- The EU is hoping to revive the negotiations for a region-to-region agreement with the Association of South-East Asian Nations (ASEAN), but few trading partners have faced such inauspicious fate as its members.
- The trade agreement with Singapore is concluded but remains unsigned and the EU Member States do not seem to be in a hurry to ratify the EU-Vietnam agreement due to the prospects of rejection by the European Parliament over labour issues.
- There is a proposal by the European Parliament to effectively stop the use of palm oil in biodiesels under the new Renewable Energy Directive (RED-II), which has caused Malaysia, Indonesia and Thailand to threaten trade retaliation against multiple EU exporters and the termination of both bilateral and regional trade negotiations.
- Given existing jurisprudence any such differentiated treatment or selective exclusion of one crop would not comply with WTO law, exposing the EU to a time-consuming WTO dispute.
- Moreover, military rule in Thailand, reports of human rights violations in the Philippines under President Duterte or atrocities in Myanmar will inevitably complicate both bilateral and EU-ASEAN negotiations.
- In Europe, much of the policy work undertaken in the current political term is dedicated to restoring the mandate and win back public trust for trade policy. The EU is weakened politically and has little wriggle room for concessions internally. The EU is demanding more, while offering less, in its international negotiations.
- The European Parliament shifts EU trade policy towards unilateral and short-term interests rather than a trade policy that could enable long-term political reforms and support the EU’s long-term geo-economic interests.
- Europe’s engagement with the ASEAN countries and the promotion of WTO rules, human rights and sustainability calls for a long-term approach which requires patience.
Excellent research assistance by Cristina Rujan is gratefully acknolwedged.
The Diplomacy of Patience: South-East Asia and Europe
Few of Europe’s trading relations have faced such an inauspicious fate over so many intricate political complexities as the EU’s relations with the countries of South-East Asia. The EU’s bilateral negotiations with Singapore were concluded after four years of negotiations in October 2014, but the deal remains unsigned.
Instead, the agreement was deferred to an opinion of the European Court of Justice (ECJ) – a decision which did not only leave the Government of Singapore nonplussed, but also unleashed the ongoing debate on the division of investment competences between the EU and its members.
Similarly, the EU has made little attempt to ratify its agreement with Vietnam, agreed in December 2016. The Commission has come to terms with the reality that it would face an uphill battle in the European Parliament over Vietnam’s labour practices – including practices that were already known to the EU before the negotiations were concluded, and even before talks were opened.
Negotiations with Malaysia, Indonesia and Thailand have faced political difficulties or diplomatic spats over EU and national regulations (e.g. various attempts of European countries to legislate against palm oil), or military coups. Several attempts have also been made to revive the region-to-region negotiations between the EU and the Association of Southeast Asian Nations (ASEAN) since it came to a halt in 2009 – the first-ever negotiation failure for both trading blocs.
Whether the approach is bilateral or regional, the EU trade talks with the South-East Asian countries have been an exercise in diplomatic patience and one of many contrasts. The pragmatic and outward looking countries in South-East Asia have signed twenty or more FTAs – including ‘impossible’ deals like China, the Gulf Cooperation Council (GCC) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) – by keeping a strict, business-like focus on what’s actually doable.
In contrast, Europe looks for grand accomplishments and tries to change the Asia-Pacific – the centre court of world trade – which policymakers may not always have had the curiosity or patience to understand. In this regard, Europe remains a romantic idealist, often set out to achieve the impossible.
As several of the bilaterals (as well as the EU-ASEAN agreement) will be heading towards fresh negotiations or talks in 2018, this paper looks towards the difficulties involved, and what it may take to break the stalemate. It is too simplistic to blame the failure on various shortcomings or unappealing practices of our counterparties. This approach ignores the whole point of economic diplomacy: It’s a choice to engage the world for what it really is, rather than use that reality as an excuse to disengage from the wider world.