Challenges and Opportunities for Vietnam in the TPP negotiations
09/01/2011 46Challenges for Vietnam in the TPP Negotiations
Challenges for Vietnam in the TPP Negotiations
• Reforming labor laws to standards acceptable to TPP members
o Collective bargaining
o Right to organize
• Non-Market Economy (“NME”) status
o Considered a market economy by some TPP countries and not others
• U.S. NME criteria statutory/not discretionary.
o Currency convertibility
o Internationally accepted workers rights/free bargaining for wages
o Foreign investment
o Government ownership/control of means of production
o Government control over allocation of resources
o Other factors
• The TPP negotiations will not remove current U.S. AD/CVD measures in place.
o U.S. import relief measures on separate, domestic administrative track.
• The TPP negotiations will not constrain U.S. trade remedy measures against dumped or subsidized Vietnamese exports.
• Risk of future AD/CVD investigations remain
• U.S. will continue to use the NME methodology in AD cases until Vietnam graduates to ME status.
• Implementation and capacity constraints
• Non-Conforming Measures– Vietnam wants to take liberal exceptions from its GATS MFN obligations that the U.S. has thus-far resisted.
• TRIPS-plus IPR commitments
• GPA accession
• Environmental commitments
• SOEs
• Tough rules in import-sensitive sectors to minimize leakage (China)
o Textiles/Apparel: yarn-forward rules, verification, no third country fabrics
o Agriculture
Opportunities for Vietnam in the TPP Negotiations
• Comprehensive, regional free trade agreement
• Once-in-generation opportunity to leap forward on:
o Economic development and boost exports
o Trade facilitation/supply-chain efficiency
o Modernize/upgrade services sector
o Accelerate privatization of SOEs
o Open procurement market
• Broad scope of TPP will have benefits deep into the Vietnamese economy
• Cutting-edge disciplines on:
o Services (insurance, banking, financial, legal and brokerage)
o Investment
o Telecommunications and e-commerce
o IPR
o SPS
o TBT
Opportunities for Vietnamese Exports
- Preferential market access to all TPP countries
• Reduced duty/duty free for key exports to ALL TPP countries
• Most near-term market access benefits in sectors with significant current trade (textiles and apparel; footwear).
o Aquaculture
o Textiles and Apparel
o Footwear
o Furniture
• Tariff reductions on exports to U.S. a tax cut for U.S. importers
• Access to U.S. services sectors, longer-term benefit
- Improvement to import relief practices
• AD/CVD questionnaires in Vietnamese
• Working-group on NME graduation
• Govt-to-govt. consultations in AD and CVD cases (not just CVD)
• Pledge not to use AD/CVD measures (long shot)
• Use TBT/SPS TPP commitments to avoid disputes (e.g. basa and tra)
Eg:
Aquaculture (catfish fillets, shrimp and prawns, ect)
• Exports from Vietnam: $500 million in 2009
• U.S. tariffs: Duty free to 6% ad valorem
Apparel (Chs 61 and 62)
• Exports from Vietnam): $4 billion in 2009
• U.S. tariffs : Duty free to 32% ad valorem, and/or specific tariffs per kg.
Footwear (6401-6405)
• Exports from Vietnam: $1.3 billion in 2009
• U.S. tariffs: Duty free to 37.5% ad valorem, plus specific tariffs
Furniture (9401 and 9403)
• Exports from Vietnam: $1.35 billion in 2009
• U.S. tariffs: Duty free
- Gains on tariff reduction/elimination important for footwear and apparel.
- Aquaculture and furniture already duty free
Conclusions
• TPP offers Vietnam a “not to be missed” opportunity to link its economy to the U.S. and other TPP members
• Counter-balance to China’s regional influence
• TPP will yield benefits deep into the Vietnamese economy:
o Goods (potential for huge increase in exports of footwear and apparel; furniture and aquaculture
o Services
o Horizontal disciplines benefit Vietnam
o regulatory coherence
o SMEs
o competition
o Development
• Opportunity to influence future composition, scope and ambition of TPP
• Industry/business community support key for TPP success
o Emphasize Vietnam’s considerable offensive interests
o Defensive interests will speak for themselves
• Not in Vietnam’s interest to seek a two-tier agreement
o Support high-standards, high-ambition agreement
• Opportunity for improved treatment in trade remedy measures
• Future graduation from NME to ME status
• Implementation challenges can be overcome:
o political will
o transition periods
o capacity building assistance/outside resources.
Laywer Jay L. Eizenstat, Esq
Miller & Chevalier Chartered
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