International Relations

The EU-Vietnam Free Trade Agreement strengthens European influence in Southeast Asia

When it comes to Southeast Asian countries, the EU has lacked a coherent trade policy for a long time – with the exception of its trade deal with South Korea. Considering the amount of imported products and parts that make their way to the EU from this area of the world, this is problematic, and it weakens European soft power influence in Southeast Asia.

There is some understandable reticence in getting involved – after all, the Southeast Asian market is known for its exploitation of labor. Aside from the obvious humanitarian cost, this takes down prices artificially, creating unfair competition against EU businesses. However, this refusal to engage with the relevant countries curtails the European Union’s transformative power: wouldn’t it be better to effectively regulate the inflow of goods from that area, applying severe labor rights and production quality standards? This would protect workers against exploitation and allow native businesses to compete in European markets, thus bringing prosperity to these countries and still keeping prices low for customers, thanks to the abolition of tariffs. It appears that the EU now shares this view: the EVFTA (EU-Vietnam Free Trade Agreement) will be ratified in 2018.

Image result for vietnam
Vietnam.

European-Vietnamese relations haven’t always been very amicable. During the war years (1963-1975), no European country took arms against the Communist government in Hanoi, which would later win the war, but they were part of the American bloc of alliances, and therefore considered potential enemies. After the bloody conflict came to a close, the then-European Community was quick to restore diplomatic ties, opening its embassy in the Vietnamese capital in 1990, five years before the US did the same.

In 1996, a Framework Cooperation Agreement (FCA), covering a wide range of topics, from the economy to human rights, entered into force. It was followed in 2012 by a Framework Agreement on Comprehensive Partnership and Cooperation (PCA) and finally by the EVFTA, whose negotiations started in 2012 and were conducted by European Commissioner Cecilia Maelstrom and Chief Negotiator Mauro Petriccione.

Image result for parmigiano reggiano
Parmigiano Reggiano.

The Agreement will eliminate 99% of trade barriers, both economic (tariffs) and technical (regulations), protect European geographical indications (e.g. Parmigiano Reggiano, Champagne, Scotch Whisky…), allow European companies to bid for Vietnamese public contracts, increase controls and transparency on Vietnamese State Owned Enterprises (SOEs), especially when competing against European companies, protect intellectual property rights and establish a mechanism to resolve disagreements between the two signatories.

The Agreement will also take into consideration two aspects of great importance to EU citizens: protection of the environment and respect of human rights, in compliance with the UN Charter of 1945, which both parties signed.

Image result for trump
Donald Trump.

It is very important to notice that, through these agreements and future ones already being planned, the EU aims to establish a solid network of commercial relationships with ASEAN countries, much like what the US tried to do with the Trans-Pacific Partnership (TPP) before Trump became President.

Europe is finally stepping into the void left by Trump’s America in the international network of trade. This is a solid platform for the Union to play an important role in the future of this strategically important region: these countries are experiencing impressively high growth rates – they are the real “winners” of globalization- and thus their importance in the world economy is set to steadily grow.

Guest article by Federico Bindi. 

Sources:

http://ec.europa.eu/trade/policy/countries-and-regions/countries/vietnam/

http://ec.europa.eu/trade/policy/countries-and-regions/negotiations-and-agreements/#_in-place

http://evfta.com/info-center/evfta/

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