The deal, which follows 2½ years of talks, would remove nearly all tariffs on goods traded between the two regions over seven to 10 years, as well as barriers to trade in services, investment and government procurement.

It comes as U.S. negotiators struggle to wrap up their own trade agreement with 11 Pacific nations including Vietnam.

Cecilia Malmström, the EU’s trade commissioner, said a deal was reached on Tuesday morning following a telephone conversation with her Vietnamese counterpart Vu Huy Hoang.

Speaking at a news conference, Ms. Malmström said the deal with Vietnam was “an important steppingstone” toward the bloc’s ultimate goal of signing a broader agreement with the Association of Southeast Asian Nations, an organization of 10 countries that includes Indonesia, Malaysia and Thailand.

Trade between the EU and Vietnam has increased threefold over the past decade to €28 billion annually, the commissioner said.

“Over 31 million jobs in Europe depend on exports, so having easier access to a growing and fast-developing market like Vietnam, with its 90 million consumers, is great news,” she said.

The negotiating teams will now settle some remaining technical issues and finalize the legal text, which needs to be approved by national EU governments and the European Parliament. It is likely to enter into force in late 2017 or 2018.

The EU is pursuing several other major trade deals in Asia, including with India and Japan. Ms. Malmström said she was “very committed” to concluding talks with Tokyo, but that it was too early to say if a deal would be reached by year-end. Senior EU negotiators are also due to meet with their Indian counterparts in September to decide whether to restart talks, which were opened in 2007 but have since stalled.

Ms. Malmström was asked about efforts by U.S. negotiators to complete a major Pacific trade agreement, which ended Friday without resolution amid deep differences over trade in dairy and other products. U.S. and other officials had hoped to wrap up the final contours of the 12-nation Trans-Pacific Partnership last week.

Ms. Malmström said she expected that deal to be concluded soon despite “some stumbling blocks.”

“It’s not a competition,” she added of comparisons between U.S. and EU trade deals in Asia.

The EU and U.S. are also working on their own deal to create the world’s biggest free-trade zone. Negotiators held a 10th round of talks in Brussels last month toward the so-called trans-Atlantic Trade and Investment Partnership, or TTIP, but were unable to make “a big break-though,” Ms. Malmström said. Further rounds are now expected in October and probably December.

“We will do everything to try to wrap this up in 2016,” she said.

By Tom Fairless - The Wall Street News - August. 4, 2015

Brussels seals trade accord with Vietnam

The EU concluded a major trade agreement with Vietnam on Tuesday, opening up one of Asia’s fastest-growing economies and a consumer market of more than 90m people to European companies.

During two-and-a-half years of talks between Brussels and Hanoi, negotiators were forced to address human rights concerns and fears that China would use Vietnam as a backdoor for cheap textile imports into the EU.

Vietnam’s economy grew 5.4 per cent last year to $170bn. It is forecast to grow by 82 per cent over the next five years, according to the latest figures from the International Monetary Fund, fuelled by strong exports, a youthful population and an increasing emphasis on technology.

Trade between the two economies totalled more than €28bn last year and the EU is Vietnam’s second-biggest trading partner after China. The EU imported €22bn worth of goods from Vietnam in 2014.

The deal, which requires approval from the EU parliament, will remove 99 per cent of tariffs between Europe and Vietnam over the next decade.

“Over 31m jobs in Europe depend on exports, so having easier access to a growing and fast-developing market like Vietnam, with its 90m consumers, is great news,” said Cecilia Malmström, the EU’s trade commissioner.

European clothing, footwear and sportswear companies have been vocal advocates of the deal, which will slash the tariffs on goods made in their Vietnamese factories.

However, textiles also proved to be a sticking point because of fears that China would use Vietnam as a conduit through which to flood EU markets. For this reason, EU trade negotiators said that they had introduced strict “rules of origin” safeguards, ensuring that raw materials from China must undergo sufficient workmanship in Vietnam before they can be re-exported to Europe.

Ms Malmström has also had to weather criticism from rights groups and politicians, who have criticised the EU for negotiating such a wide-ranging deal with the one-party communist state, which has a poor record on civil liberties. In March, the EU’s ombudsman admonished the European Commission for not conducting a prior human rights impact assessment before pressing ahead with the deal.

However, Ms Malmström has defended the EU’s approach, stressing that increased trade is a catalyst for socio-economic change and arguing that Brussels would maintain a strict focus on rights concerns. She noted that the EU would have powers to suspend the deal if it had concerns that Vietnam’s record on human rights was deteriorating.

Ms Malmström played down suggestions that a deal with Vietnam was a blueprint for a similar deal with China, which she insisted was “not on the agenda at the moment”.

A deal with Vietnam has long been seen as one of the EU’s more straightforward deals. Negotiations over an accord with the US are far more complex and politically sensitive, although Ms Malmström vowed to try to “wrap up” an agreement next year.

The EU said that the Vietnam deal would allow European companies to bid for big public contracts such as roads and ports in the country. It will also open up the service sector in spheres such as banking and insurance.

Some technology executives had expressed concerns that Vietnam was moving to protect its nascent technology industry with new legislation. Brussels insisted that there had been progress on these non-tariff barriers and predicted that European businesses would enjoy greater access in sectors such as “electrical appliances, IT, and food and drinks”.

The deal will safeguard the geographical indicators for European foods and drinks such as Rioja wine and Scotch whisky. Similarly, the EU will recognise names such as Buon Ma Thuot coffee. Vietnam is the world’s second-biggest coffee producer.

By Christian Oliver - The Financial Times - August 4, 2015