After a week of negotiations in Hanoi, EU trade commissioner Pascal Lamy and Vietnamese trade minister Truong Dinh Tuyen reached a bilateral conclusion to Vietnam's accession to the WTO.
"Today the EU and Vietnam cement further their trade and economic relations," said Lamy.
"This deal brings Vietnam a step closer to the international trade family, the World Trade Organisation, where it belongs. It is highly symbolic that this deal is concluded in the margins of ASEM meeting, which gathers the EU and Asian family together, a sign of the EU's commitment to Asia."
The EU and Vietnam have already established a solid trade relationship. The EU is Vietnam's main trading partner, accounting for more than 17 per cent of its overall trade, followed by the US (14 per cent), Japan (13 per cent) and China (11 per cent).
Total trade in goods between the EU-25 and Vietnam amounted to around € 6.4 billion in 2003. EU imports from Vietnam amounted to € 4,7 billion in 2003, with agricultural products accounting for 10 per cent.
Between 1999 and 2003 EU imports from Vietnam grew by 9 per cent on average every year.
Vietnam benefits from preferential access to the EU market under the EU's General System of Preferences (GSP), which lowers import duties below the most favoured nation rate.
The deal covers the commitments that Vietnam will undertake in goods and services once it accedes to the WTO. Both parties believe that this will lead to the opening up of the Vietnamese market, while reflecting Vietnam's status as a low-income developing country.
The average tariff level that Vietnam will apply is around 16 per cent for industrial goods, 22 per cent for fishery products and 24 per cent for agricultural goods.
WTO accession is likely to anchor Vietnam into an international rules-based trading system. This, says the EU, will enhance openness, transparency and predictability, which are key to attracting foreign investment and provides a foundation for improved economic governance.
Vietnam applied to become a WTO member on 4 January 1995. The Working Party to cover the multilateral aspects of the WTO accession of Vietnam was established on 31 January 1995. Bilateral market access contacts were established shortly thereafter.
Topics under discussion in the Working Party include agriculture, the customs system, import licensing, national treatment and state trading. The last meeting of the Working Party took place in June 2004.
As part of the WTO accession process, Vietnam is negotiating bilateral market access deals with all interested WTO members. Being Vietnam's largest trading partner, the EU bilateral agreement represents a major step in the process of Vietnams' WTO membership.
Vietnam is currently conducting negotiations with the US, Japan, China, Canada, and Australia among others. Once these bilateral negotiations have been concluded and the Working Party has completed its work on Vietnam's trade regime, the Working Party will determine the terms of accession.
These will appear in a report with a protocol of accession containing the specific market access commitments (in tariff and services schedules) of Vietnam.