Though the Trans-Pacific Partnership (TPP) is pretty much dead at this point, the landmark trade deal – which would have involved a staggering 40% of the global economy – is still likely to have an impact on Vietnam and its economic progress.
As one of the smaller nations involved in the 12-country deal, Vietnam has long been proclaimed one of TPP’s biggest winners. Though Vietnamese officials delayed the ratification of the trade deal in September, government authorities strongly supported the free trade agreement, which looked to be a done deal in Vietnam.
Now, however, things have changed. US President-elect Donald Trump has vowed to axe the deal, according to VnExpress, creating uncertainty for the future of both the TPP and its member nations. In order for the trade agreement to go into effect, 85% of the trade zone’s GDP – or at least six countries – must ratify the deal, however one of those nations must be the United States, which alone makes up 60% of the pact's GDP. With the country’s incoming leader so fiercely opposed to the TPP – he once called the agreement “the worst trade deal ever, a fiasco” – its fate looks grim.
Nonetheless, Vietnam is vowing to move forward with over 30 new pieces of legislation that initially began as an effort to comply with the trade agreement’s standards, reports Bloomberg.
The forthcoming legislation focuses on business, foreign trade and labor regulations and represents one of the most dramatic economic reformation periods in Vietnam since Doi Moi, according to the news source. Even without its ratification, the TPP can still serve as a road map for future economic development in the country.
“It is reasonable to conclude that the period of 2011-2016 is the biggest reforms in Vietnam since Doi Moi. TPP is one of the important actors for this process,” Deputy Director General Pham Trong Nghia of the Department of Law at Vietnam’s National Assembly Office told Bloomberg.
Moving forward, the country will focus on several other free trade agreements with European and ASEAN nations.
“[Vietnam has already] signed 12 free trade agreements, so joining the TPP is good, but without joining TPP we will still continue to further the economic integration under programs we have joined,” Prime Minister Nguyen Xuan Phuc said after the American election, according to RT.
Vietnam recently finalized the Europe-Vietnam Free Trade Agreement (EVFTA), which will eliminate over 99% of tariffs between the two parties once implemented in 2018, according to VnExpress.
Meanwhile, Vietnam also has the option of joining the China-led 16-nation Regional Comprehensive Economic Partnership (RCEP), which could raise the GDP of member countries by an average of 1.1%, according to Bloomberg. The RCEP currently includes the 10 members of ASEAN along with China, Japan, South Korea, India, Australia and New Zealand.
While having other economic options is important for Vietnam, the RCEP agreement also poses an opportunity for China to rise as a regional power, potentially creating complications in the East Sea territorial disputes. Still, having a post-TPP back-up plan is good for the country, according to Pham Quang Minh, rector of Hanoi National University's University of Social Sciences and Humanities.
"Vietnam has always worked from the principle 'don't put all your eggs in one basket,' and wasn't completely relying on TPP,” Minh told Sputnik Vietnam. “But now it is necessary to activate economic reforms. Vietnam has to wake up and quickly adapt to the new economic situation."
[Photo via Updato]
