The signing ceremony in Hanoi came just two days after the European Union had agreed to another, much bigger, free trade deal with four South American countries.

The latest deal would eliminate 99 percent of the tariffs on goods and services between the European and Vietnamese markets, although some tariffs would progressively be cut over a decade and some agricultural products would be limited by quotas.

“Good morning Vietnam!” Cecilia Malmstrom, the E.U.’s chief trade negotiator, wrote on Twitter hours before signing the deal with her counterpart, Tran Tuan Anh, Vietnam’s trade minister. Subscribe to With Interest

Catch up and prep for the week ahead with this newsletter of the most important business insights, delivered Sundays.

In a later statement, she said: “This is a strong statement for open, rules-based trade and another important agreement for the E.U. in South East Asia.”

The government of Vietnam, in a statement, hailed the agreement as a “historic moment.”

Negotiations between Vietnam and the European Union began in 2012 and were completed last year. After trade talks between the United States and the European Union broke down late in 2016, a newly elected President Trump vowed to protect American workers and goods. In reaction, the E.U. decided to become more assertive in reaching free trade agreements around the world, E.U. officials have said.

On the margins of the Group of 20 nations summit in Osaka, Japan, on Saturday, Jean-Claude Juncker, the president of the European Commission, said that during his five-year term, the E.U. had finalized trade agreements with 15 countries.

“Today, Europeans benefit from open trade with 72 countries,” he said, adding that “we need the G20 to improve economic cooperation between us.”

But some trade skeptics, including some in Europe, have expressed concerns over the E.U. signing a trade deal with a developing country like Vietnam.

Lora Verheecke, a Brussels-based activist for Friends of the Earth, an umbrella organization of environmentalist and human rights groups around the world, wrote in an opinion piece in the EU Observer last week that the European Union’s deal with Vietnam would “have dire consequences for human well-being and our ability to prevent climate and ecological breakdown.”

She said that “corporate courts” included in the deal were likely to favor “big business and rich individuals” over citizens and the public interest in Vietnam.

Vietnam, which has one of the fastest-growing economies in Southeast Asia, projects that its exports to the E.U., worth nearly 50 billion euros in 2018, will increase by over 40 percent by 2025 under the new deal.

The deal still must be ratified by both the European Parliament and the parliaments of the European Union’s 28 member states, as well as by Vietnam’s National Assembly.

“We hope for a swift ratification,” the European Union said in a statement on Sunday, “in order to allow our businesses, workers, farmers and consumers to reap their benefits as soon as possible.”

By Milan Schreuer - The New York Times - June 30, 2019

__

EU signs landmark trade deal with Vietnam

Agreement to cut 99% of tariffs is first with developing country in Asia and swiftly follows deal with South American bloc

The European Union has signed a landmark free-trade deal with Vietnam, the first of its kind with a developing country in Asia, paving the way for tariff cuts on almost all goods.

The EU has described the deal as “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% of tariffs, with some items cut over a 10-year period and other goods, notably agricultural products, limited by quotas. It 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. In 2018, it exported $42.5bn worth of goods and services to the EU, with $13.8bn worth of goods coming the other way, official data shows.

On Friday, the EU and South American trade bloc Mercosur agreed a free-trade treaty following two decades of talks.

In Asia, the EU now has deals with South Korea, Japan and Singapore, and has embarked on talks with Indonesia, Malaysia, the Philippines and Thailand. The Singapore deal is due to come into force this year.

Reuters - June 30, 2019