BRUSSELS (AFP) - The EU and Vietnam on Tuesday announced a free trade deal that would remove nearly all tariffs that Brussels called a "milestone" on the way to a region-wide agreement with Southeast Asia.
The EU said the agreement in principle followed two and a half years of "intense" negotiations between the 28-nation European Union (EU) and Vietnam, whose two-way trade has grown three-fold to 28 billion euros (more than S$42 billion) in the last 10 years.
"We have a deal. This finely balanced agreement will boost trade with one of Asia's most dynamic economies," EU Trade Commissioner Cecilia Malmstroem announced in Brussels following a phone call with her Vietnamese counterpart Vu Huy Hoang.
In Hanoi, Hoang said the deal would help "integrate Vietnam into the global economy," allow Vietnamese firms to meet international standards and provide benefits for businesses and people on both sides.
Malmstroem told a press conference in the Belgian capital that the two had agreed on "all the political issues", but more legal work was needed to finalise the text and she hoped the deal could take effect in late 2017 or early 2018.
She called the agreement, which follows a similar one with Singapore last year, an "important milestone" in EU ties with the 10-member Association of Southeast Asian Nations (Asean), which includes Vietnam and Singapore.
"Our ultimate goal is to have a region-to-region agreement," the former Swedish politician said.
The EU is holding separate talks with two other Asean members, Malaysia and Thailand, to try to secure similar free trade agreements.
EU foreign policy chief Federica Mogherini announced meanwhile that she will visit Kuala Lumpur on August 5-6 as part of the EU's drive to "step up its engagement" with Asean, which will also include talks on security.
- Human rights focus -
Malmstroem said "there is a large focus on human rights" in the deal and in the broader relationship, warning that the agreement could be suspended if Vietnam fails to respect its obligations.
Malmstroem said the agreement, the first that the EU has concluded with a developing country, will remove more than 99 per cent of tariffs on goods traded between the two economies over a period of up to seven years.
"The agreement will also create new market access opportunities in services and investment," a statement said.
"Vietnam has agreed to liberalise trade in financial services, telecommunications, transport and postal and courier services," it added.
Vietnam, it said, will also open its market to EU investment by, for example, lifting or easing restrictions on the manufacture of food products and beverages, as well as in non-food sectors.
The deal will ensure the respect of workers' rights as well as the "sustainable management" of natural resources, including wildlife, forests and fisheries.
Malmstroem said more than 31 million jobs in Europe - which is suffering from high unemployment - depend on exports and that having easier access to a growing market of 90 million consumers was "great news".
Vietnam exports mobile phones and other electronics, footware and textiles, and agricultural products including coffee, rice and seafood to the EU.
EU exports to Vietnam, meanwhile, are dominated by high-tech products including electrical machinery and equipment, aircraft, vehicles and pharmaceuticals.
The EU and Japan are also negotiating a free trade agreement, but Malmstroem said it was too early to know whether the two sides would seal one by the end of the year.
Brussels and South Korea also have a free trade agreement.
The EU is negotiating an investment deal with China, but one on free trade is "not on the agenda at the moment", the commissioner said.
She added EU negotiators would also meet with their Indian counterparts in September to see if there is a "willingness to restart talks" on free trade that have stalled.