Vietnam took market share of EU trade away from other Southeast Asian nations last year, a trend that might continue after it concluded a free-trade agreement with the regional bloc.
In 2014, Vietnam passed its neighboring countries to become the largest exporter to the US, more than the “traditional workshops” like Thailand and Malaysia.
Vietnam took advantage of the trend of moving manufacturing operations in Asia in the context of rising labor costs in China to attract investment from corporations such as Samsung Electronics.
Although trade between the EU and Singapore, which is still the EU’s largest partner in Southeast Asia, increased last year, its market share in the total value of trade decreased from 25.1% to 24.1%.
Malaysia, Thailand and Indonesia also lost their market share to Vietnam
Currently Vietnam is the second country in the ASEAN signing a free trade agreement with the EU. Telephone, electronic products, footwear, clothes and coffee are its main exports to the EU.
The total trade turnover between the EU and ASEAN increased by 12% last year. According to the EU data, trade turnover between China and the EU rose to $520.8 billion in 2015, more than double that of ASEAN.
Vietnam accounted for 19.1 percent of the 201.4 billion euros (US$227 billion) in total trade between the EU and members of ASEAN last year. That figure is up from 15.8 percent in 2014, according to data from the EU delegation in Singapore.
“Vietnam is one of the growing markets and we’ve seen a very positive development with our trade relationship with that country. That growth coupled with the finalization of the free trade pact points to a dynamic trade relationship in the future,” Michael Pulch, EU ambassador to Singapore said on June 15.
EU aims at Vietnam and Singapore in a business initiative to expose small and medium-sized companies in Europe to opportunities in Southeast Asia.
The EU will support the promotion of meetings between companies in the two regions in a variety of industries – from water, food to other beverages.
Signs of Vietnam’s trade prominence are growing: In 2014, the nation overtook its ASEAN neighbors to become the biggest exporter to the US, powering ahead of traditional manufacturing hubs such as Thailand and Malaysia. Vietnam has capitalized on shifting production patterns in Asia as labor costs in China rise.
While EU trade with Singapore, which is still the bloc’s biggest partner in Southeast Asia, increased last year, its market share of total trade fell to 24.1 percent from 25.1 percent. Malaysia, Thailand and Indonesia also lost market share to Vietnam.
Vietnam is the second nation in ASEAN after Singapore that the EU has concluded a free-trade pact with. Exports from Vietnam to the EU are dominated by telephones, electronic products, footwear, clothing and coffee.
Vietnam has also matured into demanding more advanced technologies, which Europe is still a key provider of.
