July 13, 2019

THE OLD WORLD IS THE NEW WORLD:

A Deeper Look at Vietnam's Trade Deal With Europe: The EU's drive to become the defender of multilateralism promises further opportunities for Southeast Asia. (Stuart Brown, July 12, 2019, The Diplomat)
     

On June 30, Vietnam signed a trade agreement and investment protection agreement with the European Union (EU). In doing so, the country became the second member of the Association of Southeast Asian Nations (ASEAN), following Singapore, to conclude a major trade agreement with the EU. Although the news was partly upstaged by the EU's agreement with the South American trade bloc Mercosur just a few days earlier, the deal has important implications not only for Vietnam's relationship with Europe, but for the EU's wider role in Southeast Asia.

There are obvious economic benefits for both sides, with a 99 percent reduction in tariffs envisaged. From day one, around 65 percent of EU exports to Vietnam will be tariff free, with most other areas being fully liberalized over the next 10 years. For Vietnamese exports to the EU, 71 percent of exports will be tariff free from day one, with 99 percent liberalized within seven years.

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Just as importantly from the European perspective, the deal allowed the EU to further strengthen its credentials as the chief defender of free trade and multilateralism, at a time when the protectionist instincts of Donald Trump and an entrenched trade conflict between the United States and China continue to dominate global affairs.

Indeed, the contrast between the approach pursued by Trump in Vietnam and the deal with the EU could hardly have been greater. In the days leading up to the agreement, the U.S. president had sharply rebuked the country, labeling Vietnam "almost the single worst abuser of everybody." Trump's ire, as ever, was linked to a burgeoning trade deficit between the United States and Vietnam. 

Posted by at July 13, 2019 6:14 PM

  

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