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European Union Talks Trade in Asia

The European Union has begun trade talks with South Korea and the Association of Southeast Asian Nations (ASEAN). As Ron Corben reports from Bangkok, analysts say the European Union's push in Asia follows the example of the United States and other nations seeking trade deals in the fast-growing Asia-Pacific region.

As Asian nations become wealthier and their trade expands, the European Union is eager to tap into that growth.

The EU has begun negotiating a free trade agreement with South Korea and it has started preliminary discussions on a deal with the Association of Southeast Asian Nations.

The talks are driven in part by European fears of being blocked out of Asian markets as governments in the region sign trade deals with each other and the United States. The U.S. and South Korea are finalizing a trade agreement, and Washington is in talks with other Asian nations to open markets.

Bob Broadfoot, managing director of Hong Kong firm Political and Economic Risk Consultancy, says the EU's moves highlight the growing awareness of competition from other large trading economies.

"The EU doesn't want to be left out and it sees a number of other bilateral trade deals between the U.S. and certain Asian countries like the U.S. and Korea," Broadfoot says. "So the EU on the one hand feels that it's being pressured into a similar course of action."

The ASEAN talks are in the very earliest stage.

Jean-Jaques Bouflet is the trade counselor at the European Commission office in Thailand.

"Most of our [trading] partners are entering free trade agreements policy with ASEAN and we were the only ones not [doing so] to be negotiating a free trade agreement," Bouflet says. "So it's clearly a must for us if we want to stay in the race."

In addition to increasing trade between the two blocs, Bouflet says a deal will allow greater EU investment in the 10 ASEAN members.

The EU's population is almost 500 million, while ASEAN is home to around 560 million. Trade between the two stands at around $140 billion a year.

But ASEAN officials say an agreement with the EU could take years because of the differences between the two organizations. While the EU is a common market and its members are industrialized nations, ASEAN has yet to establish a common market and some members are among the poorest countries in the world.

A deal, ASEAN leaders say, may only be done around 2015 when the group hopes to have established a free trade zone among its members.

A deal also could be delayed if ASEAN calls for the EU to reduce subsidies to its farmers and open its agricultural market further.

Human rights groups worry that in its eagerness to increase trade, the EU might overlook rights abuses in some ASEAN countries, particularly Burma. The EU, United States and other governments have imposed economic sanctions on Burma because of its poor rights record.

Debbie Stothardt is a spokeswoman for the Alternative ASEAN Network.

"We hope that the European Union is going to be mindful of the long-term costs of rushing into a free trade agreement without due diligence," Stothardt says. "They really do need to be very, very clear about the environmental, the labor, the human rights and legal standards that are upheld by all parties to such a free trade agreement."

Trade negotiators from Brussels may find easier going in Seoul.

The EU's trade with South Korea stood at over $78 billion in 2006, making it Seoul's second largest trading partner following China.

A trade deal could lift South Korea's exports to the EU by 36 percent and European exports to Seoul could grow more than 47 percent.

The two sides hope negotiations can be done within a year.

Brian McDonald, the EU ambassador to South Korea, says the negotiations began after months of preparation.

"This is a very important step, which of course is economic but also has a political dimension. I'm quite optimistic it's quite possible to move ahead quickly," McDonald said.

Analysts say South Korea and the EU may face fewer obstacles in reaching a deal than Seoul and the U.S., because the talks with Washington included sensitive agricultural products.

European banks and automobile companies hope to make inroads in the South Korean market. But for Seoul, the prize could be increased access to Eastern European markets for its autos, electronic goods and textiles.

For both ASEAN and South Korea, trade agreements with the European Union could help ward off rising competition from China and India. Trade analysts say ultimately, it is fear of those two economic powerhouses that may lead to agreements.