A new TPP is rising from the ashes – what does it mean for Vietnam?
In the last couple of years, there was a lot of discussion among the policy makers and country leaders about the prospects of Trans Pacific Partnership – a trade deal that would connect 12 countries of the Pacific Rim. After Donald Trump’s US presidential election victory, the newly elected leader cut the US out of the trade pact. For many, this meant the end of TPP.
However, the leaders of the 11* remaining member countries continued the discussions, with Japan taking the leading role. One of the key meetings happened during the APEC meeting hosted by Vietnam in Da Nang last November, when new optimistic voices were heard over TPP’s future.
In late January, the 11 members reached a deal on a revised agreement, and scheduled to sign it in Chile in March 2018. The new deal will be called Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and it will very similar to the original agreement signed in 2015.
CPTPP’s outline, impact, and future prospects:
1. Unlike a traditional trade deal covering the exchange of goods and services, it also locks in other requirements, from labor issues and the environment to government procurement.
2. At least six countries must ratify the agreement for it to come into force.
3. It might slow down China-led RCEP trade deal, and make China compete with Japan, a new head of a rival trading group.
4. It will significantly boost the trade among its participants, after removing 95% of customs duties (in the long run)
5. The list of participating countries will certainly not stay the same, as Thailand, Indonesia, Philippines, Taiwan and even the UK showed interest to join the trade deal.
According to many economists, Vietnam would have been the greatest winner from the TPP trade, especially due to close trade ties with the US, and a lack of a bilateral trade agreement. Today, however, without the US taking part in the new trade pact, Vietnam will see less direct positive impact on its economy, especially due to the fact that Vietnam already has trade deals with most of the CPTTP members. On the other hand, this deal might a have positive effect on Vietnam’s socio-economic picture, especially as the country will have to implement new policies in regards to labor issues and the environment.
Finally, the CPTPP members confirmed that they will keep the door open for new countries to join the trade pact, including the US. If this would happen in the future, Vietnam could reap the full benefits by further strengthening trade ties with the global markets, and thus bolstering the economy.
*Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam