The European Commissioner Karel De Gucht and Vietnamese Minister for Industry and Trade Vu Huy Hoang have officially launched negotiations for a free trade agreement (FTA) between the European Union (EU) and Vietnam.

Both sides are said to be seeking a comprehensive agreement covering tariff and non-tariff barriers as well as commitments on other trade related aspects, notably procurement, regulatory issues, competition, services, and sustainable development.

"I'm delighted to announce the opening of trade negotiations with Vietnam. The potential for both sides is enormous and the first negotiating round should take place just after the summer break,” said De Gucht.

In 2007, the EU member states agreed to launch negotiations on a region-to-region FTA with the Association of Southeast Asian Nations (ASEAN), but these were put on hold in 2009. In December 2009, the European Commission (EC) decided to pursue free trade talks with ASEAN countries in a bilateral format, whilst preserving the strategic objective of a region-to-region FTA for a later date.

Negotiations with Singapore and Malaysia began in March 2010 and October 2010 respectively. Vietnam will thus be the third partner of the EU in the ASEAN region with whom the EU has started negotiations on a free trade agreement.

The EU and Vietnam initialled a Partnership Cooperation Agreement in 2010, as a first step towards establishing closer economic and political ties, and the launch of FTA negotiations marks the next step in this relationship. Vietnam is the EU's fifth largest trading partner within ASEAN with total trade in goods of EUR18bn (USD22.5bn) last year, while the EU is Vietnam's 3rd largest trading partner (after China and the United States).

EU exports to Vietnam are dominated by high-tech products, including electrical machinery and equipment, aircraft, vehicles, pharmaceutical products and iron and steel. Vietnam's key export items, totalling some EUR12.8bn in 2011, include footwear, textiles and clothing, coffee, seafood and leather furniture.

The EU is also one of the largest foreign investors in Vietnam with investments worth around USD1.8bn, which represented more than 12% of Vietnam's total committed foreign direct investment in 2011.

However, after the decision to open talks with Vietnam, De Gucht added that “our door remains open. We are continuing our contacts with a number of other ASEAN member states, including Indonesia, the Philippines and Thailand, and Europe will be ready to move whenever they are."

June 27, 2012

Source:  Tax News

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