PCA to usher in new era of EU relations

On November, 2007, during his official visit to Vietnam, European Commission (EC) President José Manuel Barroso and Vietnam’s Prime Minister Nguyen Tan Dung agreed on starting the PCA negotiations. After two years and nine negotiation rounds, the PCA content was agreed on. The PCA was initialed in October, 2010.

The PCA is a frame agreement monitoring the Vietnam-EU relationship and it replaces the 1995 Vietnam-EC Frame Cooperation Agreement. The PCA creates a new long-term and comprehensive framework for the Vietnam-EU relationship. It is compatible with the two sides’ socio-economic development priorities and external policies.

The agreements within the PCA are an important foundation for the two sides to establish specific cooperation mechanisms, contributing to further strengthening the bilateral cooperation and partnership.

Politically, the PCA would help further sharpen the two sides’ fine political relationship. Agreements reached within the PCA in politics, peace and security are the basis for the two sides to boost dialogue and cooperation in settling issues of mutual concern, both bilaterally and on such multilateral forums as the United Nations, ASEM and particularly ASEAN-EU when Vietnam will become a coordinator of the ASEAN-EU relationship in July, 2012.

With its external policy of being “an active and responsible member in international issues”, Vietnam will further join hands with foreign partners in solving global issues, including its cooperation with the EU in tackling regional and international issues like climate change, transnational crimes and terrorism, ensuring nuclear security, managing natural resources, environment and maritime security.

In terms of trade and investment, the PCA facilitates the two sides to better tap their comparative advantages and supplement their economic structures. The EU has advanced technologies, especially in mechanics, manufacturing, chemicals, transport, aviation, pharmacy and services with big added value. These are also products increasingly needed by Vietnam whose production capacity remains limited. Meanwhile, the EU has big demand for a wide range of products, such as raw rubber, handicrafts, footwear, garments, fishery, coffee, tea and pepper which Vietnam has competitive advantages in.

The potential for Vietnam to expand its exports to the EU is big, because the two sides’ trade turnover occupies only 0.6 per cent of the EU’s total trade turnover with its foreign partners. The PCA, including a separate chapter on trade and investment, shows the two sides’ wish for the development potential of these sectors.

The PCA allows Vietnam to access the EU more conveniently. Specifically, the EU pledges to boost consultancy in improving the effectiveness in using benefits that the Generalised System of Preferences can bring to Vietnam. The EU vows to give Vietnam special treatment packages in its economic and trade relations with Vietnam. It also heads for soon recognising Vietnam as a market-based economy.

Besides, the PCA has laid an important basis for the two sides to ignite negotiations of the Vietnam-EU Free Trade Agreement (FTA). FTA negotiations and signing would usher in many opportunities, removing tariff and non-tariff barriers, and boosting export and economic growth.

At present, only 42 per cent of Vietnam’s exports to the EU enjoy a zero per cent tax rate, while the rate for Malaysia and the Philippines is 80-85 per cent. If the FTA comes true, the rate of Vietnam’s exports enjoying a zero per cent tax rate in the EU will be 90 per cent and this will add another 35 per cent to Vietnam’s exports volume to this market. Besides, together with the FTA negotiation process, the EU will accelerate its recognition of a market-based economy status for Vietnam and this will enable Vietnam to better fight trade protection forms like an anti-dumping tax.

As for development cooperation, the EU commits within the PCA to continue giving development assistance to Vietnam in a new period after 2013, suitable to the country’s socio-economic development programmes and strategies. The EU also pledges to strengthen its support to Vietnam in achieving development targets recognised by the international community, including the United Nations’ Millennium Development Goals.

This is also a foundation for Vietnam to continue taking advantage of necessary support from the EU and its member countries in the future, in order to serve its national development targets.

The PCA will swell specialised cooperation fields that the EU can offer and Vietnam needs. In these fields, the EU also has concrete commitments in technical assistance and capacity improvements. This will enable Vietnam to benefit from the EU’s scientific and technological achievements to more effectively implement its economic restructuring and international integration.

In a nutshell, on the back of Vietnam’s strong relationship with the EU and its member countries over the past more than 20 years, the official signing of the PCA and the start of FTA negotiations will open up a fine prospect in the Vietnam-EU relationship.

The two sides are embarking on a new stage, with a larger scale and scope. This will further contribute to accelerating Vietnam’s doi moi and national industrialisation and modernisation, and international integration in the coming time.