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EU seeks FTA with Vietnam
Philippe Meyer, Head of the European Union’s Free Trade Agreement negotiation mission, told Vietnam’s press on October 14 that as the negotiations for the free trade agreement (FTA) between the EU and ASEAN have been going slowly, the EU is considering moving ahead by kicking off separate negotiations with some ASEAN’s countries that are ready to open their markets, including Vietnam.
After a series of delays, the EU and ASEAN resumes the 6th negotiation round on the FTA between the two blocs on October 15.
The negotiations between the two groups began two years ago, however, to date the EU and ASEAN still have not been able to reach a final agreement. The tardiness in negotiations has made the EU become impatient. It fears that the negotiation process will end with unpromising results. Meanwhile, some ASEAN’s countries have expressed their willingness to conduct separate negotiations with the EU.
Meyer said that the EU has prepared another scenario in case the EU-ASEAN negotiations go to a deadlock. The EU will push up FTA negotiations with some countries, though it will not give up others.
“We initially hoped to end the FTA negotiations with ASEAN within two years since the negotiations were kicked off in 2006,” Mr. Meyer said, adding that the negotiations have lasted two years already, and if it were to take four or five years, little would be accomplished.
It seems that ASEAN countries still cannot reach a harmonization in the viewpoints of market opening, which has made the negotiation process go more slowly than initially expected.
The tardiness will not benefit anyone if the ten ASEAN’s countries choose to open markets so slowly.
Meyer also said that Vietnam is capable to be in the group which can conduct quick negotiations with the EU. However, Vietnam has not announced its intention to conduct separate negotiations with the EU because Vietnam is now acting as the coordinator for EU-ASEAN FTA negotiations.
However, he said that he cannot see any conflict of interest in the fact that Vietnam may have separate negotiations with the EU. Vietnam itself also conducted bilateral FTA negotiations with Japan, while Thailand also had similar negotiations with other partners. In principle, there exists two ways of accessing agreement, bilateral and regional.
Meyer pointed out that the best solution for now, especially in the context of the world’s economic recession, is to open markets. If Vietnam has an FTA with the EU, Vietnam will have more choices and it will be able to better control the prices.
Answering to the question, what disadvantages Vietnam will have to face after Vietnam opens its market to the EU, especially when Vietnam’s trade deficit is up to $20bil, Meyer affirmed that the EU is not a threat to Vietnam.
Vietnam’s trade deficit comes from trade with other partners, not the EU, he said.
Meanwhile, the opportunities will be very big with FTA. Currently, Vietnam bears the tax rate of 7% when it exports shoes to the EU. However, if Vietnam has an FTA with the EU, the tax rate would be zero. The tax rate would also drop to zero with the t-shirt tax rate to the EU, which is currently imposed at 13%.
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