Analyzing the impact of the EVFTA on the importation of transportation vehicles, parts, and components into Vietnam from the EU: A SMART model approach

Abstract

This study examines the impact of the EU-Vietnam Free Trade Agreement (EVFTA) on Vietnam’s imports of transportation vehicles, parts, and components from the EU. Using the SMART model and data from UN COMTRADE and Vietnamese government agencies, the analysis shows modest increases in import values. Growth rates are 0.23% with the EVFTA alone and 0.21% when the Regional Comprehensive Economic Partnership (RCEP) is also considered. These findings reveal different effects among EU member states and product categories, especially in HS group 87 (vehicles) and HS group 89 (ships and boats), where trade creation is notable for Germany, Slovakia, and Italy. However, the study also finds significant trade diversion, with $361.91 million shifting from other regions to the EU. Despite these modest gains, the EVFTA positively impacts Vietnam’s industrial growth and green energy transition by enabling the import of advanced EU products. The research emphasizes the importance of considering how agreements like the RCEP influence the broader economic effects of the EVFTA, as some benefits shift to RCEP countries like Japan, South Korea, and China.