Vietnam stands to gain a great deal from the TPP and other trade agreements, writes Ms. Sherry Boger, Chairwoman of the American Chamber of Commerce (AmCham).
First, it is important that we recognize that Vietnam has been extremely successful in international economic integration in general and with the US in particular. Last year total trade between our two countries again expanded by 20 per cent and reached $36.3 billion, and could reach nearly $72 billion by 2020 if present trends continue, and even higher with the TPP.
Moreover, in 2014, Vietnam became the leading ASEAN country supplier to the US, ahead of Malaysia and Thailand. Vietnam’s share of total U.S. imports from ASEAN was 22 per cent and could exceed 30 per cent by 2020 if present trends continue.
On the other hand, Vietnam is the lowest-ranked of all ASEAN countries for US exports, at only $5.7 billion in 2014. This figure could certainly be increased by improving Vietnam’s business environment for exporters from the US and other countries and importers in Vietnam and their distributors.
At the same time, revenues of AmCham companies and their partners in Vietnam’s domestic market continue to grow as well and a number of AmCham companies increased their FDI in Vietnam.
After many years of work, the Trans-Pacific Partnership Free Trade Agreement is closer to conclusion and ratification. With work and reform, Vietnam could be the largest beneficiary from the TPP in relative terms.
The TPP is important for all member countries and especially Vietnam, first of all because of the specific, positive impact on the export of goods and services, GDP growth, and the creation of more jobs. Some experts predict that Vietnam’s exports will increase by 28.4 per cent with the TPP.
The expected export “baseline” in 2025 without the TPP of $239 billion could grow to $307 billion. In addition, the expected GDP growth benefits are substantial.
According to the World Bank, Vietnam’s average annual GDP growth rate was 7.4 per cent over the 1990-2007 period and is projected at 5.6 per cent over the 2008-2018 period. With the TPP, its GDP in 2025 could be 10.5 per cent higher than the baseline estimate.
Business and government leaders are increasingly aware of the growing importance of the Asia Pacific Region and the associated benefits of the TPP. According to a widely quoted study published by the Brookings Institution and the Organization for Economic Cooperation and Development (OECD), “Growth of both multinationals and the global economy will depend increasingly on emerging market consumers, especially in Asia (India, ASEAN, and China).
Global middle-class spending should rise from $21.3 trillion in 2009 to $55.7 trillion in 2030. Asia’s share should increase from 23 per cent in 2009 to 59 per cent in 2030. In 2009, there were 525 million middle-class consumers in the region. By 2030, that number will be 3.2 billion.”
That is one reason why US and other global corporations have established and are establishing more production facilities in Vietnam, to serve Vietnam, ASEAN, Asia-Pacific, and other global markets. It is also why we are all interested in developing free trade agreements such as the TPP, the EU-Vietnam FTA, the ASEAN Economic Community 2015, the Korea-ASEAN FTA, and the Japan-ASEAN Economic Partnership Agreement, etc.
Finally, as the US Congress has moved and is moving towards approval of the Trade Promotion Authority to prepare for the prompt ratification of the TPP, we hope and expect that Vietnam and the US will have concluded negotiations. We salute the TPP, as it will help to further lay a foundation for regional integration and further economic and social development. Cooperation in the TPP can be a foundation and an engine for the US-Vietnam Comprehensive Partnership announced in July 2013.