Vietnam Weekly - June 28, 2019
According to the European Council's website, an investment protection agreement will be signed as well, while the full text of both agreements is also available. The council's statement says this is the most ambitious FTA the EU has ever signed with a developing nation, and will eliminate 99% of customs duties between the two sides - 65% of these will be zeroed immediately upon signing, while the rest will be phased out over the next seven years.
Negotiations over this deal began in 2012 and hit some speed bumps along the way, most notably when Vietnam kidnapped a wanted former business executive in central Berlin in late 2017. It seems these issues have been cleared up, or at least papered over, and it's full steam ahead for trade between the two parties, which is worth almost USD60 billion.
However, before Vietnamese officials could even set down their celebratory bia hõi, President Trump came flying out of the blue with a huge downer: in an interview with Fox Business Network, he took a break from blasting China on trade to call Vietnam "the single worst abuser of everybody," which us, uh, quite the phrase.
He went on to say that Vietnam takes even worse advantage of the US than China, and I actually heard the collective Vietnamese government gasp all the way down here in Saigon. Of course a comment doesn't make policy and Trump is famously carefree in what he says, but if this signals a shift in the administration's stance toward Vietnam it would be potentially catastrophic: countless companies have already moved production here in order to escape the tariffs on China, so if tariffs were slapped on Vietnam there would be production chaos. And this is the last thing the Vietnamese government wants, as they've been selling the country as the next great (and cheap) manufacturing base.
At the same time, it's not surprising that Trump would turn his trade anger on Vietnam: there are already reports of companies using the country to get around the tariffs on China, and the US has a USD17 billion trade deficit with the country. There hasn't been much coverage of this in Vietnamese media yet, though Tuoi Tre reported on one economist who said there is "no chance" that the US will levy tariffs on Vietnam. This will be one to watch.
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