Vietnam is the first nation in ASEAN bloc to build up an action plan for its long-term relationship with the EU. Where does this work stem from?

 It stems from the encouraging achievements in bilateral trade between Vietnam and the EU recently. Currently, the EU is the leading trade partner of Vietnam, and a big investor in Vietnam. In 2006, the two-way trade reached $10.2bil, while Vietnam’s exports to the EU reached nearly $7bil. The EU accounts for 17% of Vietnam’s total trade turnover.

 I can say that the EU is the target market with the biggest potential for Vietnamese exporters. The biggest importers are Germany and the UK ($800mil-1bil a year), followed by France and the Netherlands ($500-700mil). The main export items are apparel, footwear, farm produce, and handicrafts. The export growth rate is 20-30% per annum. Italy, the Netherlands, Germany are the biggest exporters to Vietnam, estimated at $500-700mil a year.

 The EU is now a bloc of 27 members, including East European countries, which do not set overly high requirements on Vietnamese products. Meanwhile, the same tax rates are being applied in all EU countries. And this is an opportunity for small- and medium-size Vietnamese enterprises.

Bui Huy Son, Deputy Director of the Multilateral Trade Policy Department under the Ministry of Industry and Trade. The EU is also the biggest investor in Vietnam with $9.94bil worth of FDI registered capital (740 projects, employing 23,000 labourers) and $940mil worth of ODA capital

Do you think that small- and medium-size Vietnamese enterprises will have to face a lot of challenges with the FTA?

Once the ASEAN-EU FTA comes into life, big Vietnamese enterprises will have to compete fiercely with big enterprises from the EU, which will affect small- and medium-size Vietnamese enterprises. For example, if big Vietnamese enterprises lose contracts, small- and medium-size enterprises, the sub-contractors, will not have jobs.

Besides, Vietnamese enterprises will also have to compete with ASEAN enterprises, since every country in ASEAN wants to have an advantage in dealing with the EU.

 As you have said, small- and medium-size enterprises play a very important role in the national economy, contributing 25% of GDP. What would you say to leaders of the enterprises as the coordinator and the negotiator for the ASEAN-EU FTA?

Ministries and branches should understand that the ASEAN-EU FTA is a necessary thing for the regional connection. Currently, EU is giving Vietnam and some ASEAN countries tax preferences (GSP). However, in the future, when Vietnam and the countries are more developed, the preferences will be transferred to other poor and underdeveloped countries.

It will be necessary to sign partnership and cooperation agreements (PCAs). Vietnam will need to receive support from EU countries to support the development of small- and medium-size enterprises and from ASEAN countries as well, as the development levels of ASEAN countries are different. Vietnam should draw up policies aiming to develop small- and medium-size enterprises.