Sunday, April 1, 2012

EU Trade Chief Seeks Closer Ties With Asean

PHNOM PENH—European Union Trade Commissioner Karel De Gucht said on Sunday that the EU and the ten-member Association Southeast Asian Nations share a long-term goal of developing a free-trade agreement between the two economic blocs, and that a series of bilateral negotiations with a number of Asian nations provides a useful framework for creating a potential regional pact.

"Business and government agree: The relationship between Europe and Asean is becoming more and more important," Mr. De Gucht said at a regional summit in Cambodia. "Our futures are entwined."

The EU trade chief said around 90% of the world's economic growth takes place beyond the EU's borders and that Asean is a major engine for development. With the EU accounting for around 10% of Asean's total trade, there is room for Europe and Asean to improve trade ties, and the EU is stepping up plans to develop a series of bilateral trade deals in the region.

The EU and Vietnam are set to begin negotiating a free-trade agreement after agreeing Saturday on key topics to be covered, flagging Europe's growing desire to develop stronger ties with Southeast Asia's fast-growing economies.

The trade relationship between Vietnam and the EU improved sharply last year after the EU dropped tariffs on imports of Vietnamese footwear. Now the two sides aim to eliminate import tariffs, trade in services and other nontariff barriers, while reaching a broader agreement on intellectual-property rights and freer competition in each other's markets. Still, the agreement just signals the beginning of a long process.

The European Commission, the EU's executive arm, will have to consult with EU member nations before it can launch formal negotiations with Vietnam, which met with Mr. De Gucht and other EU representatives on the sidelines of the Association of Southeast Asian Nations summit in Cambodia's capital.

Vietnam is the third member of Asean with which the EU has begun negotiations on a free-trade deal. The others are Singapore and Malaysia.

Mr. De Gucht said in an interview with The Wall Street Journal on Saturday that the EU's strategy is to attempt to create a network of similar, complementary trade agreements across Southeast Asia until the Asean group is ready to conduct region-to-region free-trade talks.

"We are making sure that these discussions all have the same backbone," Mr. De Gucht said, with the hope of of one day helping create a broader EU-Asean free-trade pact once the Southeast Asian nations more closely integrate their economies, starting in 2015.

Asean, Mr. De Gucht added, "is making big efforts towards integration and we would be very pleased if they continue and if they go even faster, because for us the ideal configuration is to have a region-to-region process."

"It's an idea whose time has come," he said.

Separately, Mr. De Gucht said Saturday that European political and economic sanctions against Myanmar can be lifted soon, provided that Sunday's elections were conducted in a free and fair manner. The lifting of political sanctions could come as early as April 23 at a meeting of European foreign-affairs ministers, if the vote proceeds without any irregularities. If that test is met, and if the International Labor Organization concludes that Myanmar has made progress in eradicating forced labor, Mr. De Gucht said he will propose restoring EU tariff preferences and other benefits to Myanmar.

Myanmar's opposition icon Aung San Suu Kyi and other opposition leaders had complained of problems in the lead-up to Sunday's vote. Her opposition National League for Democracy said late Sunday she had won a seat in parliament in a historic series of elections to fill 45 vacant seats in the country's legislature. Her party said it was winning in several other constituencies, too.

—Martin Vaughan contributed to this article.

Write to James Hookway at james.hookway@wsj.com

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