GRADUATION THESIS THE IMPACT OF VIETNAM – EU FREE TRADE AGREEMENT ON GEOGRAPHICAL INDICATIONS: A CASE STUDY OF HUNG YEN LONGAN

TABLE OF CONTENT ACKNOWLEDGEMENTS ii TABLE OF CONTENT iii LIST OF ABBREVIATIONS v LIST OF TABLES vi LIST OF FIGURES vii LIST OF DIAGRAM viii INTRODUCTION 1 1. Rationale of the study 1 2. Objectives and research questions 3 3. Structure of the content 4 CHAPTER1: THEORETICAL FRAMEWORK ANDLITERATURE REVIEW 5 1.1. Definitions 5 1.1.1. Geographical indications and relevant terminologies 5 1.2.1. Geographical indication under the perspective of Trade 7 1.2. Literature review 9 1.2.1. Review on Geographical Indications Studies 9 1.2.2. Review on Case study methodology about Geographical indication: 12 1.2.3. Review on Geographical indication of Vietnam and EU studies: 21 1.2.4. Review on the future of Vietnam – EU Free trade agreement. 23 CHAPTER 2: BACKGROUND OF VIETNAM – EU AGREEMENT AND THE GEOGRAPHICAL INDICATIONS IN VIETNAM AND EU 27 2.1. Background of Vietnam – EU FreeTrade Agreement. 27 2.1.1. Vietnam – EU Trade picture 27 2.1.2. Vietnam – EU FTA Negotiation 32 2.1.3. The Geographical indications article in Vietnam – EU Free Trade Agreement. 33 2.2. Background of Geographical indications in Vietnam 37 2.2.1. Regulations of Geographical indications in Vietnam 37 2.2.2. The reality of Geographical indications in Vietnam 40 2.3. Background of Geographical indications in European Commission 42 2.3.1. The context of Geographical indications in European Commission 42 2.3.2. Reality of Geographical indications in EU countries 45 2.4. Comparison of GIs regulation in Vietnam and Europe countries 49 CHAPTER 3: RESEARCH RESULTS 51 3.1. The socioeconomic factor effecting the development of Hung Yen longan 51 3.1.1 Location and population 51 3.1.2. Population 52 3.1.3. Climate 53 3.1.4. Natural resources 54 3.1.5. The development of Economic 55 3.2. Hung Yen Longan 57 3.2.1. The overview of Hung Yen Longan 57 3.2.2. The development stages of Hung Yen longan commodity 58 3.2.3. Longan tree and farming households 60 3.2.4. Commercial channels in Hung Yen provinces 62 3.2.5. Problems of Hung yen longan trademarks 63 CHAPTER 4: RECOMMENDATION FOR THE DEVELOPMENT OF GEOGRAPHICAL INDICATIONS PRODUCTS: 68 CASE STUDY OF HUNG YEN LONGAN 68 4.1. Rebuilding Organizational and institutional structures 68 4.2. Building strong market partners: 69 4.3. Effective legal protections 70 CONCLUSION 71 REFERENCE 73 ANNEX 75

VIETNAM NATIONAL UNIVERSITY UNIVERSITY OF ECONOMICS AND BUSINESS

THE FACULTY OF INTERNATIONAL BUSINESS AND ECONOMIC

-o0o -GRADUATION THESIS THE IMPACT OF VIETNAM – EU FREE TRADE AGREEMENT ON

GEOGRAPHICAL INDICATIONS:

A CASE STUDY OF HUNG YEN LONGAN

SUPERVISOR: DR NGUYEN CAM NHUNG STUDENT: PHAM NGOC MY LINH

CLASS: QH - 2012E – KTQT – CLC TRAINING FORM: FULL – TIME

HANOI, MAY 2016

First and foremost, I would like to express my deep gratitude to Dr NguyenCam Nhung, my research advisor, for her guidance and valuable comments duringthe fulfilment of this research Her suggestions enhance my analytical skills andenrich my knowledge about international trade In addition, her willingness todiscuss whenever I have any problems is highly appreciated

I would also like to acknowledge the support and guidance from the Faculty ofInternational Business and Economics, VNU University of Economics andBusiness It would have been much more difficult to finish this study if it had notbeen for the helpful guidance from the faculty staff and facilities

Last but not least, I would like to express my appreciation to all the authors andorganizations whose studies and reports were quoted and mentioned in this paper It

is thanks to their works that I have the proper knowledge and information to build

up my own framework and analysis, for which I am greatly thankful The names ofthose authors and organizations will be presented in the Reference

For any errors or inadequacies that may remain in this work, of course, theresponsibility is entirely my own and I would try my best to improve the paper as it

is to be developed further in the future

TABLE OF CONTENT

ACKNOWLEDGEMENTS ii

TABLE OF CONTENT iii

LIST OF ABBREVIATIONS v

LIST OF TABLES vi

LIST OF FIGURES vii

LIST OF DIAGRAM viii

INTRODUCTION 1

1 Rationale of the study 1

2 Objectives and research questions 3

3 Structure of the content 4

CHAPTER 1: THEORETICAL FRAMEWORK AND LITERATURE REVIEW 5

1.1 Definitions 5

1.1.1 Geographical indications and relevant terminologies 5

1.2.1 Geographical indication under the perspective of Trade 7

1.2 Literature review 9

1.2.1 Review on Geographical Indications Studies 9

1.2.2 Review on Case study methodology about Geographical indication: .12 1.2.3 Review on Geographical indication of Vietnam and EU studies: 21

1.2.4 Review on the future of Vietnam – EU Free trade agreement 23

CHAPTER 2: BACKGROUND OF VIETNAM – EU AGREEMENT AND THE GEOGRAPHICAL INDICATIONS IN VIETNAM AND EU 27

2.1 Background of Vietnam – EU Free-Trade Agreement 27

2.1.1 Vietnam – EU Trade picture 27

2.1.2 Vietnam – EU FTA Negotiation 32

2.1.3 The Geographical indications article in Vietnam – EU Free Trade Agreement 33

2.2 Background of Geographical indications in Vietnam 37

2.2.1 Regulations of Geographical indications in Vietnam 37

2.2.2 The reality of Geographical indications in Vietnam 40

2.3 Background of Geographical indications in European Commission 42

2.3.1 The context of Geographical indications in European Commission 42

2.3.2 Reality of Geographical indications in EU countries 45

2.4 Comparison of GIs regulation in Vietnam and Europe countries 49

CHAPTER 3: RESEARCH RESULTS 51

3.1 The socio-economic factor effecting the development of Hung Yen longan 51

3.1.1 Location and population 51

3.1.2 Population 52

3.1.3 Climate 53

3.1.4 Natural resources 54

3.1.5 The development of Economic 55

3.2 Hung Yen Longan 57

3.2.1 The overview of Hung Yen Longan 57

3.2.2 The development stages of Hung Yen longan commodity 58

3.2.3 Longan tree and farming households 60

3.2.4 Commercial channels in Hung Yen provinces 62

3.2.5 Problems of Hung yen longan trademarks 63

CHAPTER 4: RECOMMENDATION FOR THE DEVELOPMENT OF GEOGRAPHICAL INDICATIONS PRODUCTS: 68

CASE STUDY OF HUNG YEN LONGAN 68

4.1 Rebuilding Organizational and institutional structures 68

4.2 Building strong market partners: 69

4.3 Effective legal protections 70

CONCLUSION 71

REFERENCE 73

ANNEX 75

LIST OF ABBREVIATIONS Abbreviations Meanings

FTA(s) Free Trade Agreement(s)

WTO World Trade Organization

VEFTA Vietnam – EU Free Trade Agreement

GDP Gross domestic product

GI(s) Geographical indication(s)

TRIPS Trade-Related Aspects of Intellectual PropertyWIPO World Intellectual Property Organization

PDO Protected designation of origin

PGI Protected geographical indication

USD United State Dollar

IGO Indication of origins

IPL Intellectual property law

TSG Traditional Speciality Guaranteed

DNA Deoxyribonucleic acid

FDI Foreign Direct Investment

TPP Trans-Pacific Partnership

RCEP Regional Comprehensive Economic PartnershipEFTA European Free Trade Association

PCA Partnership and Cooperation Agreement

ASEAN The Association of Southeast Asian NationsIPL Intellectual Property Law

DOP Protected Denomination of Origin

GSO General Statistics Office

LIST OF TABLES

Table 1.1: The key distinctions between trademarks and GIs 8

Table 1.2: Short case studies description 15

Table 2.1: Top trading partners 2014 30

Table 2.2: Type of Goods designated with GI 40

Table 2.3: Number Geographical Indications by Member State and by scheme (2010) 46

Table 3.1: Labor force aged 15 and over by sex and by residence (person) 53

Table 3.2: Planted area of land resources 54

Table 3.3: Gross domestic product at current prices by economic sector (million dongs) 55

Table 3.4: Planted area of longan by district (Unit: ha) 60

Table 3.5: Gathering area of longan by district (Unit: Ha) 61

Table 3.6: Production of longan by district (Unit: Ton) 61

Table 3.7: The Planted area and production of longan (2010 – 2014) 67

LIST OF FIGURES

Figure 1.1: On the way of catching up: Vietnam vs some other economies 25

Figure 2.1: EU – Vietnam “trade in goods” statistics (Period: 2012 – 2014, € billions) .28

Figure 2.2: EU – Vietnam “trade in services” statistics (Period: 2012 – 2014, € billions) 29

Figure 2.3: EU Foreign direct investment 2014, € billions 29

Figure 2.4: Index evolution of GIs sales value by scheme between 2005 and 2010 (base: 100 = 2005) 46

Figure 2.5: Food product GIs per countries 47

Figure 2.6: Food product division (1016 registrations) 49

Figure 3.1: The number of Cooperative in Hung Yen 56

Figure 3.2: Number of employees in cooperatives by province 57

LIST OF PICTURE

Picture 2.2: EU official GI labels in English 43Picture 3.1: Hung Yen Map 51

1 Rationale of the study

Nowadays, globalization is becoming a trend in almost countries in the worldwith a variety forms Following the trend, Vietnam also have had manifold Free-Trade Agreements (FTAs) and negotiations with countries and regions on the earth.Since the implementation of open door policy initiated in 1986, Vietnam has made atransition from a centrally planned economy to a market-oriented system withremarkable achievements, characterized by high economic growth and strongeconomic integration (Dang, V et al., 2013) Being a member of World TradeOrganization (WTO) in 2007, Vietnam has taken a crucial phase in the process ofintegration with more than 150 countries and strict requirement for each member ineach area After that, Vietnam has signed successfully 16 FTAs with countries andregion around the world (see https://aric.adb.org/fta-country ) which open the doorfor Vietnam to access the giant markets and powerful countries and regions such as

EU, the United State, Australia, Singapore, etc

One of the most salient FTA recently in Vietnam has been Vietnam – EU Trade Agreement (VEFTA) signed in 2015 have given potential opportunities forVietnamese products to export into an enormous global market, having 28 Europeancountries and over 508 million people which accounted for 20 per cent of worldtrade and 26 per cent of world GDP (Vo Tri Thanh, 2015) European commissionand Vietnam has considered carefully on tariffs, non-tariff barriers, intellectualproperty rights, corporation and investment environments, environmental protectionand human rights (WTO center, 2015) Then, both parties have released a full textwith 21 chapters In chapter 12 of full text, there are strict articles on intellectualproperty rights, specially geographical indications

Free-The chapter on intellectual property rights (chapter 12) has emphasized with thearticles on geographical indications (GIs) Indeed, European countries have usedGeographical indications as an effective tool to maximize the benefit of these

products against the international pressure and to protect their origin products fromimported ones since 1992 (IPR2, 2011), while GIs in Vietnam has started in 2005with copious flaws on registration procedure, right of use, control, examination,supervision, anti-imitation and roles of competent organizations related to originproducts (Trong Binh Vu, 2006) Therefore, as can be conspicuously seen that there

is an extensive gap between the development of GIs in the EU countries and these

in Vietnam The former has a long time to prepare and protect their origin productswhile the latter is in the development process of GIs A stank example is that EUhas 171 GI products, however, Vietnam has only 39 GIs (Full text of VEFTA,2015)

Furthermore, Vietnam is an agricultural country, however, the main productsexporting to EU market are garments, footwear, coffee, wooden items, aqua-products Therefore, Vietnam are not using its competitive advantages onagriculture Beside, when the stakeholders, producers and manufacturers ofVietnam export GIs products into the EU market, they would confront a copious ofbarrier derived from the low technology, small scale of manufacturing, managementand standard quality of products

Hung Yen longan, for instance, although Hung Yen has competitive advantages

on longan with a special taste, the activities of Hung Yen longan in the domesticand foreign market are not enhanced and improved as its potential value Generally,the geographical indications products in Vietnam are not managements anddevelopments as its values leading to the waste of using geographical indicationsprotections The GIs protection in Vietnam only have purposes of fighting againstthe violation and unhealthy competitiveness in market as well as the imitation andabuse of products while the EU use GIs protection to develop and identify thedifferent of a product with the others, it then gradually builds brand name andtrademark of a product in the customer mind (Trong Binh Vu, 2006)

With the internal and external factors, in the short-term of performing VEFTA,Vietnam would meet difficult to gain the benefit from exported geographical

indication products because of manifold visible and invisible barriers of Europeancountries This study, therefore, analyzing the case study of Hung Yen’ longan, a

geographical indications product to answer the main question “How to increase the competitive advantages of Geographical indications – Hung Yen Longan of Vietnam in the Vietnam – EU free-trade agreement?” In doing so, the author firstly

analyzes the scale of VEFTA as well as the background on geographical indications

of both parties prior to studying the case study of Hung Yen’s longan From thecase studies in the world as well as the realities in Vietnam, the author would like topropose some prescriptions to contribute to the GIs development in Vietnam

2 Objectives and research questions:

The thesis has two main objectives as follows:

- Analyzing the trade scale between Vietnam and EU, the articleGeographical indication in VEFTA and the background on geographicalindication of both parties

- Applying case study of Hung Yen longan

Thus, this study focuses on answering the main question:

- How to increase the competitive advantages of Geographical indications– Hung Yen Longan of Vietnam in the Vietnam – EU Free-TradeAgreement?

In order to solve the main question, I will have some Sub-questions:

- How about the geographical indications regulation in the Vietnam – EUfree-trade agreement?

- How about the reality of geographical indications in Vietnam?

- What should Vietnam do to increase the competitive advantages ofgeographical indications in Vietnam – EU negotiation?

3 Structure of the content:

- Introduction

- Chapter 1: Theoretical framework and literature review

- Chapter 2: Background of Vietnam – EU Agreement and the

Geographical indications in Vietnam and EU

- Chapter 3: Research results

- Chapter 4: Recommendation for the development of Geographical

indications products: Case study of Hung Yen Longan

- Conclusion

CHAPTER 1: THEORETICAL FRAMEWORK AND

LITERATURE REVIEW

1.1 Definitions

1.1.1 Geographical indications and relevant terminologies

The term “Geographical indications” has confirmed in the late 19th century, thefirst one is the Paris Convention (1883) (Daniele Giovannucci, 2009) as

“indications of source of appellations of origin” After that, there were copious

agreements commenting about GIs The Paris Convention (1883) and the MaridSystem (1891) use term “indication of source”, then the Lisbon System (1966)contains the term “appellation of origin (Geneva, 2003) However, the regulationand forms of protection has performed in recent decades

Article 22 of WTO Agreement on Trade-Related Aspects of Intellectual

Property Rights (TRIPS) defined GIs as indications which a good as originating in the territory of a Member, or a region or locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographical origin Accordingly, a GI product is a link between product and a

specific location so that the product is confirmed about its quality, characteristicsowing to its region In TRIPS, there are two level of GI protection, a higher forwines and spirits and one else lower for all other goods (TRIPS, 2016)

This term slightly differs from the definition of World Intellectual Property

Organization (WIPO) that a GI is a type of intellectual property right that may apply to any type of food Geographical indications are like trademarks and commercial names, it means it is distinctive signs that permit identification of product and/or product attributes on the market WIPO showed that the GI only

apply on food and it can be use like trademarks, it means GIs have three mainbenefits: 1) source-identifiers, 2) guarantees of quality, and 3) valuable businessinterests

Nevertheless, in the world, each country has been protected in different forms,

namely, sui generis systems, trademarks, certification marks, collective membership

marks, and denominations of origin (Daniele Giovannucci, 2009)

Furthermore, in some case, a product could be protected in one country but not

in another or the forms and scope of protection are often different from country tocountry Fortunately, both of Vietnam and EU used term GI and require formallegal registration to protect GIs

The use of GIs is not limited to agricultural products It may also highlightspecific qualities of a product that are due to human factors found in the product’splace of origin, such as specific manufacturing skills and traditions That is the case,for instance, for handicrafts, which are generally handmade using local naturalresources and usually embedded in the traditions of local communities (WIPOpublication No 952)

There are some relevant terms with GIs:

Appellation of origin (AO): this is the earliest forms of GI recognition in Paris

Convention and in the Lisbon Agreement In the Lisbon Agreement, AO defined as

the geographical name of a country, region or locality which serves to designate a product originating therein, the quality and characteristics of which are due exclusively or essentially to the geographical environment, including natural and human factors (Article 2, Lisbon Agreement) The term “appellation” is sometimes

understood as narrower than “indication” but is used increasingly less as one of itskey distinctions

By comparison, the term “Geographical indication” is broader than Appellation

of origin because GI can be given to goods, whereas the AO is limited that the quality and the characteristics of the product in question be due to, exclusively or essentially, the geographical environment, including natural or human factors

(Geneva, 2003)

Collective mark: are used only by the members of a cooperative, association or

other group to identify their goods or services as having a connection to the

collective and its standards The collective mark may or may not have a geographicidentity In the US, it uses collective mark for geographical origin products instead

of geographical indication However, in the EC, Collective marks use as trademarksthat used by the member of a collective group to distinguish their offerings fromthose of non-members A group that benefits from “protected designation of origin”(PDO) or “protected geographical indication” (PGI) may also apply for a collectivetrademark for their GI product’s name or graphic representation The PDO/PGIdesignation provides a protected indication of quality and origin relationship that isseparate from other intellectual property rights (Daniele Giovannucci, 2009)

Indications of Source: used from Paris Convention and in the Madrid

Agreement, however, the term “indication of Source” are not defined in both events.According to WIPO on “Geographical Indications Historical Background, Nature ofRight, Existing Systems for Protection and Obtaining Protection in Other

Countries”, “Indications of source” are defined as “all goods bearing a false or deceptive indication by which one of the countries to which this agreement applies,

or a place situated therein, is directly or indirectly indicated as being the country

or place of origin shall be seized on importation into any of the said countries.”

Therefore, it is clear that an indication of source is more general and refers to acountry, or location in that country, as being the place of origin

1.2.1 Geographical indication under the perspective of Trade

In some countries, people use Geographical indication protection as trademarks

so that they could increase their products’ competitive advantage in the globalmarket Although geographic terms or signs are not able to be registered astrademarks in case of they use geographically descriptive of the origin of the goods.However, if they use geographic sign to identify the source of the goods or services,thereby recognizing it as identifying a particular company or manufacturer ofproducers, in this case, the geographic sign would describe the unique “source” ofgoods or services (Daniele Giovannucci, 2009)

According to WIPO, a trademark is a sign capable of distinguishing the goods

or services of one enterprise from those of other enterprises Trademarks are protected by intellectual property rights

Therefore, the sign that is protected first, whether it is a trademark or a GI, shalltake precedence over and prevent the use of any conflicting subsequent sign The

phrase “first in time, first in right” would be the heart of trademark law (Frank Z

Hellwig, 2003)

One problem with resolving the GI conflict in a manner other than “first intime, first in right” is that it would lead to an illegal seizure of property withoutcompensation Since trademark rights are property, the seizure of a trademark,either by cancelling the right entirely, or by taking away the right to exclude others,would violate the most basic right guaranteed to private property

Therefore, in some countries and regions, they choose the way of co-existencebetween trademarks and GI, EU, for example, in EC Regulation 2081/92 regardinggeographic indications, has established a system that specifically allows for co-existence between a prior trademark and a later GI Even in TRIPS Agreement

Article 16.1 has stated that “The owner of a registered trademark shall have the exclusive right to prevent all third parties not having the owner’s consent from using in the course of trade identical or similar signs for goods or services which are identical or similar to those in respect of which the trademark is registered where such use would result in a likelihood of confusion”.

Table 1.1: The key distinctions between trademarks and GIs

Feature Trademarks Geographical indications

Ownership

Anyone

Typically individual entity

or corporation, sometimes collective or government

Producers or government

Transferability To anyone, anywhere Linked to origin

Cannot be de-localizedRights to origin First in time – first in rights Distinguishes legitimate rights to

origin, not first to apply for name.Registration confers rights to all legitimate producers

Protection Private.

Burden entirely on owner

PublicGovernment responsible but someprivate burden to identify

infringement

Use

Trademark: typically

private, can license

Collective mark: closed

group

Certification mark: open

according to set rules

Collective, open to all producers that comply with rules

Quality

Private Usually not specified except sometimesfor certification marks

Disclosed in standards or specifications and obligatorily linked to origin

Name or sign

May be createdMay or may not have geographic linkage

Must exist already and must link

to terror

(Source: Adapted from work of Marette, Clemens and Babcock 2007)

1.2 Literature review

1.2.1 Review on Geographical Indications Studies

With the development of GIs laws in agreements and regulations in eachcountry, the number of scholars on GIs increased remarkably in the whole world Inthis respect, most of the previous studies has attempted to answer for the question

“How have countries protected their geographical indications products around the world?”

Guide to geographical indications – Linking products and their origins (2009)

This study has considered as one of the most important document in thegeographical indications area Derived from international agreements, case studies,

research documents, the study offers a global overview of GIs and their distributionworldwide by country and by product as well as the important of GIs in the world In thefirst chapter, the authors support the basics information of GIs The GIs are defined:

“A Geographical Indication identifies a good as originating in a delimited territory or region where a noted quality, reputation or other characteristic of the good is essentially attributable to its geographical origin and/or the human or natural factors there”

The GIs are popular because it provides certain information and offer aguarantee GIs protection are important of GIs for producers, rural areas and regionsand countries Therefore, GIs would have great influence on economic of countries

in the world The total market for sales of GI products worldwide is at well over 50billion USD in which EU is the regions that has the largest number of protected GIs(6021 produces including 5200 wines – spirits and 821 foods)

Nevertheless, in the world, each country has been protected in different forms,

namely, sui generis systems, trademarks, certification marks, collective membership

marks, and denominations of origin Therefore, after analyzing the pros and cons ofGIs prior to analyzing the model of development of GIs with the differentcharacteristics of GIs as follow:

- Competitiveness and economics GIs are a potentially unique form of competitiveadvantage, even for smallholders They are not easy to erode because theydepend less on common factors of competition such as cost of production.Instead, GIs build on unique local factors born of tradition, know-how, andspecial agro-ecological endowments A viable GI essentially leverages theseassets to develop its reputation and value in much the same manner as a brand

- Smallholders, employment, and rural enterprise: in the world, GIs offer a giantvalue of income for farmers, producers, France, for example, GIs offer a primarysource of income for 138,000 (mostly smaller) farms in and 300,000 Italianemployees

- Society and culture: the potential long – term value of GIs is not only at theeconomic level but also at a cultural level which is the recognition of customaryand value – adding traditional that can convey a deep sense of a person, theirculture and their long-standing relationship to a region

Environment and ecology that GIs tent to value the land and its particular agro –ecological characteristics The case for GIs promoting environmental value may bevalid but is less certain The scientific literature regarding the effects of GI systems

on the environment is limited but the documented observations and case studies that

do cover this aspect usually point to positive and mutually reinforcing relationsbetween the two areas

Subsequently, the authors consider GIs protection on policies and approachesaround the world with four main regions, namely, EU, the United State, China andIndia In each country and region, the author considers policy, the objectives of GIs From the case study of regions, the authors propose a detail process ofundertake a GI for a product from the successful case study in the world withspecific steps and strategic plans As can be seen from the study, there are four mainfactors that influence the success of GIs, namely, organizational and institutionalstructures, equitable participation, market partners and legal protection

Therefore, the study supports the reader an overview knowledge onGeographical indication through both of theoretical and practical case studies

Indications of Geographical Origin as part of the Intellectual Property Law (2003)

Professor Marianne Levin (2003) give the reader a glimpse of this rather specialbut just as important part of intellectual property law Furthermore, the author givesthe reader a clear understanding of what an IGO is and why this field of intellectualproperty law still is so un-uniform, and an insight of different on-goingdevelopments in the field of IGOs In the end of the study, the author also makesshort summaries of certain case-law of particular interest On the first hand, thestudy has an international focus, but there will be some references to national

systems in other countries as well Using a giant source of information from legalscholars, articles, case-law, international symposia and from juxtapositions frominternational WTO-meetings, etc., submitted from the Internet

Geographical indication protection systems around the world (2003)

In the article, using the methodology of case study, the authors firstly define therelevant terminologies on GIs and overview the history of GIs in negotiations,agreements and regions priors to analyzing the issues between trademark and GIthroughout the scientist in the areas

In the study, the authors focus on resolving the relationship between GI andtrademark because of the overlap in two terms After that, the authors review theGIs and trademarks in developing countries through case studies of Cheese, andWines and Spirits Thanks to the study, I could comprehend the overlap betweenTrademarks and GIs so that I have found the answer for question “why do somecountries use Geographical indications protections as trademarks?”

1.2.2 Review on Case study methodology about Geographical indication:

The case study method embraces the full set of procedures needed to do casestudy research These tasks include designing a case study, collecting the study’sdata, analyzing the data, and presenting and reporting the results The qualitativecase study is an approach to research that facilitates exploration of a phenomenonwithin its context using a variety of data sources This ensures that the issue is notexplored through one lens, but rather a variety of lenses which allows for multiplefacets of the phenomenon to be revealed and understood The review onGeographical Indications Case study have given me the overview on Case studymethodology so that I could apply into my study

In the area of Geographical indications, there are a variety of case study of GIsproducts around the world, as follows:

The protection of Geographical Indication in India – Case study on

“Darjeeling Tea” (2009)

In the study, Sudhir Ravindran and Arya Mathew (2009) analyzed the casestudy methodology of Darjeeling tea Darjeeling tea is a premium quality teaproduced in the hilly regions of the Darjeeling district The tea offers distinctivecharacteristics of quality and flavors To protect Darjeeling tea from the dishonestbusiness practices of a various commercial entities, Darjeeling Tea would bemarketed and branded Furthermore, the brand of Darjeeling Tea would survive thetea industry as well as improve its financial situation

The authors analyzed the history of legal protection of Darjeeling Tea in Indian.The first attempt on the part of the Tea Board of India towards protection of the

‘Darjeeling’ brand was undertaken way back in 1983, when the ‘Darjeeling’ logowas created The Tea Board obtained home protection for the Darjeeling logo as acertification trade mark under the Indian Trade and Merchandise Marks Act 1958(now the Trade Marks Act, 1999) The registration was granted in class 30 in thename of the Tea Board in 1986 In the same year, the logo was registered as atrademark in several other countries like the UK, the USA, Canada, Japan, Egypt,and under the Madrid Agreement covering Germany, Austria, Spain, France,Portugal, Italy, Switzerland and former Yugoslavia67 In the absence of a separatelaw dedicated exclusively to GI’s in India during that time, the word ‘Darjeeling’was also registered under the Trade and Merchandise Marks Act 1958 in class 30 inthe name of Tea Board in 1998 When the Geographical Indication Act in India wasenacted in September 2003, the Tea Board applied for GI protection of ‘Darjeeling’

in October 2003 In October 2004, Darjeeling was granted the GI status in India tobecome the first application to be registered in India as a GI In 1998, the Tea Boardhired a services of Compumark that monitor and report to the Tea Board all cases ofunauthorized use and attempted registration Until 2005, there are almost 15 casesagainst infringement and misuse of the word Darjeeling Tea worldwide includingRussia, USA, Japan, France, Germany, Israel, Norway and Sri Lanka etc…

Some operational aspects of managing Geographical indications (2004)

Geographical indications and the protection of indigenous resources: Anexamination of how geographical indications can be utilized as a tool to protectindigenous resources from outside exploitation and generic imitations In the firstchapter of the study, the author review GIs protections histories, products andregulations in countries, namely, French, Swiss, Australia and the US Eachcountries uses a different GIs protections system so that it protects differentproducts For example, French and Australia use GIs protections law to protectwines, whereas Swiss system protect agricultural products such as milk, preservedmeat, fruit and vegetables Therefore, there would be different way of managingGeographical indications In the study, the author analyzes some way of protecting Firstly, DNA Fingerprinting technology DNA polymorphisms could be used asgenetic markers in much the same way as other genetic markers: in parentageanalysis, in genetic studies on the inheritance of traits, or in the identification ofindividuals Therefore, DNA fingerprinting can isolate from any genome.Furthermore, the authors find out the case studies that use DNA fingerprinting sothat the reader can get information easier

Secondly, copyright of re-recorded copy through case study of Super CassettesIndustries, a producer and marketer of Pre-recorded audio cassettes and otherrecords which it sells under the mark/logo T-series, and case study of LitigationWatch, an Indian generic drug maker leading to some patents for Opposition inIndian

Geographical indications: review of seven case – studies worldwide (2009)

Nadja El Benni and Sohie Reviron (2009) review seven case – studies of GIsaround the world, namely, Argan oil of Morocco, Cashmere of Mongolia, Café deColombia and coffee of Costa Rica, Habanos of Cuba, Rooibos tea of South Africa,and Tequila of Mexico through gathering existing information on these case-studiessuch as reports, presentations, article, etc… Thus, the study shows the way thatdeveloping countries confronted in practice with marketing issues, collectiveorganization, social and environmental effects, national legal frame, and protection

on the international market In seven case studies, there are seven differentstrategies for protection the international market The author follows the followingsystematic approach during the research

- Firstly, an overview gives about the conventional market system, supplychain, the uniqueness of the product and the marketing strategy

- Secondly, the study analyze how the supply chain could protect GIs in thenational legislation and in international negotiations

- At the end the challenges for the concerning product on the market aredescribed as well as social and environmental side-effects of the existingsupply chain and impact of the GI system is striped

Table 1.2: Short case studies description

Country Product Export of total

production

Registered as

Mongolia Cashmere wool 50 – 90%

(dependent on processing stage)

Certification markTrademark

TrademarkCertification mark

GISouth Africa Rooibos tea 60& Trademark

(Source: Geographical indications: review of seven case – studies world wide (2009))

The first case study is Argan oil of Morocco accounting for 50000 liters old

annually (Ouraiss, 2007) The Argan oil is a traditional product which used for foodand cosmetics purposed by Moroccan women In the late 1990s, the demand forhigh –value oil markets expanded dramatically leading to the need of more sterile,

mechanized extraction and sophisticated marketing strategies Nevertheless, theinability to participate directly in high value Argan oil markets and the poortransportation infrastructure Therefore, there are two kind of cooperatives:

- The non-mechanized sponsored by the GTZ associate

- The mechanized cooperative established by Zoubida Charrouf

Argan oil is an impressive success story The product that was traditionally used

by women and sold locally has become in a very few years a world-wide famousproduct Beyond this commercial success that has led to an increase of women’ssalaries, different positive side effects have been got such as new scientificknowledge on chemical properties of the oil, technical improvement of processingpractices, and construction of a strong collective organization based on women’cooperatives and commercial groups The supply chain will have to face thechallenge of increasing production without losing the artisan characteristics of theproduct Mechanization of certain steps of processing, such as kernels crushing andoil extraction that were traditionally made by hand by women will have to be drivencarefully in order to avoid a drift to lower quality This technical innovation openstoo the gender issue, extracting being until now a women activity Regardingenvironment aspects, the case-study highlights specific problems in countries withcomplex systems of land usage and ownership When there is land tenure insecurity,long term projects such as argan trees plantation are difficult to realize

The second case study is Cashmere of Mongolia The cashmere supply chain

plays a significant role in the Mongolian economy With annual production of over3’000 tons, Mongolia is the second largest producer of cashmere after China in theworld Currently, raw cashmere and cashmere products are Mongolia’s third largestexport It provides income and employment for an over a third of the population.However, the commercial performance is not satisfying The cashmere industry hasdifficulties to get access to raw greasy wool because of open competition withChinese traders/ smugglers The consequence of this competition for raw material isthe high price paid to producers (around 24 $ per kg) As of today, cashmere is the

most valuable livestock driven raw material for herders as it is sold for the highestprice in the market year-round Herders are currently enjoying the relatively highprice of cashmere But it could not last If local processing companies cannotincrease their capacity utilization and continue to run loss in a few years to come,they will have to cease operations A number of processing companies have alreadyexited the industry This will give Chinese buyers an opportunity to emerge as amonopoly power and may drop the price they pay to the herders A geographicalindication expected benefits are firstly organizational innovation in order to createlong term relationships between herders and the processing companies based ontrust and information sharing Technical improvements at the herders’ level (goatscombing practice is a crucial step for getting high quality processed wool) shouldincrease value creation in the supply chain.

On the environmental aspects, pasture land degradation is presently a majorthreat in Mongolia Herders are worried about this ecological disaster, because ofthe expected consequences on their activity in the future A GI strong organizationmay help to combine short term economic and long term environmental objectives

The third case study review Café de Colombia and coffee of Costa Rica With

its trademark strategy the Federation could increase the mark up on average coffeeprices Especially the “100% Colombia Coffee” and “Juan Valdez” brand is highlyrecognized by international consumers The reason why Colombia protected theterm “Café de Colombia” in EU as GI (PGI) was to avoid the attempts of thirdparties to misuse the good name of “Café de Colombia” The aim is to defend theeconomic value of an already established product, for which a reputation wasalready built up with a sophisticated marketing strategy using trademarks Asroasting does not necessarily need to be carried out in the geographical area “Café

de Colombia” could not be protected as PDO However, if coffee beans would beroasted in Colombia this would create a high economic added value, irrespectively

if the coffee is sold as GI coffee or not As the Federation as collective producerorganization had already established a well organized supply chain (with quality

ensured by Alma café and rural development goals) the registration as PGI in the

EC took only one year It can be estimated that with the existing supply chainstructure the additional costs were relatively low to become registered as PGI in theEuropean Community The distribution of value to producers is one of the goals ofthe FNC A lot effort was undertaken by the FNC to improve the quality of life forinstance through educational programs and infrastructure projects The protection ofbiodiversity in the coffee grow in regions is also one aim of the FNC

Then, coffee of Costa Rica is considered Prices paid for Costa Ricans coffeeare in general higher than for most other coffees Between 2001 and 2006 the exportprice for Costa Ricans coffee increased from 64.79 USD/46 kg bag to 122.23 USD/

46 kg bag Whereas Costa Rica coffee prices were on rank five in 2001 (behindprices paid for coffee of Ethiopia, Kenya, Colombia and Mexico) in 2006 thehighest prices were paid for Costa Rican coffee (followed by Colombia, Kenya,Nicaragua and Mexico)

Coffee producers are not included in every step of the supply chain but areprotected against volatile market prices by legal mechanisms Support schemes arealso fixed legally and are mainly provided by the private industry Every actor in thesupply chain defend its own interest which results in a solution that is not solelytargeting producers well-being or the distribution of value to producers To increasethe access to the international market with high quality products ICAFE (throughwhich the State has the supervision and control over the coffee supply chain) hasestablished the program “seven regions, seven coffees” Within this programimportant coffee regions with an individual profile were identified However, it isstill under discussion if a GI should be nation or region wide Compared toColombia and as a result of the existing supply chain structure, Costa Ricans coffeegrowers are less supported regarding socioeconomic aspects However, to improvethe environmental quality in coffee producing regions several programs andlegislation were launched by the government These programs increase thereputation on the international market with the aim to generate higher prices

Although coffee of Colombia and that of Costa Rica have followed twodifferent GI strategies, these objective is similar – green coffee- in order to increaseprices paid to producers Supply chains are also very different Colombia hasdeveloped a very strong democratic efficient organization (The National Federation

of coffee growers- FNC) that pilot’s production and the institutional system It hasprepared and advocated with great success registration in EU (first foreign product

to be registered) Costa Rica organization is more dominated by public authoritiesthat control margins at different levels of the supply chain

Habanos of Cuba is one of the most famous GI in the world and has a longhistory of origin labelled product As leader in the premium cigar segment,Corporation Habanos SA held a 30% share of the international premium cigarssales Habanos cigars are one of the most usurped GI products in the world andhave deployed different tools for protection including, 15 “Appellation of origin”,

62 trade marks and 2 certification marks It is difficult to get information on theinternal organization of the supply chain or on production practices in a countrywhich faced a very severe economic crisis in the 1990’s and is nowadays enduringrepeating climate problems

Another case study, Rooibos is an impressive commercial success Production

volume increased steadily within the last two decades Whereas in 1995 theproduction volume was about 4’200 tons, it raises to 6500 tons in 2000 up to 9700tons in 2005 As one of the main importers of rooibos in the 1990s, Germany is stillSouth Africa’s major export destination for Rooibos tea with 75 % of export sales.The product uniqueness comes from a very specific ecosystem that leads to clearlimits of the production geographical area However, the supply chain has a lownegotiation power About 95% of the product is currently exported in bulk At theinternational level, the market power is in the hand of German traders that caneasily dictate prices especially for conventional bulk exports The price paid to theproducers in South Africa is very low compared to prices paid for bulk products in

Germany On environmental aspects, the major challenge is over exploitation ofnatural resources due to a growing demand.

The last case study is Tequila of Mexico Exports have doubled in 6 years and

the part of bottled tequila has increased The major challenge is supply in blueagave whose market has long being characterized by production irregularity andvolume recurrent shortages These market disorders of the raw material market haveled to increasing vertical integration of blue agave farming by processors, usingdifferent mechanisms The supply chain is dominated by processors and thenegotiation power of independent farmers is decreasing very fast On theenvironmental aspects, farming practices are becoming more intensive Differentauthors highlight opacity and probably poor environmental performance within theagave plantations controlled by processing companies

In the study, there are the successful case studies of GIs products for differentfood and non-food products The case-study analysis identifies strong regularities inthe GI systems

As can be seen, all products are genuine GIs that verify the two conditions ofthe TRIPS agreement:

- Typicality and uniqueness linked to a territory;

- Reputation among consumers, mainly on the export markets in developedcountries

These products response to some consumer specific needs, which leads towillingness to pay

The GI system coordinates entrepreneurs and small size farmers A goodcoordination between partners seems to be a key factor of success to get expectedeconomic benefits of GIs, which come from marketing strategy, promotion andprotection The GI alliances in developing countries are pragmatic and combine GIsand certification marks in order to protect their valuable names against low costcopiers and big industrial companies

1.2.3 Review on Geographical indication of Vietnam and EU studies:

Geographical indications and Rural development in the EU (2011)

The study consists of seven chapters Chapter one will provide the reader with abackground on Geographical Indications A brief description of the history, as well

as the current extension and distribution of GIs will be laid out, in order to make iteasier for the unfamiliar reader to later follow my analytical discussions GIscontain much more than just economics, they represent history and culture, and thispoint may be lost if the reader is not immediately introduced to the broadness of thetopic However, chapter three will then focus on the economics of GIs, the theoryjustifying protection will be described for The next second part of the theorychapter will be dedicated to rural development theory, in order to fit GIs into thebroader scheme Chapter four will describe the ongoing negotiations in the WTO,and the standpoints of the demander-group as well as the group opposing theproposal Many of the arguments heard are based on the theory justifying protection

of GIs, other arguments Simply stem from the economic interests of the differentactors Chapter five take a closer look at the EU, and the role GIs play in the Union.And then in Chapter six, there are the evaluation the impacts of production of GIs

on rural areas Chapter seven will then complement the quantitative chapter six,with a more qualitative analysis Several case studies will demonstrate thedocumented effects on a selected number of regions

Carina Folkeson showed that consumers in Europe have an interest in GIproducts, and in the types of qualities GI products represent – food safety, foodquality, environmental concerns etc The study has further showed that manyEuropean GI products receive a price premium compared to their reference market.Furthermore, and this is to some extent even more important, many raw producers(milk farmers, olive growers etc.) receive a price premium for their contributions tothe final products In other words, there seems to be a lot of potential for GIproducts to generate higher incomes to their regions’ of production, than

‘conventional’ farming does The higher income to the region as a whole will stem

both from higher profits per producer, but also from generation of employment, due

to the labor intensive production, which creates more sources of income.Furthermore, the data presented in this study shows that the output of GI productshas increased significantly over the last decade for most sectors in the four countrieswith the most GI products registered (Italy, France, Spain and Portugal) Thissuggests that the market for GI products is growing, which will attract newproducers, and further increase the incomes of those already involved in GIproduction

European Legislation on Protection of Geographical indications: Overview of the EU Member States’ Legal Framework for Protection of Geographical Indications (2011)

Irina Kireeva (2011) takes the form of a summary overview for each EUMember State on the protection of Geographical Indications (GIs), including history

of protection, the legal and regulatory framework, competent authorities involved,official controls and examples of prominent products

The author analyzed the EU legal framework for protecting GIs in two areas,namely, agricultural products and foodstuffs, and for wines and spirit In each area,the author goes through the history of protection before showing the relevantregulatory framework and the procedure for registration It then the official controland verification of compliance

In the second part of the study, Irina Kireeva was overview the GIs of EUmembers There is the same structure for all of the countries as follows:

- General background information

- National legal framework for protecting Geographical indications: includeshistory of protection, relevant regulatory framework, competent nationalauthority, and national procedure for PGIs, PDOs and TSGs, official controland verification of compliance, and specific provisions for industrial goods

- Timeframe and costs of registration

- Examples of Protected Names from the host country

- And the legislation

The study gives readers the detail information on the GIs framework ofcountries in EU

Geographical indication and appellation of origin in Vietnam: reality, policy and perspective (2006)

PrD Trong Binh Vu and BA Duc Huan Dao (2006) used the research ontheoretical groundwork of delineation, standardization the process of productionprocessing commercialization, quality management, trademarks, so on so forth,allows to summarize international and national studies on GI and AO as well aspointing out the meaning of GI, especially the difference of trademark and originindication Using institutional analysis, commodity analysis, marketing analysis,analyzing of commercial contracts and other approaches, the study analyzes thetrend of GI development in regions in the world as well as Vietnam so that theauthors bring out the limitations in GI development in Vietnam and propose theprocess of building GI products in Vietnam

1.2.4 Review on the future of Vietnam – EU Free trade agreement

Future Vietnam – EU Free Trade Agreement (Vietnam – EU FTA): An Analysis of Trade creation and Trade diversion effects (2013)

After going through the trade picture of Vietnam and EU trade, tariff barriersfrom 2012, the authors analysis the impact of Vietnam – EU FTA on the welfare ofimport country through gravity equations so that they predict the impact of VEFTA

on some key industries of Vietnam, specially car industry, machineries andelectronics industries According the author, VEFTA expected to offer many newopportunities, but also pose challenges for Vietnam’s economy Reduction on taxrates for most of the products under the FTA framework will give Vietnam anadvantage over its rivals in the EU market According to GSO, 2012, at present, the

EU is imposing high taxes on Vietnam’s main exports to the market, including

footwear (12.4 percent), textiles and garments (11.7 percent), and seafood (10.8percent)

However, after the agreement is signed the Vietnamese businesses will facecertain challenges, both sides of difficulties that may arise thereafter Firstly,technical barriers related to epidemiology and hygiene as well as animal and plantquarantines as challenges for Vietnamese goods entering the EU market Secondly,product origins will be another obstacle for Vietnamese businesses The EUpresents the biggest challenges but the development gap between both sides and thecompetition pressure placed on Vietnamese enterprises are also significant factors

To coincide with the EU’s tax reduction move, Vietnam will also have to cut taxes

on imported goods How Vietnamese businesses can survive and compete withsimilar items imported from the EU, even on their own turf, remains an openquestion Lessons learnt from joining the WTO in 2007 have shown that increasingpressure from the outside will help Vietnam improve its economy Competitionwith strong foreign businesses will push local enterprises to either restructurethemselves, or fall apart

Vietnam Economy: FTAs and Impacts (2015)

Vo Tri Thanh (2015) has analyzed the achievements and drawback of Vietnamafter more than 30 years of Doi Moi and integration There are some impressiveachievements of Vietnam:

- VN became a (low-) middle income (GDP/pc 1990: <USD 100; 2014: USD

2050 in 2014; GSO-WB poverty incidence 1993: 57%; 2014: 13%)

- VN became more industrialized (Agriculture share of GDP 1991: 41%;2014: 18%)

- VN became a very open economy (Economic openness 2014: (X+M)/GDP ≈160.2%; FDI sector: 20.1% GDP; >65% export value; 21.7% of totalinvestment)

By contrast, Vietnam is still low quality of growth (inefficient SOE sector andpublic investment; high business costs; distorted production factor markets); limited

spill-over from FDI; weak position in the global/regional value chains; wideningincome/asset gap; polluted and deteriorated environment

Figure 1.1: On the way of catching up: Vietnam vs some other economies

(Source: Penn World Tables 8.0)

The author then considered the impact of some FTAs on Vietnam Economic toconclude some remarks:

- VN is at a decisive point of time for transforming the paradigm/pattern ofdevelopment by establishing foundations for overcoming “middle-incometrap”

- VN needs to have a new impetus for reforms Interaction between domesticreforms and integration (TPP; RCEP; VN-EU FTA…) becomes much moreprofound

- The key issue is to realize the people’s potentials, institutional reforms andpromote innovation (together with taking advantages and minimizing risks incontext of integration deepening and a changing world and region)

CHAPTER 2: BACKGROUND OF VIETNAM – EU AGREEMENT AND THE GEOGRAPHICAL INDICATIONS IN VIETNAM AND EU

2.1 Background of Vietnam – EU Free-Trade Agreement.

2.1.1 Vietnam – EU Trade picture

Before signing the VEFTA, EU was the biggest export market of Vietnam withturnover of 28.11 billion USD (GSO, 2013) The characteristics in import-exportstructure between Vietnam – EU is the high level of mutual complement and lessdirect competition In 2013, two-way trade turnover between Vietnam and EUreached 33.8 billion USD, increasing by 16.11% over the figure of 2012, in whichexport to and import from EU were respectively 24.4 billion USD and 9.4 billionUSD Main exports to EU include garments, footwear, coffee, wooden items, aqua-products Vietnam’s imports from EU are dominated by high tech productsincluding electrical machinery and equipment, aircraft, vehicles, and pharmaceuticalproducts (Nguyen Binh Duong, 2015)

Nowaday, Vietnam is considered as the EU’s fifth most important tradingpartner in ASEAN regions – the third largest partner outside Europe of EuropeanCommission and the 35th out of the EU’s total trade (seehttp://ec.europa.eu/trade/policy/countries-and-regions/countries/vietnam/ )

European Commission displayed the overview trade picture of bilateral tradebetween Vietnam and EU:

 High tech products are the goods that EU dominate export to Vietnam,including electrical machinery and equipment, aircraft, vehicles, andpharmaceutical products

 By contrast, Vietnam’s key export items to the EU are: telephone sets,electronic products, footwear, textiles and clothing, coffee, rice, seafood, andfurniture

 About balance of trade in goods with Vietnam, the EU has a negativebalance while Vietnam gained positive balance EU-Vietnam trade in goods

was worth over €28.3 billion, with €22.1 billion in imports from Vietnaminto the EU, €6.2 billion in exports from the EU to Vietnam, for example, in

2014

 In addition, EU investors committed a total of $1.3 billion in Foreign DirectInvestment in 2015, thereby the EU became Vietnam’s third largest foreigninvestor partner

 In 2013, EU became the Vietnam’s biggest export market with its turnover of28.11 billion USD

Figure 2.1: EU – Vietnam “trade in goods” statistics (Period: 2012 – 2014, € billions)

EU imports EU exports Balance

(Source: European commission)

The EU has a negative balance of trade in goods with Vietnam In 2012, EU –

Vietnam trade in goods accounted for €18.6 billion prior to increasing to 21.3

billion in 2013 and reaching the zenith of 22.2 in 2014 By contrasts, the Vietnam –

EU trade in goods was roundly a third of EU – Vietnam pattern

Figure 2.2: EU – Vietnam “trade in services” statistics (Period: 2012 – 2014, € billions)

(Source: European commission)

Figure 2.3: EU Foreign direct investment 2014, € billions

Inward stocks

Outward stocks

Balance

(Source: European commission)

EU is one of the largest foreign investors in Vietnam In 2012, EU investorscommitted a total US$ 1.061 billion in Foreign Direct Investment and thus remainVietnam's fourth largest foreign investor’s partner (GSO, 2012) In 2013 registered

capital invested in Vietnam by EU businesses was over 17 billion USD with nearly

1400 projects EU investors are present in most pivotal economic sectors, mainly inindustries, construction and service sub-sector (Nguyen Binh Duong, 2015)

Table 2.1: Top trading partners 2014

7 Thailand 7,975 3.7

(Source: European commission)

As can be clearly seen from the table, EU is one of the most crucial market withVietnam economic with the fifth on importing, the second on both of importing andtotal trade even if the FTA are not exist

In 2009, the tariff of the EU on import of Vietnam was around 4.1% Weightedaverage tariff amounted to 7 % meaning that higher tariffs are applied to relevantproducts exported from Vietnam (e.g apparel and clothing: 11.7%, seafood: 10.8%and footwear: 12.4%) and very high tariff peaks (more than 57%) This means thatthe elimination of tariffs expected on substantially all the trade with the FTA willprovide important advantages for Vietnam in comparison to other competitors in the

EU markets With regard to the tariff on import, Vietnam applied substantiallyreductions after WTO accession and now the simple average tariff is 9.3% (from13.7% in 2005); the tariffs applied to the most exported products from the EU intoVietnam are quite low, with the exception of automotive (24.2%, electronics: 8.9%,mechanical: 3.4%, pharmaceuticals: 2%, Iron: 2%, optical and medical apparatus:1.3%, aircraft: 0%) In all the mentioned categories excepted aircraft, however,there are quite high tariff peaks (from 10% of pharmaceuticals to 90% forautomotive)

The average applied ad valorem tariff in Viet Nam on industrial goods was15.7% in 2008 According to the commitments in the WTO, most of Viet Nam’sduties will have been reduced to their final bound level by 2014, except for certainfish products (tariff line 0303.29 Other) and motor cars and vehicles (under heading8703), which will not reach their final bound level until 2017 and 2019,respectively

While none of the EFTA States have export duties for industrial goods, VietNam is applying such duties on some minerals and natural resources exported in

raw form with an aim to achieve sustainable exploitation of natural resources andbalanced environment protection Viet Nam's export duties are applied on an MFNbasis In 2010, the rates of export duties applied ranged from zero on certainproducts (crocodile hides and skins, wood charcoal of coconut, etc.) to 33% onsome scrap metal With regard to trade in industrial goods, the EFTA States’ importtariffs are relatively low on average Iceland’s simple average applied ad valoremMFN rate for 2008 was 2.3%, Norway’s was 0.6% and Switzerland’s was 2.2%.Switzerland applies duties on precious stones and metals as well as inorganicchemicals Norway maintains duties on certain textile products, while Iceland hascertain duties on clothing and footwear The average applied ad valorem tariff inViet Nam on industrial goods was 15.7% in 2008 (Nguyen Binh Duong, 2015)

2.1.2 Vietnam – EU FTA Negotiation

In 1995, Vietnam and EU signed a Framework Cooperation Agreement.Vietnam and EU relation are further strengthened through signing off Partnershipand Cooperation Agreement (PCA)

In 2012, the EU and Vietnam announced the start of bilateral FTA negotiations.Thus, Vietnam became the third country in ASEAN having FTA negotiations withthe EU (after Singapore and Malaysia) (Nguyen Binh Duong, 2015) After 7negotiation rounds from 2012 to 2014, on December 2nd 2015, the EU and Vietnamcompleted the conclusion of the negotiation for an EU – Vietnam Free TradeAgreement (FTA) (WTO center, 2016)

The agreement in EU – Vietnam FTA has 18 chapters including the agreements

on (WTO center, 2016) : National Treatment and Market access for Goods, traderemedies, Protocol concerning the definition of the concept of “originatingproducts” and methods of administrative cooperation, Customs and tradefacilitation, Technical Barriers to Trade, Sanitary and Phytosanitary Measures,Trade in services, investment an E – commerce, Government procurement, Stateowned enterprises, enterprises granted special rights or privileges ad monopolies,