The general consensus seems to be that negotiations over the TPP will conclude sooner rather than later.
During the recent visit to the US by Party General Secretary Nguyen Phu Trong the two countries’ leaders agreed to work closely together and with other parties to quickly conclude negotiations over the Trans-Pacific Partnership (TPP), according to Minister of Industry and Trade Vu Huy Hoang.
Minister Hoang said that the TPP topped the agenda at the meeting between General Secretary Trong and President Barack Obama and leaders of organizations and businesses in the US.
The two sides will jointly implement reforms to meet the comprehensive requirements of the TPP, including necessary measures to meet commitments under the International Labor Organization (ILO) Declaration 1998, with the aim of achieving a high quality agreement with balanced interests, bolstering economic relations and investment between the two countries while creating momentum to promote economic and trade cooperation and investment in the region.
The historic visit by the Party General Secretary has created momentum for the two sides and other parties to quickly conclude the TPP negotiations and open up new opportunities for cooperation in Vietnam - US relations.
According to Mr. Nguyen Duc Thanh, Director of the Vietnam Institute for Economic and Policy Research (VEPR), the TPP will create new prospects for Vietnam’s development.
Regarding the impact of the TPP on Vietnam, VEPR’s forecast show that Vietnam’s economy is in the best position of the 12 countries in the TPP negotiations to benefit from the agreement. Vietnam’s annual GDP may increase the most, by between 1.03 per cent and 2.11 per cent, equal to $1.4 billion to $2.9 billion.
However, to take advantage of the opportunities and overcome the challenges brought about by the TPP Vietnam will need basic changes in its economic structure and institutional and regulatory policies.
“Opportunities may turn into challenges if the country does not strongly reform its economy and society, administrative procedures, capital markets, labor market, and land market,” Mr. Thanh stressed.
Professor Jeffrey Schott, a leading TPP expert, also believes that Vietnam may benefit the most from the trade pact, which will promote GDP growth and encourage exports to partner countries.
He also agrees that Vietnam will confront major challenges, with time needed to implement key reforms and policies. Vietnam must have strategies for economic reform during the next ten to 15 years and ensure the beneficial and effective execution of the TPP’s processes. Foreign investors will expand trade and increase investment in Vietnam when the country has strong and clear reform strategies in all fields, particularly in goods and services.
“I would contend that the short and medium-term benefit of the TPP for Vietnam is not contained in the text of the TPP itself,” said Mr. Tony Foster, an AmCham Hanoi board member. “It lies in the confidence generated by the mere passage of this landmark agreement.”
The bizarre animal instincts of businesspeople, he went on, which have been hibernating for a couple of years, will roar back. This could mop up the real estate overhang, which will put banks back on their feet and revive credit. “Vietnam will be off to the races once more,” Mr. Foster said.
An HSBC report on Vietnam at a glance released recently noted that the TPP will be very beneficial for Vietnam. The biggest risks will come from within Vietnam, where the inefficient allocation of resources will sap productivity and leave the country caught in the low-middle income trap. “Experiences from other countries show that escaping this is an anomaly and requires proactive efforts to boost efficiency in investment, whether in soft or hard infrastructure,” the report stated.
Ministers of the 12 nations negotiating the TPP will meet in Hawaii on July 28. President Obama has recently signed the Trade Promotion Authority (TPA), suggesting that the TPP negotiations may conclude in the months ahead before the US presidential election gets into full swing.