Trading Partners Wanted: looking at Vietnam

As it stands, Ireland’s largest trading partner is the United Kingdom. This has been the case since Independence although the balance has shifted greatly since Ireland entered the EEC in 1973 with the UK no longer wholly dominate although our reliance on the UK in certain sectors such as beef, timber, pork and much more.

As Ireland’s reliance on the UK as a trading partner has diminished, it has been able to look to a wider market largely thanks to membership of the EU both in terms of exporting to EU Member States as well as using EU trade deals to export to third parties.

Following the UK’s decision to leave the EU, made official this week by the triggering of Article 50, and the election of Donald Trump as President of the US with a far more protectionist outlook; Ireland must now use its EU membership to develop new markets and make the most of trade deals.

In the second of my series of articles, I thought I would use my first in a series of profiles, to look at opportunities for Ireland to do business with Vietnam, a country that has hosted a number of trade missions recently from the European Union in the guise of Agricultural and Rural Affairs Commissioner, Phil Hogan and from Ireland in the guise for Minister Pat Breen TD.

Vietnam is a very important growing and dynamic economy. Formal relations between Ireland and Vietnam date back to 1996. Ireland has an embassy in Hanoi while Vietnam is represented in Ireland through its embassy in London as well as an honorary consulate in Dublin.

Trade between Ireland and Vietnam has grown rapidly in recent years, with a strong focus on the education sector; food and beverages, ICT, and aviation services. The Vietnamese and Irish Embassies, together with partners in Enterprise Ireland and An Bord Bia (Irish Food Board) work closely to ensure that this important trade relationship will continue to grow and flourish.

In recent times Vietnam has made great progress in reducing poverty and improving the quality of life and opportunities for its people. Ireland, through the Irish Aid programme, has been a partner in this transformation.

Vietnam became the 150th member of the WTO in 2007, and upon its accession promised to fully comply with WTO agreements on Customs Valuation, Technical Barriers to Trade (TBT), and Sanitary and Phytosanitary Measures (SPS).

Negotiations for an EU-Vietnam FTA were launched in June 2012. The EU considers the FTAs with individual ASEAN (Association of South East Nations) countries as stepping stones towards an agreement in the regional framework.  The agreement for a free trade deal includes the elimination of nearly all tariffs (over 99%). Vietnam will liberalise tariffs over a 10-year period and the EU will liberalise tariffs over a 7-year period

The Vietnam agreement includes all of the key provisions of the new Investment Court System for EU trade and investment negotiations proposed by the European Commission. The agreement also covers non-tariff barriers to trade and other trade related aspects such as public procurement, regulatory issues, competition, services, investment, intellectual property rights, and sustainable development.

In addition to creating new opportunities for EU firms, the agreement aims to support Vietnam’s transition towards a more competitive and more sustainable economy. To highlight ways of addressing possible impacts of the EU-Vietnam FTA on human rights and sustainable development.

The European Commission is committed to continue strengthening the way in which it addresses human rights in its engagement and dialogue with Vietnam, including in the framework of the Free Trade Agreement. In this respect, the Commission remains convinced that the agreement constitutes – in addition to the Partnership and Cooperation Agreement and other policies and initiatives – a solid platform to further promote these values in its relations with Vietnam. Making talks complicated is the issue surrounding nations not recognising the EU as a single entity and instead negotiating bilaterally with individual Member States. This is something that Commissioner Hogan was keen to address during his recent trade mission.

Vietnam enjoys trade preferences with the EU under the Generalised Scheme of Preferences.

EU exports to Vietnam are dominated by high tech products including electrical machinery and equipment, aircraft, vehicles, and pharmaceutical products. Vietnam’s key export items to the EU include telephone sets, electronic products, footwear, textiles and clothing, coffee, rice, seafood, and furniture.

The EU has a negative balance of trade in goods with Vietnam. In 2016, EU-Vietnam trade in goods was worth over €42.4 billion, with €33.1 billion in imports from Vietnam into the EU, €9.3 billion in exports from the EU to Vietnam.

The EU is one of the largest foreign investors in Vietnam. In 2015, EU investors committed a total of $1.3 billion in Foreign Direct Investment reaching a total investment stock of $ 21.7 billion. The EU is Vietnam’s 5th largest foreign investor partner.

The European Chamber of Commerce in Vietnam was established in 1998 to help develop Vietnam into an attractive investment destination and trading partner for European businesses. With more than 850 members, we are one of the biggest foreign Chambers of Commerce in Vietnam. Representing a plethora of sectors and sizes ranging from SMEs to MNCs, EuroCham has a very strong business network in both Vietnam and Europe. Through its members, more than 150,000 people are directly employed and the EU is Vietnam’s 2nd biggest trade partner.

Vietnam now boasts a more liberal economy with a young, outward looking population keen on deeper integration into the global community. In the meantime, the chamber has developed into a fully-fledged business association offering a wide range of benefits and services to their members in Vietnam.

Vietnam offers huge potential for business and must be a priority for both Ireland and the EU in terms of increasing partnerships.

We will never have a better trading partner than the UK nor will we ever replace it’s preeminent role in Irish commerce but it is vital that we look to develop new markets and the obvious first ports of call must be those closest to home with the easiest levels of access.

Senator Neale Richmond is the Government spokesman on EU Affairs in Seanad Éireann.