Vietnam and the United States are both signatories to the Trans-Pacific Partnership (TPP) Agreement along with Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Japan and Singapore. Initiated by a group of like-minded countries sharing the same view and goal of expanding agreements that include Asian – Pacific countries which account for more than 50 per cent of global production output and over 40 per cent of world trade, the TPP is expected to create a boost for US – Vietnam economic ties and provide wider market access for both sides.
TPP makes Vietnam different in the region
According to the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment, governmental officials and business leaders are becoming more acutely aware of the importance of the Asia Pacific region and the TPP benefits. Expenditures of the global middle class are expected to increase from US$21.3 trillion in 2009 to US$55.7 trillion in 2030. The Asian market share is estimated to grow from 23 per cent in 2009 to 59 per cent in 2030. This interest will develop when Vietnam joins the TPP. These are favourable conditions for US companies to expand investments, including their constant expansion of operating scale and production capacity in search of profits. The TPP will make Vietnam different from other investment markets in the region.
According to AmCham, Vietnam may be the biggest beneficiary from the TPP with relevant terms and conditions. Some experts predicted that Vietnam’s exports will increase 28.4 per cent when the TPP comes into force. Its export value without the TPP and with the TPP in 2025 is projected at US$239 billion and US$307 billion, respectively.
Moreover, the TPP is believed to give a strong boost to the country’s GDP growth. With the TPP, Vietnam’s GDP in 2025 may be 10.5 per cent than the baseline (without the TPP).
The TPP is an opportunity for Vietnam to utilise and supplement the areas which fall short, such as investment funds and qualifications which fail to meet requirements. Adam Sitkoff, Executive Director of the American Chamber of Commerce (AmCham) in Hanoi, not only highly valued the extreme importance of the TPP to US – Vietnam bilateral economic relations, but also believed that the TPP would have a transformative effect on Vietnam’s business environment and offer new opportunities to help Vietnam’s strategic drive to industrialise, modernise and globalise. The TPP will enable the private sector to gain a greater access into key markets, will stimulate competition, will attract additional foreign investment, and will help build key supply chain infrastructure, thus creating significant opportunities for Vietnamese businesses.
TTP will create a level playing field for Vietnamese and US companies, thus requiring Vietnam to carry out sweeping reforms to open up the market for US goods and service providers and agricultural goods. With a market of 600 million people in the ASEAN Economic Community, the TPP will open another valuable opportunity for Vietnam to reach the world’s largest economies that account for 40 per cent of global GDP.
Promises that have not come true
However, the American Chamber of Commerce in Vietnam (AmCham) said the TPP is still a promise, not a reality. Each TPP country has its own procedures to obtain approval, law enforcement and administrative procedures. This is also a difficulty. The TPP issues have been discussed for many years by Vietnam and its partners, including the US. It offers a framework for action and focus for efforts in 2016.
Ms Sherry Boger, AmCham Chairwoman at the Vietnam Business Forum (VBF) held in December 2015, said that the Regulatory Coherence, Transparency and Meaningful Public Comment (TPP Chapter 25) is an essential first step to implement Vietnam’s commitments for public comment on proposed administrative regulations from citizens and businesses that would be affected. Vietnamese central and local agencies must enhance competitiveness and step up reform of procedures in provision of public services in an appropriate, effective way to facilitate preparatory process for international economic integration.
She said, regarding the education, a key development driver (TPP Chapter 23), Vietnam needs work-ready graduates, science and technology, research, and innovation. “AmCham member companies are involved in a number of education projects. We encourage the Government to lead a large-scale transformation to scale HEEAP 3.0 nationwide, supported by both Vietnamese and FDI business associations and companies,” said Sherry Boger.
Very few Vietnamese enterprises are part of global supply chains. Although Vietnam has attracted FDI with significant export growth, more than two-thirds of Vietnam’s exports are from FDI factories; and imported materials and components account for 90 per cent of the export value. AmCham companies, together with relevant business associations, are cooperating in supplier development so that Vietnam companies will qualify to join global supply chains, particularly in garment and textile, footwear and household appliances.
In his statement on the Trans-Pacific Partnership, US President Barack Obama said, “The TPP includes the strongest commitments on labour and the environment of any trade agreement in history, and those commitments are enforceable, unlike in past agreements. It promotes a free and open Internet. It strengthens our strategic relationships with our partners and allies in a region that will be vital to the 21st century.” Hopefully, with upcoming expansion opportunities, Vietnamese companies can access and further develop trade and cooperation ties with US investors and businesses.
Source: vccinews
Keyword : TPP, A Boost to, Vietnam-US Relations.
