The European Union will sign a deal to remove virtually all customs duties on trade with Vietnam on Sunday, the EU Commission announced.
The accord was negotiated back in December 2015, but EU member states only gave their approval on Wednesday at a ministerial meeting.
EU trade commissioner Cecilia Malmstrom will travel to Hanoi at the weekend to sign the deal and the EU parliament is expected to ratify it later this year.
"I am very pleased to see that Member States have given a green light to our trade and investment agreements with Vietnam," Malmstrom said.
"Beyond the clear economic benefits, this deal also aims to strengthen respect for human rights as well as protecting the environment and workers' rights."
Vietnam hailed the agreement as "important" and "comprehensive".
"Investors from the EU will now have the opportunity to take advantage of a rising economy like Vietnam," Minister of Industry and Trade Tran Tuan Anh told reporters in Hanoi on Tuesday.
EU-Vietnam trade represents 50 billion euros ($57 billion) in goods and four billion inn services, and Europe is keen to secure access to 95 million consumers.
But Brussels has expressed concern in the past about the former French colony's human rights record.