Commissioner Lamy's Speech on 'EU-Vietnam - A partnership of equals'

Ladies & Gentlemen,

It is a great pleasure to return to Hanoi on such an auspicious occasion - the first meeting of 39 leaders and their representatives from an enlarged European Union and Asia. I am particularly pleased to have been given an opportunity to address the European Chamber of Commerce here in Hanoi and want to thank you for hosting this event.

Vietnam's Eurocham is a demonstration of one of the most successful experiences of European business associations in Asia. Its strong European Union business identity and united voice continue to be essential elements in ensuring that European and Vietnamese businesses develop ever closer ties. The impressive turnout here today is a reflection of Eurocham's capacity to act as the focal point for the EU business community in Vietnam.

The EU continues to be the main investor in Vietnam. This provides us with significant leverage with which to promote our interests, while at the same time permitting us to assist Vietnam in achieving its own potential.

Of course, EU trade relations with Vietnam take place in various contexts-: multilaterally, region to region, bilaterally. During the past year, it is undoubtedly the multilateral context which has dominated our mutual agenda. Eurocham has played a pivotal role in Vietnam's WTO accession negotiations, as well as during negotiations for the market access and textile agreement, constantly feeding sectoral updates on to the negotiators. I want to express my sincere appreciation for the unflagging support and commitment which you have shown throughout a sometimes complex and demanding process.

The EU interest in promoting Vietnam's WTO accession is a double one: on the one hand, Vietnam is a rapidly developing market with a huge potential, and in a number of sectors EU companies have a comparative advantage which we would like to enable them to exploit. On the other hand, Vietnam remains a low income developing country, and we have taken on a role of sponsor for its WTO accession, striving for a bilateral deal that is realistic and could act as a protection for Vietnam against excessive demands by others. I have come here this week to see whether we can conclude the bilateral agreement on Vietnam's WTO accession. Discussions are still ongoing. Our teams have worked hard and made good progress over the last couple of days, notably on goods, but there are still a number of basic disagreements on the degree of market access Vietnam is prepared to grant. The most difficult area is services, and here in particular telecoms, courier, maritime transport, tourism, distribution, certain financial services and environmental services. We now have a fairly precise idea of Vietnam's red lines on these issues, and we need to see whether within these parameters, there is sufficient room to satisfy our interests.

At this stage, I am not sure whether we will be able to resolve the outstanding issues before I leave tomorrow afternoon. I will meet with my colleague, Minister Tuyen for a further stock taking later this afternoon. By tonight, a clearer picture should emerge.

The contact we have had with EuroCham on the WTO accession show that European Chambers are growing in importance as key interlocutors for the Commission in developing the EU's policies and strategies for its economic relations with trading partners. This is recognised in many ways, including an initiative by the Commission which seeks to provide opportunities for closer regional co-ordination between European Chambers on EU interests throughout Asia.

The EU is increasingly conducting relations on a "region-to-region" basis, be it in ongoing FTA negotiations (Mercosur, Gulf Co-operation Council, Economic Partnership Agreement with regional groupings within Africa, the Caribbean and the Pacific) or other forms of relations (Andeans, Central America, Asia). We consider such an approach has the potential to generate more economically viable and interesting results, since regional integration on the partners' side increases the market potential and makes more "cost-effective" efforts in the regulatory area.

This is equally true for ASEAN. Recognising this, in October 2003, ASEAN collectively took a huge leap forward into the unknown - deciding upon the establishment of an ASEAN Community based on 3 pillars - economic, social-cultural, and security, by 2020. Through the Economic Community, ASEAN is committed to addressing the key economic challenges it faces: subscale markets and unnecessary costs arising from different standards and regulations - problems which Europe faced as well twenty years ago when we launched the Single Market programme.

The decision which ASEAN has just taken, to move from a looser form of integration towards a genuine community is a critical choice, because it raises two important considerations:-

- Firstly, how far does the grouping want to proceed in terms of aligning their collective preferences? This requires drawing the boundaries between areas of community and national interest.

- Secondly, what type of institutions are required to implement common rules?

As ASEAN strives to identify more precisely the future direction that it will take, it is being confronted with these issues. And it is here, in working more closely with ASEAN during a period when it is establishing the foundations for a new alliance, that I see the potential for a closer partnership between the EU and ASEAN.

The EU is ASEAN's only trading partner which has experienced a similar challenge to the one facing ASEAN, that of trying to integrate a large group of countries with different languages, histories, cultures, capacities, and priorities into a genuine community based on shared interests and values. The EU has been working on a similar project for decades. There are many things that we can share and learn from each other, keeping in mind of course that there is no single model to follow or unique mechanism to achieve certain goals.

I recently met up at the beginning of September with my colleagues, the economic ministers from the ASEAN countries. Our discussions focused on how to take forward our partnership, both within the WTO and as a region-to-region dialogue. When we launched the Trans-Regional EU-ASEAN Trade Initiative (TREATI) last year, it was intended to create a framework to enhance EU trade relations with ASEAN, based upon dialogue and joint activities in areas of mutual economic interest. The aim was to share knowledge and experience, leading to greater convergence between differing regulatory systems and establishing greater transparency and understanding between the two regions.

The focus is on non-tariff barriers, on topics such as trade facilitation, technical barriers to trade, and sanitary and phytosanitary issues, where our experience had demonstrated that these could create impediments to increased trade and investment. The ultimate ambition is to develop a deeper understanding and intensify our co-operation to facilitate the eventual negotiation and implementation of an EU-ASEAN FTA in the future.

In a way, we want to tackle the most difficult issues first, without which an FTA risks remaining mere paper. We differ here from other partners of ASEAN, who launch FTA negotiations first and backload the more contentious regulatory barriers.

Time will tell which approach produces better results. The EU, for its part, remains convinced that the real 21st century trade issues are not tariffs and quotas, but standards and rules in areas such as safety, health or consumer protection.

Now that ASEAN has decided to build its Economic Community through accelerated integration in important sectors such as automotive, electronics, textiles and clothing, agrifood and fisheries, we have revisited the focus of TREATI. Much of our thinking and objectives remain valid. However, it was Minister Tuyen, who has recently agreed to act as the co-ordinator on behalf of ASEAN for TREATI, who suggested that we could bring the greatest benefits to ASEAN by aligning our efforts in the areas where ASEAN is working on its own integration, and giving priority to sharing how we have achieved our own integration within the EU.

So it was recently agreed with the ASEAN Ministers to plug TREATI activities more directly into the sectoral initiatives prioritised by ASEAN: We will now focus on sanitary and phytosanitary standards in agrifood and in fisheries, on technical standards for electronics, and on wood-based industries. At the same time, we will pursue our cross-sectoral co-operation on trade facilitation and investment which is so important for business, large, medium and small. In this way, we can actively contribute to the ASEAN integration process by strengthening its institutions and consolidating its own achievements in areas which will also be decisive for the future good functioning of our region-to-region economic relations.

Business has a role to play in this respect, to ensure that we focus on those sectors and activities that are the most promising. European Business Associations abroad are the natural interlocutors for the European Commission in order to provide the necessary input on business priorities. I would therefore like to invite Eurocham, now that Vietnam's accession negotiations will assume less importance, to pay some attention in the coming years to making TREATI more immediately relevant for EU and ASEAN business.

Because in helping ASEAN to develop into an ASEAN Community, at the same time, we are clearly also helping ourselves. A genuine ASEAN Community will have an increased market potential and its 10 members will be able to speak with a stronger, more united voice - regionally and globally. This is something that all ASEAN's trading partners should welcome.

And finally, I would like to say something regarding our regional relations in yet another context - the Asia-Europe Meeting.

As I mentioned at the outset, ASEM leaders this week celebrated the enlargement of our dialogue to include 39 players. This, I believe, opens the way for a new period of fruitful co-operation, in particular in the area of special interest to me: the economic pillar.

The ASEM process has a number of characteristics that make it an especially valuable forum for co-operation between our regions. It is informal, based on dialogue, and unencumbered by institutions or structures. It is multidimensional, covering political and cultural co-operation as well as economic dialogue. And ASEM is built on a spirit of equal partnership that allows us to exchange views in a spirit of mutual support and understanding, finding strength in our diversity.

As many of you will already know, ASEM's offers a key forum for economic debate. This week has seen discussion of major macroeconomic developments and growth prospects for our two regions, and for the world economy. Leaders have also assessed threats to economic growth such as high oil prices and the menace of terrorism.

One recurring theme of ASEM economic discussions is the fundamental importance of multilateral systems of economic governance, in particular the WTO, where we need to continue to consolidate the substantial achievements of this summer's deal in Geneva.

This Summit has also seen the presentation of the report of the ASEM Task Force on Closer Economic Partnership. This has articulated a new vision for the future of Asia-Europe economic ties and will be the subject of detailed examination by my fellow Economic Ministers and colleagues during the months ahead. The Task Force, consisting of eminent experts on trade and finance, was established by the last ASEM Summit, held in Copenhagen in 2002. It was asked to examine how to improve ASEM economic relations by making recommendations in the fields of trade, investment and finance. The focus of the Task Force on placing business at the heart of the ASEM dialogue will certainly be of interest to you all.

Finally, let me say a few words on a subject that is certainly close to your hearts - the Asia Europe Business Forum. I welcome the efforts that are being made to develop closer links between business and ASEM, and the AEBF has certainly contributed to this dialogue. But I feel that business involvement in ASEM needs to be increased yet further, to attract more and stronger business input to our work.

I especially look to all of you to help by working to develop cross-regional partnerships between European and Asian firms, and by stimulating better engagement by small businesses that are often left out of international dialogues.

By focusing on this, I am convinced that the AEBF can produce real results that have a strong and lasting influence on ASEM Economic Pillar activities.

Thank you for your attention.

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