EU to Study Resuming Free-Trade Negotiations With Southeast Asia

The European Union will explore the possibility of resuming talks on a free trade agreement with the Association of Southeast Asian Nations more than six years after negotiations between the two sides collapsed.

Officials will meet toward the end of 2015 to “take stock” of developments in the two regions that will help to decide when talks may restart, EU Trade Commissioner Cecilia Malmstroem told reporters in Kuala Lumpur Sunday after meeting with Southeast Asian economic ministers. She declined to give a timeframe when a decision will be made to resume negotiations.

“The whole purpose of this exercise that we are putting into motion by the end of the year is to identify what are the main difficulties, what could be a possible deadline,” she said. “We know there are differences and challenges, that’s why we took a break in our negotiations a few years ago but many things have changed, in Europe and here as well since then.”

Trade between the EU and Asean rose to $248.2 billion last year, rising from $242.6 billion in 2012, according to a joint statement. The EU is Asean’s second-largest trading partner, while the European grouping is the biggest source of foreign direct investment inflows into the Southeast Asian region.

The EU has sidestepped stalled World Trade Organization efforts to open markets by seeking commerce deals with countries such as the U.S. and Canada. In Southeast Asia, it has completed negotiations with Singapore and is about to enter the final phase of talks with Vietnam.

‘Most Difficult’

Negotiations between the EU and Malaysia for a free trade agreement stalled after the seventh round in April 2012. The two sides weren’t able to “resolve the most difficult issues,” Malmstroem said in a speech to business leaders Sunday.

Both need to be clear that they are ready to achieve an “ambitious deal” before restarting talks, she said.

“There’s no point getting bogged down in the same issues for a second time,” Malmstroem said. “If we want a result that is truly ambitious, and truly effective, both Malaysia and the EU must be ready to contribute across the board.”

That means relooking at offers on tariffs, transparency of regulation and market access on services, export taxes and public procurement, she said.

“I believe in the general principle that open public procurement markets allow governments to buy the best goods and services at the best prices,” Malmstroem said. “But I also understand that this is sensitive, and that it relates to one of the core issues of Malaysian politics.”

Malaysia’s government procurement policies have hampered free-trade negotiations with the U.S. because of preferential treatment given to the country’s so-called Bumiputera, or indigenous, entrepreneurs.

“We’re always willing to talk and to find ways forward, but we need know that there is a willingness to engage on all these issues,” she said in an interview Sunday.

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