EU Trade Commissioner Karel De Gucht and Vietnamese Minister for Industry and Trade Vu Huy Hoang have concluded preparations for starting negotiations on a bilateral free trade agreement.
Meeting in the margins of the 11th ASEAN-EU Economic meeting in Phnom Penh last week, they concluded a scoping paper that covered the topics to be included in the future trade negotiations. The completion of this preparatory work is an important stepping stone towards launching trade negotiations with Vietnam because it sets out the framework for the trade negotiations.
“Today’s decision marks a clear desire to deepen trade relations and improve the business environment between the EU and Vietnam. The EU and Vietnam are complementary economies with much to gain from ever closer cooperation. In stepping up our trade relations, we will provide new opportunities for importers, exporters and consumers as well as contributing to generating growth in both economies.” said Commissioner De Gucht. “The EU is committed to increasing its engagement with dynamic Asian emerging markets to boost trade and growth.”
Both sides have agreed on ambitious targets for the areas to be covered in the upcoming negotiations for a free trade agreement. The negotiations will cover a broad range of issues including elimination of import tariffs, trade in services, non-tariff barriers to trade (such as technical barriers or the rules on foodstuffs) and the trade aspects of rules relating to intellectual property and competition.
The aim of the preparatory work is to make sure that both parties go into the negotiation with the same objectives. The EU has conducted similar preparatory work, known as “scoping exercises”, with other countries, which have proven useful for subsequent negotiations as basic parameters are set from the beginning.
The Commission will now consult with Member States before the European Union and Vietnam launch the negotiations.
Vietnam would be the third partner of the EU in the ASEAN region, after Singapore and Malaysia, with whom it has started negotiations on a free trade agreement.
Vietnam is one of the 10 members of the Association of South East Asian Nations. The ASEAN countries together are the EU’s third largest trading partner outside Europe with annual bilateral trade in goods and services of some € 175 billion.
After FTA negotiations between the EU and a group of ASEAN countries stalled, EU Member States in December 2009 gave the green light for the Commission to pursue negotiations towards free trade agreements with individual ASEAN countries, beginning with Singapore in March 2010, followed by Malaysia in October 2010. At the same time, the EU has not lost sight of the ultimate goal of achieving an agreement within a regional framework.
In 2011, EU-Vietnam trade in goods was worth over € 18 billion, with almost € 13 billion in exports from Vietnam to the EU, resulting in a € 7.6 billion trade surplus in Vietnam’s advantage. Vietnam’s key export items include footwear, textiles and clothing, coffee seafood, leather furniture while the EU exports were high tech products including electrical machinery and equipment, aircraft, vehicles, pharmaceutical products and iron and steel.
Vietnam is the EU’s fifth largest trading partner within ASEAN (and 35th out of the EU’s total trade). Conversely, the European Union is Vietnam’s 3rd largest trading partner (after China and the US).
The European Union is one of the largest investors in Vietnam (approx. US$ 1.767 billion which represented more than 12% of Vietnam’s total committed FDI in 2011 according to Vietnamese sources).
The European Union and Vietnam initialled a Partnership Cooperation Agreement in 2010, as a first step towards establishing closer economic and political ties.