The EU strengthens its economic partnership with Vietnam looking to the ASEAN in the future

EU – Vietnam free trade agreement will boost the European presence in the entire ASEAN market (Source: The Economy Club)

The European Parliament approved the EU – Vietnam free trade agreement as a sign of Brussels’ major involvement in the ASEAN market. The document will help to set trade standards in the Southeast Asian region and could lead to a future multilateral trade and investment agreement. This trade agreement demonstrates that Brussels is building its way to becoming one of the main geopolitical actors in the ASEAN.

The deal between the two parties was defined as the most modern and ambitious agreement which Brussels has ever concluded with a developing country.  The majority of the members of the European Parliament (401) voted in favour of the EU – Vietnam free trade agreement, while 192 were against the deal and 40 preferred to abstain.

For Brussels, the trade agreement is a solid message in favour of free, fair and reciprocal trade during a period marked by growing protectionist tendencies and important challenges for rules-based multilateral trade. The agreement will eliminate practically all customs duties between the two parties in the next ten years, including on the main European export products to Vietnam: machinery, cars and chemicals. The agreement extends to services such as banks, maritime transport and post offices, for which EU companies will have better access. EU companies will also be able to participate in public tenders from the Vietnamese government and from several cities, including Hanoi. It also safeguards 169 emblematic European products, such as Parmigiano Reggiano, Champagne or Rioja wine.

In addition, the agreement is a tool to protect the environment and support social progress in Vietnam, including workers’ rights. In fact, the text commits Vietnam to apply the Paris Agreement and to definitively approve two bills on the abolition of forced labour and freedom of association, respectively by 2020 and 2023.

Finally, the commercial agreement provides for a suspension clause in case of violation of human rights.

In a separate vote, the European Parliament approved an investment protection agreement with 407 votes in favour, 188 against and 53 abstentions, which provides for an investment court system with independent judges to resolve disputes between investors and the state.

Why this agreement matters? Because it underlines the European Union’s will to become a geopolitical actor in Vietnam and in general in the ASEAN which could become the fourth-largest economy in the world by 2050.  The EU presence and trade in the region represents also a challenge for China and the United States, two super-powers which have tried to influence local sociopolitical and economic dynamics and sign agreements with members of the ASEAN.