News Room - Business/Economics

Posted on 17 Oct 2008

EU-ASEAN could hit 20% trade growth

The Free Trade Agreement (FTA) between the EU and ASEAN plays a significant role in bolstering mutual trade. Nations in the two blocks have been in negotiations hoping to reach final agreements soon. Viet Nam News reporter Phuong Hoa and some other journalists talked with Philippe Meyer, directorate general for trade of the European Commission and head of the European negotiation delegation for the FTA about related issues. He is here to participate in the sixth round of negotiations of the EU-ASEAN FTA, which started in Ha Noi yesterday and will end on Friday.

What are the major benefits for Viet Nam in joining the FTA?

The EU is a good and fair partner for Viet Nam, because we offered the Generalised System of Preferences (GSP) to a number of developing countries, including Viet Nam.

Basically, under the GSP, we decrease import duties, lower import tariffs and will possibly facilitate your exports to the EU. We offered Viet Nam GSP on half of its total products exporting to the EU.

Viet Nam is doing very well and it has managed to diversify and increase exports.

For example, the average duties on shoes imported to the EU is about 6-7 per cent, but with the GSP, the rate is only 3.5 per cent. With FTA, we'll completely remove import duties, implementing zero tariffs for 90-100 per cent of goods shipped from Viet Nam.

There will be an improvement of access of Vietnamese products to our market. In turn, a number of European products and services arriving in Viet Nam will help sharpen competition and decrease prices for consumers.

Could you say something about the process of the talks?

We are at a difficult stage at the moment because we need to see what options we'll take. There are many options on the table as we're proceeding at the same pace with all 10 ASEAN countries. This makes it slow work.

Or we could choose a solution we've successfully implemented in our community and start with those ready to do something.

We think, we should not wait for five, six or seven years to complete the talks.

Viet Nam opened its doors wide in becoming a full member of WTO. Does the EU expect Viet Nam to open more by signing the FTA?

There is big difference between liberalisation in the World Trade Organisation (WTO) and bilateral negotiation. In WTO, we do not remove tariffs completely, and WTO's liberation keeps slow and progressive.

For the FTA, what we want is real integration of our markets. For example, within a short term period of less than seven years, we want to completely remove tariffs, we want to move freely. Not only by removing tariffs, but also addressing a number of non-tariff barriers.

After WTO's access, Viet Nam's trade deficit is expected to be US$20 billion this year. Will the opened market under our current conditions adversely impact the trade deficit?

Trade deficit is a result of trade partners, not the EU. Indeed, we have trade deficit with Viet Nam. Because we do not compete for the same products, so there is great concern.

You should think of opportunities. If the FTA is reached, some 6-7 per cent duties for Vietnamese products will be zero.

Why did the European Commission (EC) still make the decision to review the anti-dumping tariffs on Vietnamese shoes despite the opposition of nine European associations and 15 of the 27 member countries?

The decision is surveyed and launched automatically, based on various criteria. We organise the circumstance, because it's important to know where the member states position themselves. This is the EC's responsibility.

And we can make a move when there is a complaint in the community. Without taking fair action, we may have to be taken to court. So we have to monitor the situation and it completely often takes about 12-15 months; but our trade commissioner has promised to complete it within one year before leaving. Probably.

Actually, anti-dumping duties started two years ago, and the anti-dumping duties for China is 16 per cent while Viet Nam's is 10 per cent. This is not a gift to Viet Nam, but simply that the situation concerns China more.

Viet Nam should improve fair competition between companies.

If Viet Nam joins the FTA, will the country face the same possibility of anti-dumping duties?

Anti-dumping and free trade are different things. Anti-dumping is when a company does not behave well, does not observe the rules of fair competition with others. So, it is not related to free trade. Anti-dumping measures can happen anytime.

Anti-dumping is accessed by making comparisons with the prices of many other manufacturers in the world.

Another factor is market economy status, and we can probably help Viet Nam achieve that status faster.

Only 8-9 per cent of Vietnamese exports to the EU are now affected by anti-dumping duties, which is not much.

What is your anticipation of growth rate in trade between the two blocks after the FTA is reached?

The trade will increase in the two regions. This is a question that I can not answer exactly, because it depends on the extension and liberalisation of ASEAN countries.

According to a study, made in 2006, the growth can only be calculated country by country, but on average the trade might increase 20 per cent and GDP of each nations is expected to rise by 2 per cent; and Viet Nam is at the average level.