EU Report: Trade Relations Have not yet Reached Full Potential

The 2006 EU Trade Counsellors Report released May 29 confirms that, on balance, the EU remained Vietnam’s prime trading partner in 2006. “In spite of 18% growth which brings as very close to USD 10 billion in bilateral trade, this relation has yet to meet its full potential,” stated Dr Markus Cornaro, Ambassador of the European Commission Delegation to Vietnam at the press conference on the Vietnam economy report.

 

According to the Report, the EU is the second largest export destination for Vietnamese products (after the US), and the third largest importer into Vietnam (after Japan and China). In addition, the EU is the second largest investor in terms of implemented capital (after Japan).

 

Underlining the importance of Vietnam's international integration and its impact on trade relations with the EU, Dr. Cornaro reiterated the need to ensure long term sustainability for the next generation, “Vietnam in recent years has made wonderful strides in economic growth, fuelled by the prospect of WTO accession. The EU has championed Vietnam’s cause for WTO accession but, once this has been attained, there remain some potential threats to its developmental sustainability.”

 

Indeed, the report warns about the undiversified export structure to the EU, largely concentrated on only a handful of sectors, namely textiles and garments, footwear, seafood, coffee and furniture, rendering Vietnam's exports to the EU vulnerable to upheaval. The report also recommends reducing Vietnam's dependency on raw material imports with volatile prices, as well as concentrating on high quality products and strengthening local brands by improving Intellectual Property Rights protection.

 

Remarking on Vietnam's economy with Dr. Cornaro, German Ambassador to Vietnam Mr Weber-Lortsch said, “Investors from the European Union are increasingly keen on injecting funds and offering advanced technology to Vietnam. The aggregate implemented capital of EU investors, now standing at USD4.2 billion, perhaps best demonstrates our great interest in and long term commitment to the prosperity of Vietnam.”The report emphasizes some of the many opportunities in Vietnam, such as in the sectors of infrastructure (roads and ports), telecommunications, and energy. These arease are becoming bottlenecks for Vietnam's economic growth, and European investment and expertise are much needed.