VNEconomyNews.com - The progress in negotiations over a free trade agreement between has Vietnam and EU almost ground to a halt since senior officials of both sides early last year agreed to start the talks.
In March 2010, Prime Minister Nguyen Tan Dung and EU Trade Commissioner Karel De Gucht agreed to start bilateral negotiations. However, since then, no specific progress has been seen, and FTA talks haven’t begun.
Minister-counselor for the Delegation of the European Union to Vietnam Jean Jacques Bouflet raised many questions about the slowness at a conference in HCMC on Wednesday.
“I don’t understand why the negotiation doesn’t reach any specific progresses,” he said, brushing aside concerns that an FTA might swell Vietnam’s trade deficit.
“We are not the ones who caused Vietnam’s problem of trade deficit. 90% of Vietnam’s deficit in 2010 was with China,” the official said, adding that Vietnam’s imports of EU equipment and machinery would benefit its economy.
He iterated that the possible trade agreement won’t cause trade deficit for Vietnam but an increase of EU investment in the country, so there should be no reason for the country to hesitate about the FTA.
In addition, the FTA is considered a good solution for Vietnam’s exporters who otherwise may face difficulties when the EU is revising its Generalized System of Preferences (GSP).
The EU counselor’s points were shared by Nguyen Canh Cuong, Deputy Director General of the European Market Department under the Ministry of Industry and Trade of Vietnam.
The agreement is expected to help improve the competitiveness of Vietnamese goods imported into the 27-nation community, Cuong said.
Cuong also informed of good news that Prime Minister Nguyen Tan Dung had re-emphasized the country’s determination to boost FTA negotiations with the EU. The Government leader in a recent meeting of the trade ministry set a target of concluding an FTA between Vietnam and the EU this year.
However, Cuong of the trade ministry pointed the finger at other hindrances.
The difference in approach is hindering the negotiation which has yet to commence, Cuong said. He explained to the Daily on the sidelines of the conference that the current technical difficulty is the scope and depth of coverage of the trade liberalization the EU side insisted on.
“This approach for negotiation is completely new for Vietnam. For us, when the negotiations have yet to start, no binding terms should be made,” he said.
However, with the EU’s approach, what are outlined in scoping papers will be put in FTA negotiations as obligatory.
“That approach is inflexible and time-consuming. It needs a more flexible one to overcome the hurdle,” Cuong said.
Bouflet, however, seemed not to agree, saying that other ASEAN countries, such as Singapore and Malaysia, were going to conclude bilateral trade agreements with EU. Of course, the scoping exercises were made before FTA talks, he said.
“An FTA between EU and Singapore is expected to conclude this year, and an FTA with Malaysia is going on and can be concluded next year. It’s up to Vietnam to decide when it’s ready to meet the standard,” he said.
In addition, the official emphasized the EU’s ambition with substantial liberalization, especially for services which are now its strong point.
“It’s clear that the EU will not open bilateral negotiation with the country that is not ready to commit itself to an ambitious and swift liberalization,” he said.
The EU official said that the EU wanted an FTA with openness as wide as possible. For example, at least 90% of goods should be liberalized in trade, the official explained.
The EU is now the second biggest importing market of Vietnamese goods, with the two-way trade last year reaching US$12 billion.