European Union opens trade door to Vietnam

The European Union agreed on Wednesday to open its markets wider to Vietnam, while closing its trade doors to Cambodia, rewarding Hanoi for its progress on labor guarantees and sanctioning Phnom Penh for human rights abuses.

The moves mark the EU's increased insistence that trading partnerships go beyond market liberalization and be coupled with commitments to environmental, labor and social standards. On Wednesday, it displayed both its carrot and stick. In Strasbourg, EU lawmakers voted by 401-192 to approve a free trade agreement with Vietnam.

It is the most comprehensive pact of its kind struck by the EU with a developing country, and only its second - after Singapore - with a member of the Association of Southeast Asian nations (ASEAN). Campaign groups such as Human Rights Watch had urged the EU lawmakers to postpone approval until Vietnam had made further reforms, including on freedom of assembly and to a penal code they say puts government critics in jail.

EU trade commissioner Phil Hogan said Vietnam had already made great efforts to improve its labor rights record and the new partnership would increase the EU's potential to promote and monitor reforms.

Vietnam Industry and Trade Minister Tran Tuan Anh called the agreement  a "significant milestone" in relations and said it should take effect in July. Garment, footwear and wood furniture industries would be the chief Vietnamese beneficiaries, he said.

The deal will eliminate 99% of tariffs, although Vietnam will have a transition period of up to 10 years for some imports, such as cars and beer.

Many Vietnamese goods already benefit from preferential access to EU markets under a scheme offered to poorer developing countries. However, this applies to duties on two-thirds of product types and tariffs still apply, albeit at a lower rate, to garments.