The roar of a tiger: EU-Vietnamese Trade Deal

by André Francischetti Moreno

The commercial war between China and the United States led Americans to shift part of their supply chain to Vietnam, thus heating once more the vibrant economy of the Asian tiger. The most benefited industries were the textile and electronic ones, of which Vietnam is a leader in Southeast Asia. The European Union took the opportunity to firm the most “ambitious agreement between Europe and a developing country”, in what the Swedish MEP Karin Karlsbro further described as a “historical opportunity”. Nevertheless, many human rights activists and chiefly the Greens criticized how the agreement was done, claiming that Vietnam does not respect a series of freedoms and labor standards.

As for the agreement, it will gradually scrap taxes on 99% of all goods traded bilaterally and will facilitate European companies to invest in Vietnam, as they will pitch for government contracts on equal terms with their local counterparts. The two parties further committed to ratify and effectively implement eight fundamental Conventions of the International Labor Organization (ILO), ILO’s principles of fundamental rights at work, the Paris Agreement and act in favor of environmental conservation while being monitored by agents of the civil society. The agreement also sets high standards of consumer protection, ensures that there is no “race to the bottom” to attract investment, and gives Vietnam 10 years to eradicate its duties on EU imports. Notably Vietnam signed six ILO conventions since the negotiations with the EU started, two of them to be ratified by 2023. Under the agreement, appropriate retaliation is also predicted in the case of serious human rights breaches. The president of the European Commission, Ursula von der Leyen, stated that trade agreements as such are important to recovering the European economy as they create jobs and give Europeans access to new emerging markets. By 2035, the agreement is predicted to result in €15 billion/year in additional imports from Vietnam and €8.3 billion/year in EU exports, from which every €1 billion results in around 14,000 new jobs in the EU.

The new agreement is seen as strategic for the EU as a global player. With an economy that grows 6- 7% every year, Vietnam is the EU`s second-largest trading partner in the Association of Southeast Asia Nations (ASEAN) only behind Singapore. In geopolitical terms, this agreement is substantial to expand European interests in the region in face of an ever-growing Chinese and American influence. Moreover, it represents a strategic opportunity for the EU to broaden its rules-based approach to international trade, human rights, and democratic principles, and action for the conservation and sustainable management of wildlife, biodiversity, forestry, and fisheries.

Nevertheless, the EU-Vietnam trade agreement met substantial opposition over matters regarding human rights. Twenty-eight human rights non-governmental organizations, both within and outside Vietnam, signed a letter addressed to the European Parliament to postpone the Parliament’s approval of the deal until the Vietnamese government implemented concrete and verifiable measures to protect labor and human rights. This proposal, in turn, was solidly defended by the Greens who supported the deal but wanted the Vietnamese government to reach some benchmarks before concluding the trade agreement. The European Parliament’s Committee on Foreign Affairs noted that the European Commission did not carry out a satisfactory human rights impact assessment of the deal, moreover there is criticism about the deal only focusing on a limited range of rights. Additionally, some detractors hold that is not responsible to sign a deal with a one-party state that has a poor record concerning workers’ rights and still have political prisoners. Geert Bourgeois, the EU’s rapporteur for the EU-Vietnam Free Trade Agreement (EVFTA) said that although democracy and human rights were not fully established in Vietnam, the trade pact serves as a “lever to improve the situation.”

In brief, the EVFTA entered into force on August 1 and will gradually eliminate taxes on 99% of all goods traded between the European Union and Vietnam. Although the agreement encompasses bilateral commitments to human rights, labor conventions, and promotion of environmental protection policies, some NGO’s and political actors believe that the EU Parliament should have postponed the voting until the Vietnamese government had implemented concrete and checkable measures. On the other hand, those who support the agreement defend that it is an opportunity to expand European soft power through commerce, set a platform to control human rights abuses in Vietnam, and follow a promising path to the economic recovery of Europe after the coronavirus crisis.

Photo by Thijs Degenkamp on Unsplash

References

Nicholson, C. (2020, February 24). Talking Europe – Free trade, fair play? New EU-Vietnam deal stokes controversy. Retrieved August 07, 2020, from https://www.france24.com/en/europe/20200224-talking-europe-free-trade-fair-play-new-eu-vietnam-deal-stokes-controversy

Press corner. (n.d.). Retrieved August 07, 2020, from https://ec.europa.eu/commission/presscorner/detail/en/ip_20_1412

Vietnam trade deal: What are the benefits?: News: European Parliament. (2020, June 10). Retrieved August 07, 2020, from https://www.europarl.europa.eu/news/en/headlines/economy/20200131STO71518/eu-vietnam-trade-deal-what-are-the-benefits

Vietnam: EU-Vietnam trade agreement meets opposition over human rights issues: Business & Human Rights Resource Centre. (2020, February 22). Retrieved August 07, 2020, from https://www.business-humanrights.org/en/vietnam-eu-vietnam-trade-agreement-meets-opposition-over-human-rights-issues