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

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Chinese Wolf Warrior Diplomacy and Sino-EU relations

by André Francischetti Moreno

             The European Union’s concerns with its commercial relations with China have been gaining new dimensions with the ongoing Coronavirus crisis. Sino-European partnership      goes from the political to the economic realm, encompassing environmental policies and debates about human rights. The global pandemic and the need to strengthen the Chinese image in the National Assembly, in Beijing, pushed China to an aggressive diplomacy style that is causing tension amidst European actors. 

              While many countries still struggle with the devastating effects of the COVID-19 crisis, China seems to be recovering quickly, at least for now. Pragmatic cooperation with Beijing regarding medical supplies and assistance is indeed at the top of the Sino-European agenda, nevertheless, Xi Jinping is also taking the height of the crisis as an opportunity to exploit political and economic vulnerabilities in Europe. 

              At the beginning of the crisis, when countries like Italy and Spain were hit hard by the high number of infections, the European Union was divided on how to deal with the situation. The lack of action by the EU and the lack of solidarity among EU members not only caused a new wave of Euroscepticism to arise but gave China space to offer essential medical support that was urgently needed. Xi Jinping raised the notion of building a “Health Silk Road” while talking to the Italian PM Giuseppe Comte, in what many specialists would interpret as one of the many soft power victories China is striking in Europe. 

              The escalating tensions in the Sino-Indian border, Hong Kong, South and East China seas, increasing investments in nuclear weapons able to reach many NATO members, violation of human rights regarding the Uyghur minority and disinformation campaigns attempted the European Union to an aggressive Chinese diplomacy style and its inability to stand up to it. The EU’s foreign policy chief, Josep Borrell highlighted Beijing’s advances to play on the differences between Europeans. It is not news that Chinese investments in Europe have repeatedly blocked EU statements criticizing Beijing’s actions, as it was the case of Hungary and Greece rejecting a declaration against Chinese actions in the South China sea. However, in the past months, China tried to intervene in the European information network. In April, for example, Beijing pressured Brussels to modify the wording of the EU’s report on disinformation. Along with, the China Daily, under the influence of the Chinese Foreign Ministry, required the EU ambassador to delete a sentence declaring that the outbreak of the pandemic happened in China as a condition to publish a Sino-European relations celebration text (co-written by him and 27 EU ambassadors). The modification was accepted by the EU delegation, causing a fierce opposition in Europe. Also in this period, the Chinese embassy in France accused French care workers of abandoning elderly patients to starve and die. This type of declarations about the mismanagement of European countries toward the crisis and the spread of fake news led the European Commission Vice-President, Vera Jourova, to say that, “Foreign actors and certain third countries, in particular Russia and China, have engaged in targeted influence operations and disinformation campaigns around COVID-19 in the EU, its neighborhood and globally, seeking to undermine democratic debate and exacerbate social polarization, and improve their image in the COVID-19 context.”

            In Europe, the last word in foreign affairs still rests on national governments, so that it remains difficult to present a united front against or in favor of foreign actors in many matters. Knowing that different European countries face different types of pressure, it is important to hold an open yet watchful posture toward foreign investments in companies that are key to the national interest and security. In the Sino-European case, for example, China is a relevant partner in climate change policies, the EU’s biggest source of imports, and its second-biggest export market. Particularly, China holds many investments in Europe, buying for instance stakes in many airports, ports, and relevant industrial companies. Most of these are made by private actors, thus representing no political harm. However, several private actors are subsidized by the Chinese government, causing unfair competition to European companies, and raising concern that some of these actors may be influenced by the Chinese government.

            All in all, it is as desirable that the European Union stands for an open trade relationship with China as it is to combat Beijing’s protectionism and aggressive diplomacy. Some ways to do that is by balancing Chinese investments and demanding (as well as showing on the EU’s behalf) transparency. In June, the European Commission presented a package of tools to protect the European business fabric, such as engines to control the purchase of European companies by foreign parties (mainly those who receive state support). Nevertheless, a recurrent problem came up again: the EU Member States are also in competition with each other, and the approval of such tools is still uncertain.

References

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Stolton, S. (2020, June 10). ‘Time to tell the truth’ on Chinese disinformation, Jourova says. Retrieved June 30, 2020, from https://www.euractiv.com/section/digital/news/time-to-tell-the-truth-on-chinese-disinformation-jourova-says/

(www.dw.com), D. (n.d.). NATO’s Jens Stoltenberg sounds warning on China’s rise: DW: 13.06.2020. Retrieved June 30, 2020, from https://www.dw.com/en/natos-jens-stoltenberg-sounds-warning-on-chinas-rise/a-53795384

Myers, S. (2020, April 17). China’s Aggressive Diplomacy Weakens Xi Jinping’s Global Standing. Retrieved June 30, 2020, from https://www.nytimes.com/2020/04/17/world/asia/coronavirus-china-xi-jinping.html

Baker, L. (2020, May 14). As China pushes back on virus, Europe wakes to ‘Wolf Warrior’ diplomacy. Retrieved June 30, 2020, from https://www.reuters.com/article/us-health-coronavirus-europe-china-insig/as-china-pushes-back-on-virus-europe-wakes-to-wolf-warrior-diplomacy-idUSKBN22Q2EZ

Diplomat, M. (2020, June 06). China Isn’t Losing Europe Yet. Retrieved June 30, 2020, from https://thediplomat.com/2020/06/china-isnt-losing-europe-yet/

Small, A. (1970, May 13). The meaning of systemic rivalry: Europe and China beyond the pandemic. Retrieved June 30, 2020, from https://www.ecfr.eu/publications/summary/the_meaning_of_systemic_rivalry_europe_and_china_beyond_the_pandemic

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