The European Union has signed a landmark free-trade deal with Vietnam, a first of its kind with a developing country in Asia. It has called the deal, "the most ambitious free trade deal ever concluded with a developing country." The agreement was signed in Hanoi, three-and-a-half years after trade negotiations ended in December 2015.
The free trade agreement will eventually eliminate 99 per cent of tariffs, with some items cut over a 10-year period and other goods, notably agricultural products, limited by quotas. The deal is also expected to open up the public procurement and services markets, such as for the postal, banking and maritime sectors.
The deal still needs the approval of the European parliament, which is by no means a certainty given some lawmakers' concerns over Vietnam's human rights record. Vietnam has one of the region's fastest-growing economies, backed by robust exports and foreign investment. It has already signed about a dozen free trade pacts, including an 11-country deal to slash tariffs across much of the Asia-Pacific region, known as the Comprehensive and Progressive Agreement for Trans-Pacific. The EU is Vietnam's second-largest export market after the US, with main exports including garment and footwear products.
Last year, it exported $42.5bn worth of goods and services to the EU, with $13.8bn worth of goods coming the other way. Last week, the EU and South American trade bloc Mercosur also agreed a free-trade treaty following two decades of talks. The European Union now has deals with South Korea, Japan, and Singapore in Asia now, and is in talks with Indonesia, Malaysia, the Philippines, and Thailand. The Singapore deal is due to come into force this year.
