Trade talks open with Hanoi
By Lénaïc Vaudin d’Imécourt | Tuesday 26 June 2012
The European Commission opened negotiations on a free trade agreement (FTA) with Vietnam, on 26 June, covering tariffs, non-tariff barriers as well as procurement, competition and services. Vietnam is the third ASEAN (Association of Southeast Asian Nations) country to negotiate such an agreement with the EU, alongside Singapore and Malaysia.
“The potential for both sides is enormous,” Trade Commissioner Karel De Gucht said. Overall trade in goods between the two regions represented €18 billion in 2011 and Vietnam is currently the EU’s fifth largest trading partner within the ASEAN. The EU is also Vietnam’s third largest trading partner.
According to the Commission, EU exports are dominated by high-tech products, which include electrical machinery and equipment as well as pharmaceutical products and iron and steel. Vietnam mainly exports footwear, textiles and clothing to the EU.
The bloc was one of the four biggest investors in Vietnam in 2011, with investments worth around US$1.8 billion (12% of the country’s total committed foreign direct investment). The announcement of the launch of trade negotiations with the EU is expected to boost said investments with Hanoi as they will be included in the scope of the negotiations.
The first round of talks is scheduled to take place “just after the summer break,” De Gucht said.
Partnership and cooperation agreement
On 27 June, the EU will also sign a partnership and cooperation agreement (PCA) with Vietnam, which is aimed at broadening the scope of cooperation in areas such as trade, the environment, energy, science, good governance and tourism.
“The EU has strong stakes in the success of Vietnam’s reforms,” High Representative Catherine Ashton noted. “It is committed to forging an upgraded, broader and more diversified relationship with Vietnam, a partner willing to take on increasing responsibilities on the world scene, a central actor of ASEAN and a particularly dynamic economy,” she added.
According to the EU, the PCA’s trade and investment principles, completed by a Vietnam-EU FTA, will bring “two-way trade and investment to new levels”.
The PCA will also focus on cooperation in the areas of the fight against terrorism, organised crime and corruption, as well as non-proliferation of weapons of mass destruction.
The agreement was concluded in October 2010, and after it is signed, on 27 June, it will replace a cooperation agreement dating back to 1995. The new agreement will then be ratified by all 27 EU member states and submitted to the European Parliament before it can fully enter into force.
The PCA is “a first step towards establishing closer economic and political ties. The launch of FTA negotiations marks the next step in this relationship,” the Commission explained.