Vietnam: TPP – new playing field with great opportunities and big pressure

VietNamNet Bridge – When commenting about TPP, experts all agree that this is for first time Vietnam joins the negotiations for multilateral FTA (free trade agreement) with such a fast pace, broad scope of issues to be touched, and a high level of commitment and complexity.

On November 15, 2010, Vietnamese President announced Vietnam’s decision to join the negotiation rounds for Trans-Pacific Partnership TPP.

Considered issued thoroughly before making decision

The partners which have joined the negotiations for TPP include New Zealand, Singapore, Chile, Brunei, the US, Australia, Peru, Malaysia and Vietnam. Of these, Vietnam is considered as the economy with the lowest development level.

According to an official from the Ministry of Foreign Affairs, it took Vietnam at least one year to think about whether to join the negotiations. Vietnam also attended three rounds of negotiations as an observer before making the final decision. It spent that time to consider the opportunities and challenges that TPP may bring and prepare suitable negotiation plans,

Vietnam need much time to think about TPP because of its large scope and the big influence coverage of the agreement, the one which the US calls the “FTA of the 21st century. The official from the Ministry of Foreign Affair said that this is the first time Vietnam joined the negotiations for multilateral FTA (free trade agreement) with such a fast pace, broad scope of issues to be touched, and a high level of commitment and complexity.

If comparing with BTA (bilateral trade agreements), AFTA (ASEAN’s agreement) and WTO (World Trade Organization), TPP proves to cover a larger number of issues, including goods and services trade, investment and intellectual property. Besides, TPP also covers non-trade issues such as government procurement, the environment, labor, trade union and the support to small and medium enterprises.

Lawyer Tran Huu Huynh, Chair of the Advisory Committee for the international trade policies under the Vietnam Chamber of Commerce and Industry VCCI, said that as an official member of negotiations, Vietnam absolutely can make suggestions, and raise its voice and intervene in the taking shape of the comments within the framework of TPP.

Pham Chi Lan, a well-known economist in Vietnam, also said that since Vietnam joins the negotiations from the beginning, it will have better conditions to consider the benefits and challenges so as to take initiative in negotiating for building the rules for TPP instead of accepting the rules set up by others.

Lan emphasized that this is really a big advantage for Vietnam if compared with the negotiations for WTO. With WTO, the countries which join the playing field later have to make their new commitments, while they cannot add any new rules to the rules which have been existing.

Big challenges

Considered a “next-generation” FTA, TPP not only covers the fields of trade and service, but also covers other non-trade fields such as intellectual property, the environment and labor. Therefore, the pressure of TPP on the Vietnamese national economy and Vietnamese businesses will be very hard.

According to VCCI, with TPP, Vietnam will have the chances to access export markets with the tariffs at zero percent. However, the chances may be neutralized with the barriers to be set under the mode of technical requirements, hygienic requirements, or the safeguard measures. Besides, the strict requirements on labor and the origin of materials may also make Vietnamese manufacturers unable to take full advantage of the low tariffs.

Also according to VCCI, once Vietnam has to commit to lower the import tariffs on the majority of groups of products from TPP’s partner countries, the tax collection to the state budget will decrease, while more imports will flock to Vietnam because they become cheaper. The risks seem to be very high for farm produce, which would hurt farmers.

Source: Vietnamnet, Vietnam