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EU seen close to agreeing Vietnam WTO entry

Tuesday October 5, 1:24 PM By Christina Toh-Pantin - REUTERS

HANOI (Reuters) - Vietnam and the European Union could be close to completing talks for the Southeast Asian country's entry into the World Trade Organisation, but Hanoi may find it hard to hit its target of joining the group next year.

Six EU negotiators are in the Vietnamese capital to nail down remaining points and, if all goes well, EU Trade Commissioner Pascal Lamy may be able to announce an agreement during an Asian-Europe summit at the end of the week.

Two-way trade between the EU and Vietnam was $6.8 billion in 2003, or about 22 percent of Vietnam's total trade. Its other major trading partners are Japan, the United States and China.

After nine bilateral rounds of talks, the negotiation process "has now reached its final stage", Lamy was quoted as saying in the Oct. 4 edition of Vietnam Investment Review weekly.

"I believe that, given the two sides' determination, the deal will soon be concluded," he said.

Clinching a deal with the 25-member EU would give Vietnam a big push along the path to joining the WTO. But accession requires bilateral talks with all 147 members of the Geneva-based trade watchdog.

Vietnam has completed negotiations with smaller trading partners such as Cuba but has still to complete the process with the United States and Japan.

One trade expert in Hanoi familiar with the EU talks said improved access to Vietnam's transport industry, financial services and telecommunications were among Europe's goals. "The services is where there are some remaining issues," he said.

The EU would ideally like European firms to set up wholly owned subsidiaries in those crucial sectors, but experts say they will likely have to settle for less.

Despite liberalising investment, communist Vietnam continues to restrict competition in areas such as banking and telecom where local companies dominate. In transport, foreign firms can participate only in limited parts of the logistics chain.

TEXTILES

Vietnam wants to join the trade body by 2005 as that is when quotas on textiles and garments, the country's second-most valuable export earner, will end for all WTO members.

That means big producers such as China, freed from the volume constraints imposed by quotas, will be able to compete more effectively against Vietnam, whose exports would remain capped by bilateral accords with the United States and the EU.

Textiles and garments earned Vietnam $3.4 billion in the first nine months of this year, with most of the goods going to the United States.

"Anything that brings Vietnam closer to WTO accession is a good thing,"

said Agost Bernard, associate director of sovereign ratings at Standard & Poor's in Singapore.

But he said talks with the United States might be more complicated because America designates Vietnam -- as it does China -- a non-market economy.

New U.S. envoy to Vietnam, Michael Marine, said last week questions remained whether Vietnam could implement "necessary broad reforms" in time to meet its 2005 target.

He said Vietnam indicated that telecom, distribution, transport and financial services were "tough areas for liberalisation".

Still, the United States, which has a bilateral trade pact with Vietnam, would seek progress in those areas and also in agriculture, Marine told the American Chamber of Commerce.

Japan doesn't have the WTO finishing line in sight either.

"We can't say at this moment when we can conclude negotiations," said Yasukata Fukahori, first secretary of the Japan embassy's economic division.

He said Japan and Vietnam had held three rounds of talks, and a group of experts would come to Hanoi in the next few months to hammer out detailed discussions on services and goods.