05 May 2019

The European Union and the Socialist Republic of Vietnam: the need for a free trade agreement and the potential role of Romania

Radu Muşetescu

Image source: Mediafax

Romania could play an important role in the completion of a free trade agreement between the European Union and the Socialist Republic of Vietnam, while Bucharest holds the presidency of the Council of the European Union. Romania could promote a foreign political agenda that could make it take an international stand. The Romanian-Vietnamese relations enjoy a respectable past and the idea of a potential development is quite promising. Romania’s foreign policy needs coherence and consistency in respect of a region which, even if it is far from us, it is one of the main economic growth pillars for the decade to come.

The economic dimension of international relations has always been an essential component of the way countries approach the bilateral and multilateral political relations. If political and military alliances are the most obvious image of cooperation and coordination between states, economic treaties and agreements are also an image of the openness and integration between countries. We should remember that the core concept on which the European political construction is based started from the idea that an economic integration between Germany and France will lead to the reduction of the possibility of political and military conflicts between the largest countries on the continent. And the idea seems to work.

The awareness that one country’s prosperity depends on its economic openness towards other countries, leads to a less conflictual approach of that specific state. For a rational policymaker, the start of a conflict with another state, wherein both states have a substantial economic integration, will definitely involve some prosperity costs which could question the gained political winnings. Indeed, this motivation towards cooperation can be maintained as long as the political objectives can be quantified, and these are not dependent on regime’s survival or on less quantifiable identity aspects.

Signing free trade agreements is, from this point of view, an economic integration method, by which the countries that are part of such treaty are making important steps towards a political and, eventually, security cooperation. Free trade allows international specialization, a more effective use of resources and, finally, a prosperity growth for the respective countries. It is the first, and maybe the most effective, international economic integration method. At a political level, it allows the interaction between the signatories of the free trade, the maintenance of dialogue and a continuous negotiation process which gets parts closer. Collaboration opportunities are opening towards other fields as well.

Furthermore, free trade agreements have a strong development dimensions as all the economic literature has proved that the most effective method to support the expanding countries is not governmental assistance for development, but the openness of their own economies towards these countries’ exports. From this perspective, developed countries sought to sign free trade agreements to attract the states that wanted to cooperate also politically.  Actually, these treaties are like a “signal” for the international policy, which show also a political-diplomatic access.

The Socialist Republic of Vietnam is one of the most important players in South-East Asia and the world, with a spectacular potential growth not only in the economic field, but also the political and military one. It is the only state which forced one of the two super-powers in the Cold War era period, the United States, to admit, in 1975, the popular regime emerged after the fight for freedom. The People’s Republic of China did the same in 1979, when a punishment expedition of Hanoi for overthrowing, in the previous year, the red Khmer regime from Cambodia, could not reach their goal. The fact that the second summit between the American president, Donald Trump, and the North-Korean leader, Kim-Jong-un, was held in Hanoi, in February 2019, was not a coincidence. It is the result of the experience of a state with a mature, stable and predictable speech in the international policy, as well as of its availability to build relations with any actor, regardless of regime’s nature.

The European Union has signed around 36 free trade agreements, including with countries like Algeria, Lebanon, Kosovo and Turkey. The Socialist Republic of Vietnam is no less than these states, politically speaking. On its turn, the South-East Asian state has commercial agreements, as ASEAN member, with Japan, Australia, New Zeeland, Republic of Korea, and these are just few of the Vietnamese companies or the multinational ones that Vietnam collaborates with directly. There are bilateral agreements with Republic of Korea and the Euro-Asian custom Union, both signed in 2015. Since 2001, Vietnam has standardized its trade relations with the United States of America. As country, the Republic Socialist of Vietnam had, in the past years, a balanced policy against world’s big political and economic powers, hence, an agreement with the European Union is essential to politically encourage this country in continuing this strategy on long and medium term.

From this perspective, the Socialist Republic of Vietnam communicate through its interest to an immediate free trade agreement with the European Union a message of stability and willingness for a political and security cooperation. Initially, the European approach was to have a mega free trade agreement with the entire ASEAN, but because of the differences between the 10 countries, the bilateral approach was later preferred.

Given that for some years the World Trade Organization could not mobilize its political support for initiating commercial negotiations in a multilateral framework, the United States of America seems to disprove the free trade agreements – significant to that end are the withdrawal from the Trans-Pacific Partnership (which surprised the participant countries, including Vietnam) and the commercial disputes with the European Union and the People’s Republic of China – the European Union should take the global economic leader role, to promote, on an international level, the free trade. It is, also, the only global role that it could substantially assume. As it was stated several times, the international negotiations in terms of trade liberalization are like riding a bike: when you stop biking, you fall. Now, it is more than ever necessary for at least the European Union to bike, in order to contribute to saving the prosperity the world is enjoying today. Brussels and Hanoi have already negotiated their first free trade, which they have completed in February 2016. After three years that this initiative has drugged on (alike the agreement with Singapore), Romania can play an important role in relaunching a traditional relation with the South-Eastern Asian country.  

The relations between Romania and Vietnam were traditionally tied, thanks to a similar political profile for both countries, important regional players, however with major security problems in their proxy territories. The traditional approach was the maintenance of the status-quo, to be legal and diplomatic on an international level, Romania being, together with Vietnam, a country which supports the international diplomatic and juridical balance.

Romania was an inspiration for Vietnam in the development process from the 70’s and the 80’s. More than 3.200 Vietnamese specialists were educated in Romania. They saw a model in Romania, not only in terms of development, but also of international policy. These specialists, together with other educated people from Vietnam, but also abroad, have started, back in 1989 (the economy reform year, called “Đổi Mới”), to direct this country towards a remarkable economic development, as the World Bank itself admits. For 30 years, the South-East Asian has recorded huge economic increases, more than 6% per year, reaching 9, 5% in 1995. With a $223 billion GDP in 2017 and exports worth of $220 billion, according to the World Bank, this economy is one to have the greatest openness in the world. If you are reading this article from a South-Korean company device, Samsung, most likely it was made in Vietnam.

Romania is, now, in a strategic insubstantiality condition, outside the Euro-Atlantic area. If Romania will not make an economic commitment to be associated to the international political objectives, the idea of Bucharest approaching extremely important topics from the international agenda, like South-East Asia, Central Asia or the Latin America will be difficult. If we will not have some national industrial players, the use of the political status across the European Union can be, at least for now, an alternative.

The bilateral relations with the Socialist Republic of Vietnam are weakened, alike Romania’s relations with other traditional partner countries. For several years, there was not even an ambassador to Hanoi to allow business people or Vietnamese people to get Romania visa without going to neighbor countries. Maybe it is time, now, for the foreign Romanian policy to use one of the less cards it has on its table to relaunch itself on the international plan. And Vietnam can offer this key.

The European Union-Vietnam relations can be improved. Despite the mutual recognition of the great economic collaboration potential (the bilateral trade overpassing $50 billion in 2017 according to European Commission data), there are some constraints in Brussels, because of the pressure of some non-governmental organizations to push the commercial and investments relations between both countries at a higher level.

In the midst of its European Council rotating presidency, Romania can capitalize the role it has to promote the EU-Vietnam relations, starting from some programmatic, realistic premises. The signing of a free trade agreement would be an important signal to that end. The international contemporary context, which is extremely volatile and difficult to predict, suggests that states should have a more realistic approach in their foreign policy, to talk less about human rights (which are actually about each state’s internal policy) and focus more on a pragmatic approach. What stance could be more suggestive than the US-Vietnam approach, countries which decades ago were in an opened conflict, which led to unexampled human and material loses at that time, the end of the World War II, but which are now collaborating and have common regional economic and security development projects. If Romania would try to impose its own vision in the European foreign policy, Vietnam would be an at least interesting starting point.

And, most likely, the leaders of the South-Eastern Asian state will not forget it.