FREE TRADE AGREEMENT BETWEEN
THE EUROPEAN UNION AND THE SOCIALIST REPUBLIC OF VIET NAM

CHAPTER 7: NON-TARIFF BARRIERS TO TRADE AND
INVESTMENT IN RENEWABLE ENERGY GENERATION

ARTICLE 7.1

Objectives

In line with global efforts to reduce greenhouse gas emissions, the Parties share the objectives of promoting, developing and increasing the generation of energy from renewable and sustainable sources, particularly through facilitating trade and investment. To this effect, the Parties shall cooperate towards removing or reducing non-tariff barriers and fostering cooperation, taking into account, where appropriate, regional and international standards.

ARTICLE 7.2

Definitions

For the purposes of this Chapter:

(a) “local content requirement” means:

(i) with respect to goods, a requirement for an enterprise to purchase or use goods of domestic origin or from a domestic source, whether specified in terms of particular products, in terms of volume or value of products, or in terms of a proportion of volume or value of its local production;

(ii) with respect to services, a requirement which restricts the choice of the service supplier or the service supplied to the detriment of services or service suppliers from the other Party;

(b) “measures requiring to form a partnership with local companies” means any requirements to jointly establish or operate with local companies a legal person, a partnership according to domestic law, a joint venture or to jointly enter into contractual relations such as business cooperation contracts with local companies;

(c) “offset” means any undertaking that imposes the use of a local content requirement, local suppliers, technology transfer, investment, counter-trade or similar actions to encourage local development;

(d) “renewable and sustainable sources” means sources in the form of wind, solar, geothermal, hydrothermal, ocean energy, hydropower with capacity of 50 megawatt or less, biomass, landfill gas, sewage treatment plant gas or biogases; it does not encompass products from which energy is generated; and

(e) “service supplier” means any natural or legal person of a Party that supplies a service.

ARTICLE 7.3

Scope

1. This Chapter applies to measures which affect trade and investment between the Parties related to the generation of energy from renewable and sustainable sources.

2. This Chapter does not apply to research and development projects and to demonstration projects carried out on a non-commercial scale.

3. This Chapter does not apply to projects funded and governed by agreements with international organisations or foreign governments to which the procedures or conditions of those donors apply.

4. Subject to paragraph 5, this Chapter is without prejudice to the application of any other relevant provisions of this Agreement, including any exceptions, reservations or restrictions thereto, to the measures mentioned in paragraph 1, mutatis mutandis. For greater certainty, in the event of an inconsistency between this Chapter and other provisions of this Agreement, those provisions shall prevail to the extent of the inconsistency.

5. Paragraphs (a) and (b) of Article 7.4 (Principles) apply after five years from the date of entry into force of this Agreement.

ARTICLE 7.4

Principles

A Party shall:

(a) refrain from adopting measures providing for local content requirements or any other offset affecting the other Party’s products, service suppliers, investors or enterprises;

(b) refrain from adopting measures requiring to form partnerships with local companies, unless those partnerships are deemed necessary for technical reasons and that Party can demonstrate those reasons upon request of the other Party;

(c) ensure that any measures concerning the authorisation, certification and licensing procedures that are applied, in particular, to equipment, plants and associated transmission network infrastructures, are objective, transparent, non-arbitrary and do not discriminate amongst applicants from the Parties;

(d) ensure that administrative fees and charges imposed on or in connection with the:

(i) importation and use of products originating in the other Party, by the other Party’s suppliers are subject to Articles 2.18 (Administrative Fees, Other Charges, and Formalities on Imports and Exports) and 4.10 (Fees and Charges); and

(ii) provision of services by the other Party’s suppliers are subject to Articles 8.18 (Scope and Definitions), 8.19 (Conditions for Licensing and Qualification) and 8.20 (Licensing and Qualification Procedures); and

(e) ensure that the terms, conditions and procedures for the connection and access to electricity transmission grids are transparent and do not discriminate against suppliers of the other Party.

ARTICLE 7.5

Standards, Technical Regulations and Conformity Assessment

1. This Article applies to the products covered by the tariff headings listed in Annex 7-A (List of Tariff Headings). The Parties may agree to include other products in this list by exchange of letters.

2. If relevant international standards established by the International Organization for Standardization or the International Electrotechnical Commission exist, the Parties shall use those international standards, or their relevant parts, as a basis for any standard, technical regulation or conformity assessment procedure, except when those international standards or relevant parts would be an ineffective or inappropriate means for the fulfilment of the legitimate objectives pursued. In those cases, a Party shall, upon request of the other Party, identify the part of the respective standard, technical regulation or conformity assessment procedure which substantially deviate from the relevant international standard and provide justification as to the reasons for the deviation.

3. If appropriate, the Parties shall specify technical regulations based on product requirements in terms of performance, including safety and environmental performance, rather than design or descriptive characteristics.

4. A Party accepting a supplier’s declaration of conformity as a positive assurance of conformity shall endeavour not to require the submission of test results.

5. If a Party requires test reports, whether alone, as the basis of, or in conjunction with other assurances of conformity, or as positive assurance that a product is in conformity with its relevant standards or technical regulations, it shall endeavour to accept test reports in form

of the International Electrotechnical Commission System of Conformity Assessment Schemes for Electrotechnical Equipment and Components (IECEE CB Scheme) Test Reports without requiring any further testing.

6. If a Party requires third party’s certification for product, it shall endeavour to accept a valid CB Test Certificate under the IECEE CB Scheme as sufficient assurance of conformity without requiring any further conformity assessment or administrative procedures or approvals.

7. This Article is without prejudice to the Parties applying requirements not related to the products in question, such as zoning laws or building codes.

ARTICLE 7.6

Exceptions

1. This Chapter is subject to Articles 2.22 (General Exceptions), 8.53 (General Exceptions) and 9.3 (Security and General Exceptions).

2. Nothing in this Chapter shall be construed as preventing a Party from adopting or enforcing measures necessary for the safe operation of the energy networks concerned, or the safety of the energy supply, subject to the requirement that those measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between the Parties’ products, service suppliers or investors under like circumstances, or a disguised restriction on trade and investment between the Parties.

ARTICLE 7.7

Implementation and Cooperation

1. The Parties shall cooperate and exchange information on any issues relating to the implementation of this Chapter in the relevant specialised committees established pursuant to Article 17.2 (Specialised Committees). The Trade Committee may decide to adopt appropriate implementing measures to this effect.

2. The Parties shall exchange information, regulatory experiences and best practices in areas such as:

(a) the design and non-discriminatory implementation of measures promoting the use of energy from renewable sources;

(b) technical regulations, standards and conformity assessment procedures, such as those relating to grid code requirements.

3. The Parties shall promote cooperation, with respect to domestic or regional technical regulations, regulatory concepts, standards, requirements and conformity assessment procedures which comply with international standards, in relevant regional fora.

CHAPTER 8: LIBERALISATION OF INVESTMENT,
TRADE IN SERVICES AND ELECTRONIC COMMERCE

SECTION A GENERAL PROVISIONS

ARTICLE 8.1

Objectives and Scope

1. The Parties, affirming their respective commitments under the WTO Agreement and their commitment to create a better climate for the development of trade and investment between the Parties, hereby lay down the necessary arrangements for the progressive liberalisation of investment and trade in services and for cooperation on electronic commerce.

2. Consistent with the provisions of this Chapter, each Party retains the right to adopt, maintain and enforce measures necessary to pursue legitimate policy objectives such as the protection of the environment and public health, social policy, the integrity and stability of the financial system, the promotion of security and safety, and the promotion and protection of cultural diversity.

3. This Chapter does not apply to measures affecting natural persons seeking access to the employment market of a Party, nor does it apply to measures regarding citizenship, residence or employment on a permanent basis.

4. Nothing in this Chapter shall prevent a Party from applying measures to regulate the entry of natural persons into, or their temporary stay in, its territory, including those measures necessary to protect the integrity of, and to ensure the orderly movement of natural persons across, its borders, provided that such measures are not applied in such a manner as to nullify

or impair the benefits1 accruing to any Party under the terms of a specific commitment in this Chapter and its Annexes.

5. Nothing in this Chapter shall be construed as limiting the obligations of the Parties under Chapter 9 (Government Procurement) or to impose any additional obligation relating to government procurement.

6. This Chapter does not apply to subsidies granted by the Parties2, except for Article 8.8 (Performance Requirements).

7. A Party’s decision not to issue, renew or maintain a subsidy or grant, shall not constitute a breach of Article 8.8 (Performance Requirements), in the following circumstances:

(a) in the absence of any of the Party’s specific commitments to the investor under law or contract to issue, renew, or maintain that subsidy or grant; or

(b) in accordance with any terms or conditions attached to the issuance, renewal or maintenance of the subsidy or grant.

8. This Chapter does not apply to the Parties’ respective social security systems or to activities in the territory of each Party, which are connected, even occasionally, with the exercise of official authority.

ARTICLE 8.2

Definitions

1. For the purposes of this Chapter:

(a) “aircraft repair and maintenance services during which an aircraft is withdrawn from service” means such activities when undertaken on an aircraft or a part thereof while it is withdrawn from service and do not include so-called line maintenance;

(b) “computer reservation system (CRS) services” means services provided by computerised systems that contain information about air carriers’ schedules, availability, fares and fare rules, through which reservations can be made or tickets may be issued;

(c) “cross-border supply of services” means the supply of a service:

(i) from the territory of a Party into the territory of the other Party; or

(ii) in the territory of a Party to the service consumer of the other Party;

(d) “economic activities” include activities of an industrial, commercial and professional character and activities of craftsmen, but do not include activities performed in the exercise of governmental authority;

(e) “enterprise” means a juridical person, branch3 or representative office set up through establishment;

(f) “establishment” means the setting up, including the acquisition, of a juridical person or creation of a branch or a representative office in the Union or in Viet Nam, respectively4, with a view to establishing or maintaining lasting economic links;

(g) “ground handling services” means the supply at an airport of the following services: airline representation, administration and supervision; passenger handling; baggage handling; ramp services; catering; air cargo and mail handling; fuelling of an aircraft, aircraft servicing and cleaning; surface transport; flight operation, crew administration and flight planning. Ground handling services do not include security, aircraft repair and maintenance, or management or operation of essential centralised airport infrastructure such as de-icing facilities, fuel distribution systems, baggage handling systems, and fixed intra-airport transport systems;

(h) “investor” means a natural person or a juridical person of a Party that seeks to establish5, is establishing or has established an enterprise in the territory of the other Party;

(i) “juridical person” means any legal entity duly constituted or otherwise organised under applicable law, whether for profit or otherwise, and whether privately-owned or governmentally-owned, including any corporation, trust, partnership, joint venture, sole proprietorship or association;

(j) “juridical person of a Party” means a juridical person of the Union or a juridical person of Viet Nam, set up in accordance with the domestic laws and regulations of the Union or its Member States, or of Viet Nam, respectively, and engaged in substantive business operations6 in the territory of the Union or of Viet Nam, respectively;

(k) “measures adopted or maintained by a Party” means measures taken by:

(i) central, regional or local governments and authorities; and

(ii) non-governmental bodies in the exercise of powers delegated by central, regional or local governments or authorities;

(l) “natural person” means a natural person of a Party as defined in subparagraph (h) of Article 1.5;

(m) “operation” means, with respect to an enterprise, the conduct, management, maintenance, use, enjoyment, sale or other forms of disposal of the enterprise;7

(n) “selling and marketing of air transport services” means opportunities for the air carrier concerned to freely sell and market its air transport services, including all aspects of marketing such as market research, advertising and distribution; those activities do not include the pricing of air transport services nor the applicable conditions;

(o) “services” include any service in any sector except services supplied in the exercise of governmental authority;

(p) “services supplied and activities performed in the exercise of governmental authority” means services supplied or activities performed neither on a commercial basis nor in competition with one or more economic operators;

(q) “service supplier” of a Party means any natural or juridical person of a Party that supplies a service; and

(r) “subsidiary” of a juridical person of a Party means a juridical person which is controlled by another juridical person of that Party in accordance with its domestic laws and regulations.8

2. A juridical person is:

(a) “owned” by natural or juridical persons of one of the Parties if more than 50 per cent of the equity interest in it is beneficially owned by persons of that Party; or

(b) “controlled” by natural or juridical persons of one of the Parties if such persons have the power to name a majority of its directors or otherwise to legally direct its actions.

3. Notwithstanding the definition of a “juridical person of a Party” in subparagraph 1(j), shipping companies established outside the Union or Viet Nam and controlled by nationals of a Member State of the Union or of Vietnam, respectively, shall also be covered by this Chapter if their vessels are registered in accordance with the respective domestic laws and regulations in a Member State or in Viet Nam and fly the flag of that Member State or of Viet Nam, respectively.

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CHAPTER 9: GOVERNMENT PROCUREMENT

ARTICLE 9.1

Definitions

For the purposes of this Chapter:

(a) “commercial goods or services” means goods or services of a type generally sold or offered for sale in the commercial marketplace to, and customarily purchased by, non-governmental buyers for non-governmental purposes;

(b) “construction service” means a service that has as its objective the realisation by whatever means of civil or building works based on Division 51 of the United Nations Provisional Central Product Classification (CPC);

(c) “electronic auction” means an iterative process that involves the use of electronic means for the presentation by suppliers of either new prices, or new values for quantifiable non-price elements of the tender related to the evaluation criteria, or both, resulting in a ranking or re-ranking of tenders;

(d) “government procurement” means the process by which a procuring entity as defined in subparagraph (l) obtains the use of or acquires goods or services, or any combination thereof, for governmental purposes and not with a view to commercial sale or resale or use in the production or supply of goods or services for commercial sale or resale;

(e) “in writing” or “written” means any worded or numbered expression that can be read, reproduced and later communicated, and may include electronically transmitted and stored information;

(f) “limited tendering” means a procurement method whereby the procuring entity contacts a supplier or suppliers of its choice;

(g) “measure” means any law, regulation, administrative guidance or practice, or any action of a procuring entity relating to a covered procurement;

(h) “multi-use list” means a list of suppliers that a procuring entity has determined satisfy the conditions for participation in that list, and that the procuring entity intends to use more than once;

(i) “notice of intended procurement” means a notice published by a procuring entity inviting interested suppliers to submit a request for participation, a tender, or both;

(j) “offset” means any condition or undertaking that encourages local development or improves a Party’s balance-of-payments accounts, such as the use of domestic content, of domestic suppliers, the licensing and transfer of technology, investment, counter-trade and similar action or requirement;

(k) “open tendering” means a procurement method whereby all interested suppliers may submit a tender;

(l) “procuring entity” means an entity listed in each Party’s Annex to this Chapter;

(m) “publish” means to disseminate information in paper format or by electronic means that is distributed widely and is readily accessible to the general public;

(n) “qualified supplier” means a supplier that a procuring entity recognises as having satisfied the conditions for participation;

(o) “selective tendering” means a procurement method whereby only qualified suppliers are invited by the procuring entity to submit a tender;

(p) “services” includes construction services, unless otherwise specified;

(q) “supplier” means a person or group of persons that provides or could provide goods or services to a procuring entity; and

(r) “technical specification” means a tendering requirement that:

(a) sets out the characteristics of:

(i) goods to be procured, including quality, performance, safety and dimensions, or the processes and methods for their production; or

(ii) services to be procured, including quality, performance and safety or the processes or methods for their provision; or

(b) addresses terminology, symbols, packaging, marking or labelling requirements, as they apply to a good or service.

ARTICLE 9.2

Scope and Coverage

1. This Chapter applies to any measure regarding covered procurement, whether or not it is conducted exclusively or partially by electronic means.

2. For the purposes of this Chapter, “covered procurement” means government procurement:

(a) of goods, services, or any combination thereof, as specified in Annexes 9-A (Coverage of Government Procurement for the Union) and 9-B (Coverage of Government Procurement for Viet Nam);

(b) by any contractual means, including purchase, lease, and rental, with or without an option to buy;

(c) for which the value, as estimated in accordance with paragraphs 6 and 7, equals or exceeds the relevant threshold specified in each Party’s Annex to this Chapter, at the time of publication of a notice in accordance with Article 9.6 (Notices); and

(d) that is not otherwise excluded from coverage in paragraph 3, or each Party’s Annex to this Chapter, or by the effect of any other relevant parts of this Agreement.

3. Except where provided otherwise in each Party’s Annex to this Chapter, this Chapter does not apply to:

(a) the acquisition or rental of land, existing buildings or other immovable property or the rights thereon;

(b) non-contractual agreements or any form of assistance that a Party, including its procuring entities, provides, including cooperative agreements, grants, subsidies, loans, equity infusions, guarantees, fiscal incentives, and contributions in kind;

(c) the procurement or acquisition of fiscal agency or depository services, liquidation and management services for regulated financial institutions or services related to the sale, redemption and distribution of public debt, including loans and government bonds, notes and other securities;

(d) public employment contracts; and

(e) procurement conducted:

(i) for the specific purpose of providing international assistance, including development aid;

(ii) under the particular procedure or condition of an international organisation or funded by international or foreign grants, loans or other assistance where the recipient Party, including its procuring entities, is bound to apply particular procedures or conditions imposed by the international organisation or other donors for the benefit of their international or foreign grants, loans or other assistance. Where the procedures or conditions of the international organisation or donor do not restrict the participation of suppliers, the procurement shall be subject to paragraphs 1 and 2 of Article 9.4 (General Principles); or

(iii) under the particular procedure or condition of an international agreement relating to the stationing of troops or relating to the joint implementation by the signatory countries of a project.

4. Annex 9-A (Coverage of Government Procurement for the Union) and Annex 9-B (Coverage of Government Procurement for Viet Nam) specify in its Sections for each Party the following information:

(a) in Section A, the central government entities whose procurement is covered by this Chapter;

(b) in Section B, the sub-central government entities whose procurement is covered by this Chapter;

(c) in Section C, other entities whose procurement is covered by this Chapter; (d) in Section D, the goods covered by this Chapter;

(e) in Section E, the services, other than construction services, covered by this Chapter; (f) in Section F, the construction services covered by this Chapter;

(g) in Section G, any general notes; and

(h) in Section H, the means for publishing the procurement information.

5. Transitional measures for Viet Nam for the application of this Chapter are set out in Section I (Transitional Measures) of Annex 9-B (Coverage of Government Procurement for Viet Nam).

6. If the domestic legislation of a Party allows a covered procurement to be carried out on behalf of the procuring entity by other entities or persons whose procurement is not covered with respect to the goods and services concerned, the provisions of this Chapter equally apply.

Valuation

7. In estimating the value of a procurement for the purpose of ascertaining whether it is a covered procurement, a procuring entity shall:

(a) neither divide a procurement into separate procurements nor select or use a particular valuation method for estimating the value of a procurement with the intention of totally or partially excluding it from the application of this Chapter; and

(b) include the estimated maximum total value of the procurement over its entire duration, whether this procurement is awarded to one or more suppliers at the same time or over a given period of time, taking into account all forms of remuneration, including:

(i) premiums, fees, commissions and interest; and

(ii) the total value of any option clause.

8. For recurring contracts that consist, due to an individual requirement of the procurement, in awarding more than one contract, or in awarding contracts in separate parts, the calculation of the estimated maximum total value shall be based on:

(a) the value of recurring contracts of the same type of good or service awarded during the preceding 12 months or the procuring entity’s preceding fiscal year, adjusted, where possible, to take into account anticipated changes in the quantity or value of the good or service being procured over the following 12 months; or

(b) the estimated value of recurring contracts of the same type of good or service to be awarded during the 12 months following the initial contract award or the procuring entity’s fiscal year.

ARTICLE 9.3

Security and General Exceptions

1. Nothing in this Agreement shall be construed as preventing a Party from taking any action or not disclosing any information that it considers necessary for the protection of its essential security interests relating to the procurement of arms, ammunition or war materials, or to procurement indispensable for national security or for national defence purposes.

2. Subject to the requirement that such measures are not applied in a manner which would constitute a disguised restriction on international trade, nothing in this Agreement shall be construed as preventing a Party from imposing or enforcing measures:

(a) necessary to protect public morals, order or safety;

(b) necessary to protect human, animal or plant life or health;

(c) necessary to protect intellectual property; or

(d) relating to goods or services of persons with disabilities, philanthropic institutions, non- profit institutions carrying out philanthropic activities or prison labour.

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