The European sporting goods industry has welcomed the release of the text of the European Union's trade deal with Vietnam, which is expected to help trigger a new wave of high quality investment in both directions.

The Free Trade Agreement (FTA) was finalised in December after nearly two and a half years of talks and 14 rounds of negotiations. The signing followed an agreement in principle that was reached in August.

Due to take effect from 2018, it is the first FTA the EU has concluded with a developing country, and will see the removal of more than 99% of tariffs on goods traded between the two economies over a period of up to seven years. Vietnam will also remove almost all of its export duties.

The text of the trade deal was released last week in a move designed to allow all interested stakeholders to become familiar with its content. It will now be subject to a legal review to verify its consistency and ensure that all the provisions are formulated in a legally-sound way, before being presented to the European Council and the European Parliament for ratification. 

"Negotiating parties have taken the proposals of the sporting goods industry into account by integrating measures such as immediate duty removal for most footwear from our sector and an accelerated duty removal schemes for leather sports shoes," said Alberto Bichi, secretary general at the Federation of the European Sporting Goods Industry (FESI). "We have supported the negotiations throughout the process and are endorsing a rapid implementation process."

Bichi said the FTA, once fully operative, will open "considerable opportunities" in terms of improving services to EU consumers and in facilitating market access for the European sporting goods industry. 

The EU is now Vietnam's second-biggest trade partner after China, and earlier this year became the country's third largest foreign investor. Imports into the EU from Vietnam totalled EUR22.1bn (US$24bn) in 2014, with footwear, textiles and clothing among the key goods traded.

Most recent figures from Vinatex, the state-run Vietnam National Textile and Garment Group, suggest the value of Vietnam's textile and garment exports reached $12.18bn in the first six months of 2015, a rise of 10.3% on the same period a year ago. While the US is the largest customer, accounting for 42% of the total with imports up 11% to $5.18bn, it is followed by the EU, whose textile and clothing imports rose 8.2% to $1.45bn.

EU Trade Commissioner Cecilia Malmström said of the release of the text: "I am glad that we now publish this agreement in line with our strong commitment to a transparent trade policy. When approved, the agreement will unlock a market with huge potential for EU firms. Vietnam is a fast-growing economy of more than 90m consumers with a growing middle class and a young and dynamic workforce. Its market offers numerous opportunities for the EU's agricultural, industrial and services exports. The agreement will also help trigger a new wave of high quality investment in both directions, supported by our new investment dispute resolution system with an appeal mechanism."

But while this may be seen as a landmark deal, some industry observers have warned it may not necessarily translate into a huge boost for the competitiveness of Vietnam's textile and garment sectors.

Vietnam is also a signatory to the Trans-Pacific Partnership (TPP) agreement, which is projected to give its textile and garment exports duty-free access to a common market comprising 40% of the world's GDP, including the US.

Combined, the two trade pacts have the potential to offer tremendous opportunities but may be hampered by issues such as rising wages in Vietnam, which could wipe out cost reductions created by these FTAs. Capacity constraints, weak domestic backward linkages to source yarns and fabrics, and a lack of local know-how are among other challenges seen.

Click here to view the full text of the agreement.