Trade negotiations between the EU and ASEAN states

Trade negotiations between the EU and ASEAN states

In 2017, the European Union–Association of Southeast Asian Nations (ASEAN) dialogue partnership celebrated its 40th anniversary. The same year saw the 50th anniversary of the founding of ASEAN. The ASEAN region is currently the world’s fifth largest economy, a dynamic economic area home to more than 660 million consumers. The European Parliament Research Service recently published a Briefing on Trade negotiations between the EU and ASEAN member states to update Members of the European Parliament.

As a whole, ASEAN is one of the world’s largest economies. The ASEAN Economic Community (AEC), launched in 2015 and aimed at creating a single market of more than 660 million consumers with a rapidly expanding middle class, offers great opportunities for EU exporters and investors. The EU supports ASEAN’s economic integration through various initiatives, such as the Arise plus programme, as it considers economic and trade connectivity a priority in its relations with the bloc.

The region is also a key hub for the transit of European goods and has an important position in regional supply chains. In addition to the agreements concluded individually by its member states, ASEAN has signed FTAs with China, Hong Kong, Japan, Korea and India, and jointly with Australia and New Zealand. ASEAN member states are among the 15 countries that concluded the text-based negotiations in 2019 for a Regional Comprehensive Economic Partnership (RCEP) agreement, and four of them (Brunei, Malaysia, Singapore and Vietnam), are also members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP), in force since 2018.

To ensure better access to opportunities in the region’s market, the European Union (EU) started negotiations with ASEAN for a region-to-region free trade agreement (FTA) in 2007. After negotiations were suspended in 2009, the EU decided to pursue bilateral trade agreements with the individual ASEAN member states. To date, six have begun talks on bilateral FTAs with the EU: Singapore and Malaysia in 2010; Vietnam in 2012; Thailand in 2013; the Philippines in 2015; and Indonesia in 2016.

Negotiations have already been concluded and FTAs entered into force with two of these countries, Singapore and Vietnam, in November 2019 and August 2020, respectively. Negotiations are under way with Indonesia, while talks are currently on hold with Malaysia, the Philippines and Thailand.

In the longer term, these bilateral FTAs would allow the establishment of a region-to-region FTA, which remains the EU’s ultimate ambition. By bringing together two of the world’s largest economic areas, the agreement would establish a free trade area with a combined market of more than 1 billion people.

It is in the EU’s interest to strengthen its economic cooperation with ASEAN, in order to maintain its competitive position in this dynamically developing region. Closer trade and investment relations could also pave the way towards the EU’s goal of a strategic partnership between the two regional blocs, encompassing political as well as economic cooperation.

In September 2020, at the 41st General Assembly of the ASEAN Inter-parliamentary Assembly, Daniel Caspary (EPP, Germany), Chair of the European Parliament’s ASEAN Delegation, stated that, ‘Our ultimate goal remains to establish a region-to-region Free Trade Agreement’.

During his October 2020 hearing in the European Parliament, prior to taking over the trade portfolio permanently, the Commission’s Executive Vice-President, Valdis Dombrovskis stated that, to date, there has been little convergence between the two parties, as well as within ASEAN, regarding the scope of the agreement; however, given the importance of the region, engagement with the process will continue.

In its October 2020 resolution on the implementation of the common commercial policy, the European Parliament stated that it views such agreements as those with Singapore and Vietnam as a step towards concluding an FTA with the ASEAN region as a whole.

The full Briefing is available :

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