“Today the EU and Vietnam have reached an agreement in principle for a free trade agreement (FTA), after two and a half years of intense negotiations”, the statement read.
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Malmstroem said the negotiating teams will now work on the finer points, “settle some remaining technical issues and finalise the legal text”.
Malmstroem said the agreement, the first that the EU has concluded with a developing country, will remove more than 99% of tariffs on goods traded between the two economies over a period of up to seven years. Goods which were traded between the two economies amounted to more than 28 billion euros ($30.75 billion) past year.
Ms Malmstroem said the deal would boost opportunities for both EU and Vietnamese companies “by increasing market access for goods and services”. Law, human rights issues and democracy are also to be bound within trade. It says negotiations with Thailand will be on hold until its ruling military junta cedes power to an elected government. British Prime Minister David Cameron took a business delegation to four Southeast Asian countries last week.
Vietnam exports mobile phones and other electronics, footware and textiles, and agricultural products including coffee, rice and seafood to the EU.
Vietnam’s exporters’ access to the EU will become much easier with the trade deal, giving an “important boost to the Vietnamese economy,” according to Malmstrom. Items imported to Vietnam from the EU consist mostly of high tech products, including electrical machinery and equipment, vehicles, aircrafts and pharmaceutical products. “That’s the optimistic scenario we’re working on, but it’s possible”, she told reporters.
It hopes eliminating trade barriers with the United States, in its low-cost manufacturers, which is already used by Samsung (005930.KS), LG (066570.KS), Gap (GPS.N), Nike (NKE.N) and Inditex’s (ITX.MC) Zara.
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In 2014, the European Union was the second trading partner for Hanoi after Beijing, representing 10 percent of Vietnam’s total trade.
