EU member states have given the European Commission the green light to begin bilateral Free Trade Agreement (FTA) negotiations with the different countries in the Association of South East Asian Nations (ASEAN). ASEAN is made up of Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam. The member state authorisation came on 22 December.

The first country to be impacted by these bilateral agreements is Singapore because, of all the ASEAN members, it is the EU’s most important trade partner. Negotiations are expected to begin in early 2010.

The main aim of these future free trade agreements is the gradual reduction and even elimination of tariff barriers as well as other regulations and technical obstacles which hinder trade and investment in various ASEAN markets. Their elimination could strengthen trade relations between the EU and the region in question.

European Trade Commissioner Benita Ferrero-Waldner made a point of congratulating the Council for this decision. “The creation of new trade outlets for European companies in the dynamic ASEAN countries will increase the competitiveness not only of manufacturers, but also farmers and service providers within the EU,” she maintained.

ASEAN is the EU’s third biggest trade partner (after the United States and China). Between 2004 and 2008, trade in goods and services between the two regions increased by more than 25% on average and amounted to a total of 175 billion euro in 2008. The negotiations for an inter-regional Free Trade Area with the ASEAN countries originally began in 2007, but then stopped in March 2009. EU member states then asked the Commission to reopen these negotiations but on a one-to-one basis with the individual countries.

The ultimate aim, however, is to reach agreement with the whole of the ASEAN region by means of bilateral agreements.

Background

The EU has recently embarked on more intense negotiations with Asia. An agreement with South Korea was concluded in October 2009 (although it has not yet been ratified and the ratification may be held back by Seoul - see Europolitics3882). It is also the most ambitious agreement ever negotiated by the EU. After South Korea, the EU turned to India with the aim of improving bilateral relations (see Europolitics3847). It is felt that these targeted countries need to be re-integrated into the European jobs and growth strategy ‘A competitive Europe in a global economy’.

Singapore is also included in this strategy, the aim of which is to conclude free trade agreements to open new markets in the large Asian economies for European exporters.