November 21, 2007
EU-ASEAN free trade could boost Vietnam growth
Vietnam's economy would benefit from a free trade agreement between the European Union (EU) and the Association of Southeast Asian Nations (ASEAN), said an official from European Commission (EC). Antonio Berenguer, a European Commission (EC) trade counselor with a delegation to Vietnam, predicted last week that a free trade agreement (FTA) between the European bloc and the Asian group would add 2.2 percent to Vietnam's economic growth. Berenguer said the addition to the country’s GDP growth, which stands at 8-8.5 percent and is expected to hit nine percent next year, could take the number closer to 11 percent.The FTA could also benefit other ASEAN members to the tune of 2.2 percent additional growth. The EU can expect a smaller but still significant 0.1 percent GDP growth as a result of such an agreement, he added. The commission's trade counselor explained the benefits would be brought about by the elimination of tariffs on 90 percent of goods traded between the two regional groups.The EU is ASEAN's the third largest trade partner after the US and Japan while the Southeast Asian bloc ranks as the EU's sixth largest partner. Berenguer predicted the FTA will boost EU-ASEAN bilateral trade, which stood at €126 billion (US$184.5 billion) in 2006, up 18.5-24.2 percent. Free trade could also see ASEAN members' deeper integration with the European states, which transfer technology, capital and management skills to their less developed partners, he said. More than WTO
The EU-ASEAN negotiation was initiated in May 2007 when a joint committee was set up.
Bui Huy Son, deputy director general of the Multilateral Trade Policy Department, said Vietnam's economy would open wider than it did when it entered World Trade Organization (WTO) as tariff barriers will be removed completely throughout the two regions.“The move is beneficial for Vietnam exports to the union, which account for 17 percent of the country’s total external trade turnover,” he said. Son, whose department operates under the Ministry of Industry and Trade, said more big businesses would enter the union with their competitive products while Vietnam will receive more capital and technology from EU states.
He said that Vietnam's larger enterprises entering the European market would bring small and medium sized firms along in their wake.
However he expressed concern over Vietnamese businesses' competitiveness in the new free market, which will include strong rivals with more experience in the tough European environment. An FTA is under negotiation between the two blocs' leaders.They aim to conclude the talks by the end of 2009.
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