After 5 years of negotiation, the Trans-Pacific Partnership (TPP) has been agreed. There are 12 Pacific Rim countries including the US and Japan. The TPP countries have a combined population of 800 million, make up 40% of global GDP and represent 30% of global trade. For Vietnam this represents the biggest deal since joining the WTO.
Opportunities offered for Vietnam
The TPP is expected to expand Vietnam’s GDP by US$23.5 billion and exports by US$68 billion by 2025. The key industries for Vietnam, which will take advantage of zero import tariffs in large markets like the U.S, Canada, and Japan, are textile, garment, footwear and seafood.
Another opportunity the TPP presents for Vietnam is that it will drive standards higher in terms of administrative transparency and anti-corruption.
Challenges faced for Vietnam
Vietnam is arguably the least developed country of the TPP, and under the terms it has 10 years to modify its systems before the tariff barrier is reduced to zero. It is expected to modernize the state-owned enterprise structure, its legal systems and administrative procedures and improve the skills of its large labour force in that time.
Intellectual Property Matters
Just one hour before the final round of negotiation in the early morning of 5 October, Vietnam and the U.S reached an agreement on intellectual property rights (IP), it was an area of the deal beset with difficulties.
Vietnam is expected to improve the conditions for enforcement of IP rights. This would in turn assist the growth of foreign investment, particularly in the technology sector. There is, however, some way to go from the current position.
The TPP will be presented before the Party Central Committee and then submitted to the National Assembly for ratification. In the meantime, the Vietnamese public has expressed a positive attitude towards the TPP and is looking forward to improvements in the systems through the necessary reforms.