CHAPTER 3: RECOMMENDATIONS FOR VIETNAM IN TPP
3.1. Attitudes of Vietnam towards TPP and U.S. market
(a) Viewpoints of Government
Process of participation: Since P4 Agreement was signed in 2005, through many channels, Singapore enthusiastically invited Vietnam to take part in the negotiations.
However, Vietnam then refused because the country had not have enough time to consider either political or economic situations. Once again, Vietnam was encouraged to join by the United States when the country involved in TPP in 2009, which made Vietnam to reconsider. Finally, Vietnam decided to participate in TPP negotiations in 2009; however, until November 2010, the country announced to play as an official member. This proves the apprehension of Vietnam in a 21st high standard FTA. The country has carefully considered for the whole one year, accessed both advantages and disadvantages, but in the last minutes, Vietnam still determined to make an innovation.
The government has expressed their opinions on the opportunities that TPP brings about for Vietnam. Firstly, Vietnam determines that regional integration emerged as a major trend with various form, especially in Asia-Pacific area which reflects not only the seeking for economic advantages but also new international political context after the dramatically development of some developing countries. Therefore, TPP will
provide the country with easier access to potential development resulted from the process of restructuring the world. Secondly, Vietnam can make use of international cooperation to support for economic and social development strategies, carry out integration strategy and enhance the country’s position in the world. Lastly, Vietnam also regarded TPP as a turning point in trade relations with the United States which can improve exportation and control deficit in balance of trade.
Besides, Vietnam has predicts the threats that participation in TPP can contribute to.
Firstly, deeper and wider commitments in the agreement can set out serious challenges, particularly in pressure on market opening and strict competition for Vietnamese enterprises. However, the government also determines that it is essential that Vietnam make an innovation and restructure the economy to improve quality, value and productivity. Secondly, some negative social results can be foreseen such as bankruptcy of some weak enterprises, unemployment of low quality labor force. These can cause a lot of unexpected social evils or crisis within the country. Lastly, in order to implement commitments in TPP, Vietnam has to adjust or modify legal system of commerce, investment, TRIPs and so on. Nevertheless, fortunately, with experience accumulated from negotiating WTO, this may not be a hard challenge for Vietnam.
Since official involvement, Vietnam government has made high efforts in preparing and negotiating in TPP. Firstly, a series of conference between authorities and organizations, communities, companies, researchers and concerned individuals have been hold to collect the useful and necessary ideas and suggestions from them.
Secondly, meetings in foreign countries are also Vietnam’s strategy. On one hand, these meetings help Government to survey the attitudes of partners’ businesses towards Vietnam’s participation. On other hand, they provide easier access to call for support from enterprises which have had long term relations with Vietnam. Secondly, government has introduced and published the results of negotiations to all citizens so that they can prepare to overcome the challenges as well as find their own opportunities.
(b) Viewpoints of Business Community
A survey on ideas of economic experts, associations, enterprises and international organization about TPP was carried out by Advisory Committee on International Trade Policy of VCCI. The contents of survey focus on basic problems of TPP, including Assessment about Vietnam’s involvement; justification of scope and level of commitments and attention to negotiating processes.
There were 98 experts and representatives from associations, enterprises and non- government organizations as well as professional staffs, researchers participating to express their opinions. They come from different sectors and different classes in society but have an interest in TPP in common. Consequently, results can be expected to partly reflect the attitudes of all objectives relating to TPP negotiations.
Source: Wtocenter.com
At the time of survey (November 4th, 5th 2010), Vietnam had not decided to participate the TPP as a full member. During the period from the beginning of TPP (at the end of 2009) to this point of time, Vietnam seemed to consider whether it should take part officially in or not. However, the consideration was performed only by government and authorities. It is fortunate that decision of the States coincided with public opinions
Approve 96.94%
Disapprove 3.06%
Figure 3.1.Approval rate for TPP
through the survey. More details, there were 95/98 (counting for 97 percent) representatives approving that Vietnam should participate in TPP. It means that involvement in TPP was highly appreciated from citizens and related people with high consensus. Moreover, enterprises can regard the benefits from TPP in trade relations with other partners in general and the United States in particular.
Although Vietnamese enterprises realized the high standard of TPP and the current trend of FTAs in the world, almost all of them agreed with the government in openness of negotiated issues in TPP’s rounds.
Source: wtocenter.com
A praiseworthy point is that approving ratio in all sectors is above 70 percent, even up to 95 percent in merchandise trade. As it can be predicted, trade in goods, services and investment liberalization are always at the top of interest. A point that is worth highlighting here is that the difference between supporting for trade in goods and that
for trade in services is insignificant, just about five percent. In other words, Vietnamese attitudes toward FTAs have gone beyond traditional thought with just opening trade in goods. In addition, although TRIPs is a chronic problem and violation of TRIPs is still popular in Vietnam, total rate of enterprises supporting this issue is up to 73 percent. This is an important basis for negotiators to be more decisive in environmental or labor sectors.
However, approval of a deeper and stronger level of commitment than in WTO does not belong to majority despite a relatively high rate. The details for each sector can be reflected clearly in the following table.
Table 3.1.Proposed open level of negotiated sectors in TPP
Unit: % Similar to WTO Deeper than WTO No idea
Merchandise trade 29 61 10
Trade in services 48.24 41.18 10.59
TRIPS 53.62 39.13 7.25
Investment 35.29 50.59 14.12
Labor 40.79 46.05 13.76
Environment 41.98 40.74 17.28
Source: wtocenter.com
Except for merchandise trade and investment with 61 percent and 51 percent respectively, idea for wider and deeper commitment than in WTO only accounts for fewer than 50 percent, the highest rate belongs to labor with 46 percent and the lowest belongs to TRIPs with 39 percent. This reflects the fact that Vietnam is unready for absolute trade liberalization. Consequently, certain limitations in liberalization obligations or special priority such as long term schedule, reasonable exception and technical supports should be emphasized in TPP negotiations.
3.1.2. Attitudes towards U.S. market
Assessment for U.S. market: Until the time being, the United States has still been recognized as the largest and the most important partner of Vietnam. This is also the potential market which can be expanded and exploited in the future. Vietnam has identified this market with four main characteristics. Firstly, U.S. is a large market with high purchasing power which is reflected in population of 313 million people and remarkable economic features as mentioned in chapter 2. Secondly, the country varies in demand for goods. This is resulted from the fact that U.S. is a multiethnic nation with different levels of living. Thirdly, this market requires high regulations of product quality, which contributes to a lot of international standards such as ISO 9,000 or ISO 14,000, HACCP and so on. Products or services exported to U.S have to meet the requirements of TBT, SPS or environment, etc. Lastly, complexity in legal system is also a remarkable point in U.S. market which has been considered as a strict importer.
Orientation for exportation: Vietnam expects to increase the trade turnover with the United States for all industries. However, due to the differences in competitive abilities, each sector set up its own target to this market in the future. On the whole, garment and textile, footwear, wooden furniture and electronic machinery will be proactive sectors which, as a result, will be paid much attention. It means that in the next negotiations, issues relating to these industries are considered to be strategic targets between Vietnam and the United States. Moreover, some potential industries such as agricultural or aqua-cultural products are also supported to enhance their own positions and expand market shares.