Vietnam and the EU established diplomatic relations in November 1990, and bilateral co-operation was given a boost with the July 17, 1995 signing of a framework co-operation agreement which laid out basic principles for economic and trade co-operation between the two sides. The EU has since then become an important partner of Vietnam in various domains, from politics and development co-operation to trade and investment.

Political ties between the two sides have been strengthened with many high-level meetings, the peak of which was the Vietnam-EU summit in October 2004, on the occasion of the fifth Asia-Europe Meeting (ASEM-5).

Development co-operation has been growing together with political relations. At present, the European Commission and EU member countries are largest provider of non-refundable aid and the third largest donor of Official Development assistance to Vietnam, after Japan and the World Bank. Most EU-funded projects focus on areas prioritised by Vietnam, such as rural development, human resource development, health care, education, technical assistance, management capacity building, and administrative and judicial reforms. At the 2004 donors' consultative meeting, the EU committed a total of 722.53 million euros to Vietnam in 2005, up 37% from the previous year.

Trade and investment relations between Vietnam and EU member countries have been constantly expanded. The two sides have granted each other the Most Favoured Nation status, and the EU has also put Vietnam in its list of developing countries benefiting from its Generalised System of Preferences (GSP). Over the past 10 years, Vietnam-EU trade ties have grown  an average of 15-20% per year. The EU is now one of Vietnam's leading trading partners, with bilateral trade value surpassing 6.2 billion euros in 2004, up 20% compared to 2003.

Vietnam exports to the EU mainly light industrial goods, farm and aquatic products, while importing machinery, equipment, chemicals, materials and accessories for textile and garment making, steel, fertilisers and medicines. Its major markets include Britain, France, Germany, Sweden and the Netherlands. The two sides continued to enjoy growth in trade ties in the first six months of this year, especially after the EU dropped the quota system on Vietnam's textile and garment goods on January 1, 2005.

The EU actively supports Vietnam's admission to the World Trade Organisation. The conclusion of bilateral talks on this issue on the occasion of ASEM-5 last year has generated positive effects on Vietnam's talks with other partners.

Regarding investment, EU countries were among the first investors to come into Vietnam after the country promulgated the Law on Foreign Investment in December of 1987. By the end of 2004, they had invested a total of US $6.9 billion in registered capital in 473 projects, accounting for 9% of foreign investment in Vietnam. In the first five months of this year, the EU poured more than US $293 million into Vietnam, representing 64.8% of the total FDI flow into the country in the period. Many major European companies have been represented in Vietnam, including BP of Britain, the Shell Group of the Netherlands, Total Elf Fina and France Telecom of France, and Siemens of Germany.