The Diplomat
The Council of Ministers approved last Tuesday the signature ad referendum of the Investment Protection Agreement between the European Union and its Member States, on the one hand, and the Socialist Republic of Vietnam, on the other hand.
Likewise, the Executive approved its referral to the Spanish Parliament and authorized the expression of Spain’s consent to be bound by this Agreement, which will replace the bilateral investment agreements that some twenty EU Member States currently have with Vietnam. Spain and Vietnam have had an agreement for the Reciprocal Protection and Promotion of Investments since July 2011.
According to the Government, Vietnam occupies a central place in the EU’s strategy towards Southeast Asia, as it is its second largest trading partner in the Association of Southeast Asian Nations (ASEAN). Since 1980, EU-Vietnam relations have been articulated within the EEC-ASEAN Framework Cooperation Agreement and, at the end of 2000, the EU decided to deepen and modernize its relations with the various countries in the area, engaging in parallel negotiations on a Free Trade Agreement (FTA) and a political Partnership and Cooperation Agreement (PCA).
In March 2010, negotiations on the two agreements began in parallel. The PCA negotiations were completed in 2012 and the Agreement has been in force since 2016. As regards the FTA, negotiations were extended in September 2011 to also cover investment protection (on the basis of the new EU competences of the Lisbon Treaty), which were finalized in October 2015.
Faced with pressure from Member States on the legal nature of the FTA and the division of competences between the EU and the States, the Commission referred the matter to the EU Court of Justice, which confirmed in May 2017 the exclusive competence of the EU in all matters covered by the FTA, except those relating to investments other than direct investments and investor-state dispute settlement where the latter act as defendants, a competence shared by the EU and the Member States. In light of this ruling, the initially negotiated text was adapted to create two separate agreements: an FTA and an IPA (Investment Protection Agreement) which was concluded in 2018.
The IPA was signed by the EU and Vietnam on June 30, 2019 jointly with the FTA and was adopted in Luxembourg in the framework of the General Affairs Council of June 25, 2019. On the part of Spain it was signed ad referendum by the Ambassador Permanent Representative by plenipotentiary. The European Parliament approved it on February 12, 2020 and, as it is an Agreement of mixed competence, the Member States must ratify it in accordance with their corresponding internal procedures.
The primary objective of the IPA is to create legal certainty and new trade and investment opportunities between the two partners in line with the vision of the Europe 2020 Strategy. To date, it has been ratified by the Czech Republic, Estonia, Greece, Hungary, Latvia, Romania, Sweden and Vietnam.
The entry into force of the IPA, with a common and modernized investment protection regime, will imply the suspension and replacement of the 20 existing Bilateral Investment Treaties between Vietnam and the Member States (Austria, Belgium-Luxembourg, Bulgaria, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Italy, Latvia, Lithuania, the Netherlands, Poland, Slovakia, Slovenia, Spain, Sweden, Slovakia, and Spain), which it will surpass and improve in guarantees.
