Brussels, 19/05/2011 (Agence Europe) - The possibility of negotiations being opened on a trade pact between the EU and Vietnam that was glimpsed last year has little chance of becoming a reality in the short term. Facing domestic political and economic problems, Hanoi is wary of committing itself for fear of weakening the country.
Negotiations on a bilateral free-trade agreement between the EU and Vietnam were ended virtually as soon as Trade Commissioner Karel De Gucht and Vietnamese Prime Minister Nguyen Tan Dung agreed to launch them in March 2010. In choppy economic waters, the leader of the Vietnamese Communist party has been forced to abandon his strategy of opening up to the outside, a strategy which will also see Vietnam engage in a transpacific partnership with the United States.
A recent exchange between the trade adviser of the EU delegation to Vietnam Jean-Jacques Bouflet and Nguyen Canh Cuong, an official with the Vietnamese Trade Ministry, reported in the Saigon Times Daily on 16 May, confirms the current gap between Hanoi and Brussels. To the fears expressed by the Vietnamese side that an agreement might swell the country's trade deficit, Bouflet replied that the EU was not responsible for the straits in which Vietnam currently finds itself - 90% of the blame could be laid at China's door. On the contrary, imports of European machinery and equipment would help the Vietnamese economy, he said, as would foreign direct investment from the EU. In addition, a free-trade agreement would be a far better option for Vietnamese exporters than the EU's system of generalised preferences, currently being reworked. Accepting that a free-trade deal would help improve the competitiveness of Vietnamese goods imported into the EU, Cuong confirmed Prime Minister Dung's determination to negotiate just such an agreement, and to conclude it by the end of this year, as the Commission would also like. Behind the scenes, however, the Vietnamese official pointed to several stumbling blocks, including the difference in the European and Vietnamese approaches on the scope of the agreement and the extent of the liberalisation expected. The EU would like an agreement to cover at least 90% of goods traded.
Bilateral trade increased by over 12% annually between 2004 and 2008, and was worth $12 billion in 2010. The EU is now Vietnam's second largest export market. (E.H./transl.rt)