Vietnam Suggests An ASEAN Free Trade Zone With The Eurasian Economic Union

By Chris Devonshire-Ellis

An ASEAN-EAEU FTA would create a market with a GDP of US$11 Trillion and a population of 850 million

Vietnam’s Minister of Trade, Nguyen Hong Dien has suggested that steps be taken to reach an agreement to establish a free trade zone between ASEAN and the Eurasian Economic Union (EAEU). The comments were made yesterday at the Eastern Economic Forum currently being held in Vladivostok.

ASEAN members include Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam. The bloc has a population of some 662 million and a GDP (PPP) of about US$9 trillion and makes up the bulk of Southeast Asia. ASEAN also has Free Trade Agreements with China and India and is part of the upcoming RCEP Free Trade bloc, also including Australia, New Zealand, Japan, and South Korea.

The EAEU includes Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia. It has a population of about 187 million, a GDP (PPP) of about US$5 trillion and makes up the Eurasian landmass between China and the European Union. The EAEU has Free Trade Agreements with ASEAN nations Singapore and Vietnam, in addition to Iran and Serbia and has negotiations underway with China, India, Egypt and several other ASEAN nations.

Nguyen said “Vietnam has good prospects in our cooperation with the Russian Federation. Russia is our key partner, we have all possibilities to expand cooperation with the EAEU, while Russia can also gain access to a huge market,” he said. “For taking advantage of close and trusting relations between the two countries within the framework of the partnership with the EAEU, I offer a number of steps that will allow concluding an agreement on free trade between ASEAN and the EAEU. This may serve as a basis for mustering efforts of all countries to intensify regional cooperation,” the minister added.

The relationship between ASEAN and Russia is important for regional and international cooperation, he noted. “In 2020, trade between ASEAN and Russia surpassed US$15 billion. Vietnam and ASEAN countries agreed to cooperate with Russia to expand mutual trade and investment, to support global chains of supplies and strengthen the partnership with the Eurasian Economic Union,” the Vietnamese minister said, adding that energy, agriculture, telecommunications, oil and gas, digital transformation of the economy, transport and green infrastructure may become the most promising areas of such a cooperation.

Vietnam is ready to serve as a bridge connecting Russia and the EAEU with ASEAN nations, Nguyen stated. Moscow and Hanoi have been keeping friendly relations for many decades, “which is demonstrated in all areas in the pandemic period as well.” he added.

Singapore signed off its FTA with the EAEU last year and has been encouraging Singaporean companies to invest in markets like Russia. Over 500 Russian companies now have their Asian HQ in Singapore. Vietnam signed an FTA with the EAEU in 2015 and has experienced significant trade and investment increases as a result in multiple sectors including automotive and agriculture. An ASEAN-EAEU FTA were it to happen appears to be mutually beneficial to both parties and would further reposition Russia especially as an Asian focused rather than European market in mutual trade. Russian trade with Asia is already close to that with Europe; such an FTA would spur a significant boom for mutual investments into these markets.

We discussed outbound investment trends from Russia into ASEAN recently in this article here.

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