EU-Vietnam Free Trade Agreement on the Table

The European Parliament discussed the EVFTA on 28th May but has not yet signed the agreement. The EU wants to have easier access to Vietnam’s fast-growing economy and views the trade deal as a way to force progress on human rights issues. For Vietnam, the agreement is an opportunity to strengthen political and economic ties with Europe and increase its international trade reach.

The EVFTA goes beyond a pure trade agreement facilitating exports. European lawmakers also aim for commitments on human rights such as labor unions and environmental protection. Eurocham chair Nicolas Audier said, “We have some concerns about human rights in Vietnam, but that has been discussed.”

Critics of the trade deal argue a free trade agreement does not contribute to human rights issues. Instead, it will result in the offshoring of jobs that leaves workers at home vulnerable and weighs on prices and wages in the EU.

EVFTA to improve the business climate in Vietnam

Lawmakers in Vietnam aim at leveraging the trade agreement to push reforms in other sectors as well. Le Thanh Liem, Vice-Chair of the Ho Chi Minh People’s Committee, says the deal “includes a lot of commitments to improve the business environment in Vietnam.”
The agreement provides an external factor that Vietnamese officials can use to finalize controversial internal reforms. While it might be difficult to convince business owners to support the formation of Labor Unions, an incentive such as enhanced trade could provide sufficient motivation.

The EU-Vietnam negotiations have also sparked enthusiasm in other ASEAN countries to rethink their ties with the EU. Thailand has announced to resume negotiations for a free trade agreement with the EU once the new government is in place. Previous negotiations came to a halt in 2014 after the military coup.

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