The EU on Wednesday agreed to a free-trade agreement (FTA) with Vietnam, a country described as having a “major rights-abusing government”.

This comes amid the 28-nation bloc preparing the procedure for a possible withdrawal of Cambodia’s Everything But Arms (EBA) preferential trade agreement on grounds of alleged “deterioration of human rights”.

The European Union Commission on Wednesday presented the EU-Vietnam trade and investment agreements for signing.

When finalised, it will “eliminate over 99 per cent of all tariffs on bilateral trade – worth some €47.6 billion ($54 billion) a year – and partly remove the rest through limited zero-duty quotas, known as tariff rate quotas, according to the agreement memo.

The EU’s Commissioner for Trade Cecilia Malmstrom earlier this month announced in the EU blog the start of an 18-month process that could see the withdrawal of the Kingdom’s EBA agreement, worth $676 million in duty and tax free imports, for “very troubling developments with a clear deterioration of human rights and labour rights, without convincing improvements in sight”.

The Vietnam pact needs approval from the EU Council and Parliament, and on Wednesday the EU Trade Commission said it wanted the agreement to be finalised “quickly”.

The EU said Vietnam was its second largest trading partner in Asean after Singapore. The Vietnam-EU trade in goods is worth €47.6 billion a year and €3.6 billion in services.

The FTA differs from the EBA scheme, with the former bringing benefits for both parties, while the latter benefits the EBA recipient. But both deals have strings attached as FTA partners and EBA beneficiaries must respect human rights, experts say.

Malmstrom said the Vietnam deal and a similar one with Singapore would move the bloc closer to a broader regional trade pact with Southeast Asia, the Financial Times reported.

The deal with Vietnam was the “most ambitious agreement we have ever made with a developing country. It sets the standard. It is a very important stepping stone for whatever we do in the region,” Malmstrom said.

She said the deal would “help spread European high standards” of labour law and environmental protection, as well as “create possibilities for in-depth discussions on human rights”.

Human Rights Watch’s Asia division deputy director Phil Robertson said on Thursday that Vietnam had human rights problems that needed to be addressed before the FTA was signed.

“Vietnam is clearly among the most rights abusing governments in Asean. The government has more than 120 political prisoners behind bars and the number is growing every day,” Robertson said, outlining restrictions of freedom of expression, assembly, of union formation, and a poor court system, among others.

“It is quite clear that Vietnam is a major rights-abusing government, and Human Rights Watch does not support the signing of an EU-Vietnam trade agreement until Hanoi undertakes serious reforms to respect human rights,” he said.

However, Cambodia, Robertson claimed, deserved to be hit hard by the EU on its failure to meet human rights provisions of the EBA, and now leaders in Phnom Penh have a year to take steps to improve rights, in negotiation with the EU.

But Council of Ministers spokesman Phay Siphan said: “What [Robertson] says is not true. He wants to put the blame on the prime minister and make accusations without evidence as his intentions are politically motivated.”

Siphan said the Cambodian government would carry on with the democratic process, implement the rule of law, and would not act in any way that contravened the Kingdom’s laws.