Asian countries looking to undertake free trade negotiations with large trading partners such as Europe need to look at their own track records on both trade and political practices before starting talks as these are crucial to the overall conclusion of a pact.
The 10-member Asean bloc is among the top five trading partners of the EU. The 27-member group is the second-largest export destination for goods and services from Asean, and two-way trade was worth 147 billion last year, up from 124 billion a year earlier.
The EU had hoped to secure a pan-Asean trade pact but it abandoned the plan, citing the wide disparity between Asean’s developed economies and its least developed countries LDCs.
The EU believed such conditions would make a comprehensive FTA difficult.”We already have many favourable terms for the LDCs, therefore having an FTA with the entire Asean grouping would have been very difficult,” said a leading member of the trade negotiating team in Brussels.
The EU has switched to bilateral negotiations and is now in talks with both Singapore and Malaysia, while Vietnam is set to be the next target followed by Thailand in the near future.
“There are various factors we have to consider … among them the principal stance on trade practices, democracy and human rights,”
added another negotiator, speaking on condition of anonymity during a recent background briefing in Brussels.While democracy and human rights are not related to economics, it has been the position of EU member nations that a country with a bad record in these areas was unlikely to be allowed freely into an FTA, the negotiators said.
The European Union was planning on a bilateral trade agreement with the Association of South East Asian Nations (ASEAN) for many years. On 4 May 2007, the two sides agreed to start negotiations.
The EU-ASEAN FTA is supposed to be a comprehensive agreement. While ASEAN states are hoping to gain additional market access in the EU, the agreement is expected to have a much bigger impact in strengthening business opportunities for European TNCs in the region.
The talks have moved slowly and it’s not clear if the final deal will take the form of separate agreements between the EU and individual ASEAN members, something the EU seems to prefer. This would allow European governments to avoid taking on any commitments that support the regime in Burma but also to deal with the economic heterogeneity among ASEAN members.
EU procedures require that all ASEAN countries sign a Partnership Cooperation Agreement, containing a commitment to human rights, as a prerequisite to an FTA. As of October 2008, Indonesia had already concluded its PCA with the EU, Singapore and Thailand were in advanced stages of negotiations, and Vietnam, Malaysia and Brunei were about to begin. The Philippine government stated early on that it expects problems in negotiating a PCA, as the agreement apparently requires that the signatory state join the International Criminal Court.