Robust economic growth and a significant decrease of poverty have placed Vietnam in a very attractive position for the EU and its member countries and opened up new opportunities for partnerships and deeper cooperation in the future. The Vietnamese market has a huge potential. With a population of 96 million, growing purchasing power and a young and dynamic workforce, it offers broad range of new opportunities in the areas of public procurements and foreign investments.
The European Union has already become Vietnam’s second largest trading partner after China and the second largest export market for Vietnam, immediately following the USA. Hanoi also enjoys preferential access to the EU market thanks to the EU's Generalised Scheme of Preferences (GSP). Vietnam is important to the EU due to its strategic position in Southeast Asia and the role it plays in the ASEAN organization. Furthermore, should the country successfully maintain its current pace of economic growth, in the next decade Vietnam may attain the same trajectory as China and be well on its way to be the next so-called Asian Tiger.
A revolutionary agreement
A radical breakthrough in our reciprocal trade relations has been anticipated from the EU-Vietnam Free Trade Agreement (EVFTA). It is slated to remove bilaterally more than 99% of customs duties on goods traded between the EU and Vietnam. The agreement is not limited to customs duties alone, however; it aims to reduce non-tariff barriers and simplify sanitary and phytosanitary measures while providing increased transparency. Of special emphasis is the fact that the agreement constitutes the most ambitious and comprehensive trade agreement the EU has ever signed with any developing country. It may therefore be viewed as a model for the EU's policies and trade strategies towards developing countries as such; a model where each side regards the other as a partner of equal level who also shares identical goals: to boost reciprocal trade, stimulate economic growth, create new employment opportunities, increase competition, and consolidate structural reforms.
Dynamic development
While thirty years ago Vietnam was still one of the world's poorest countries, it ranks today as one of Southeast Asia's most dynamic economies with an envy-inducing growth of 6% each year since 1990! Moreover, that achievement is not simply an outcome of economic-development aid from the EU and elsewhere, but rather a direct result of domestic structural reforms, record-breaking foreign investments and most importantly, gradual integration into the world economy. Thus far Vietnam has ratified 15 TDAs (1) while patiently awaiting (and getting ready) to implement its agreement with the EU, and in the interim (the USA's withdrawal notwithstanding) provided crucial support to its partners in a successful formation of Transpacific Partnership (TTP) (2).
And precisely that is the lesson we need to apply when drafting development strategies at the European level: it encompasses aid provisions for poor countries in their integration into global market chains (aka "trade not aid") in combination with support for domestic macroeconomic policies and focused utilization of financial resources from the EU budget. Within Europe we should be more cognizant of scenarios such as Vietnam, more detail-oriented in our analysis and willing to extrapolate from cases where our development aid policy is truly effective (3) - not as the main engine powering the actual development, but rather a component of successful domestic policies and ambitious trade strategies of the subject country. Ultimately, Vietnam alone has carried the burden of responsibility for its development, and that's how it should be.
The EU's danger games
While at a first glance all seems to be well, one specific problem lurks within. Our bi-lateral agreement has yet to be ratified. So far all potential advantages contained therein are limited to paper alone; we are nowhere near to even a temporary implementation, and the delay falls primarily on us, the EU side. The European Court of Justice has clarified the matter of competences pertaining to ratification of trade agreements between the EU and the Member States, the European parliament is ready to act and as Permanent Rapporteur of the European Parliament assigned to this particular trade agreement, I have spent more than two years smoothing the differences between political groups in order to facilitate its passing at the plenary. However, the Commission is forever nitpicking over technical discrepancies and procedural complications, and it is not at all certain whether we can conclude the matter before the current parliamentary term comes to an end in the spring of 2019. It's a very dangerous game - not in its effect on business and profits of some companies per se, but more importantly, on the perceived trustworthiness of the EU as such. The ability to negotiate agreements is one thing, but to conclude and finalize - that is to sign, ratify, and implement - is an entirely different matter. The Asian Tigers in the region follow intently all developments, and we must tread carefully lest we lose their willingness to enter into trade agreements with us in the future.
Czech specifics
For the Czech Republic both Vietnam and the noted trade agreement carry an especially significant meaning. While not a widely known fact, in proportion to the number of inhabitants, ethnic Vietnamese residing in the Czech Republic form the largest national minority of all 28 member countries of the EU. That alone evokes strong symbolism of a link between the two countries. What is well known, however, is that the Czech Republic is an export-oriented, free-market economy with a GDP driven mainly by exports. Therefore, it is in our own best interest to support any and all efforts to abolish trade barriers and throw the gates of new markets wide open. I firmly believe that the Czech government and Czech Parliament are going to actively participate in joint trade policies of the EU and in the case of Vietnam, lobby to solicit a speedy approval of the already-signed agreement.
About the Author
Notes:
1. Trade accounts for 150% of the GNP, a number higher than the per capita GNP ratio of any other country
2. Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, and Singapore
3. Overall development aid provided by the EU has shown a slight increase in the years 2007-2013 and peaked in 2010, when the sum total increased from 48.3 billion euros in 2007 to 81 billion.
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