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TRANSCRIPT
Vietnam’s Preparation
for Participation
in TPP and RCEP
Dr Le Quoc Phuong
Deputy General Director
Vietnam Industry and Trade Information Center
(Ministry of Industry and Trade of Vietnam)
Contents
I. Overview of TPP and RCEP
1. TPP and RCEP: key characteristics
2. TPP and RCEP in context of FTAs Vietnam concluded/negotiating
II. Why does Vietnam need TPP and RCEP?
1. Vietnam’s export-oriented economy needs further export
expansion
2. Special importance of region covered by TPP and RCEP for
Vietnam
III. Vietnam’s preparation for participation in TPP and RCEP
1. Vast opportunities of TPP and RCEP for Vietnam
2. Challenges and measures to overcome
I. Overview of TPP and RCEP
TPP and RCEP - key characteristics
TPP
(Trans-Pacific Partnership)
RCEP
(Regional Comprehensive Economic Partnership)
Target FTA of 12 Trans-Pacific economies FTA between ASEAN and 6 countries ASEAN
has FTA with: 6 (ASEAN+1)=ASEAN+6
Launched 2005 (initially by Chile, NZ, Singapore,
Brunei)
2012
Countries in
negotiations
(as of Oct
2014)
12 countries
ASEAN: Singapore, Brunei, Vietnam,
Malaysia
Japan
America: Chile, US, Peru, Canada,
Mexico
Oceania: Australia, NZ
16 countries
10 ASEAN countries: Brunei, Myamar, Cambodia, Indonesia, Laos, Malaysia,
Philippines, Singapore, Thailand, Vietnam
6 ASEAN partners: China, Japan, Korea, India, Australia, NZ
Expected
conclusion
End-2015 End-2015
I. Overview of TPP and RCEP
TPP and RCEP - key characteristics (cont.)
TPP RCEP
Rounds of
negotiation (as
of Oct 2014)
Round 1: Australia, May 2010
…
Round 20: Canada, July 2014
Round 1: Brunei, May 2013
…
Round 5: Singapore, Apr 2014
Driving force US as driving force:
TPP include trade and non-trade issues
TPP regarded high-standard
agreement
ASEAN and China as driving force:
RCEP focus on trade issues
RCEP standards regarded modest
Scope of
negotiations
Both trade and non-trade
Trade-related:
Trade in goods: trade in services;
Investment; IPRs; Competition; Dispute
settlement mechanism; Government
procurement; SPS; TBT
Non-trade:
Environment; Labor standard; Trade
union; SOE reform; Support for SME
Mainly trade issues
Trade in goods, trade in services
Investment
IPRs
Competition
Dispute settlement mechanism
Economic and technical cooperation
I. Overview of TPP and RCEP TPP and RCEP in context of FTAs Vietnam concluded/negotiating
Vietnam signed 8 FTAs: 2 bilateral+6 regional
Title Signed Effective Note
Bilateral FTAs
1. Vietnam-Japan Economic
Partnership Agreement (EPA)
2008 07/01/2009
2. Vietnam-Chile FTA 2011 01/01/2014
Regional FTAs
1. ASEAN Free Trade Area
(AFTA)
1992 1993 FTA of 10 ASEAN members
Vietnam joined in 1996
2. ASEAN-China FTA
(ACFTA)
2009 01/01/2010
3. ASEAN-Japan EPA (AJEPA) 2008 2008-2009
4. ASEAN-Korea FTA
(AKFTA)
2006-
2009
2007-2009 Agreement on trade in goods: signed
2006, effectve 2007
Agreement on trade in services: signed
2007, effective 2007
Agreement on investment: signed 2009,
effective 2009
5. ASEAN-India FTA (AIFTA) 2009 01/01/2010
6. ASEAN-Australia-New
Zealand FTA (AANZFTA)
2009 2010-2012 Effective date varies for individual ASEAN
members
I. Overview of TPP and RCEP (2) TPP and RCEP in context of FTAs Vietnam concluded or negotiating (2)
Vietnam negotiating for 6 FTAs:
2 regional (TPP, RCEP)+4 bilateral (EU, EFTA, Korea, CU)
Title Negotiations
launched
Expected
conclusion
Note
1. TPP 2005 End-2015 FTA among 12 countries
2. RCEP 2012 End-2015 FTA among 16 countries
3. Vietnam-EU
FTA
2012 2014-2015 FTA between Vietnam and European
Union
4. Vietnam-EFTA
FTA
2012 2014-2015 FTA between Vietnam and countries
of European Free Trade Association
5. Vietnam-Korea
FTA
2012 2014-2015
6. Vietnam-
Customs Union
FTA
2014-2015 FTA between Vietnam and countries
of Customs Union (Russia, Belarus,
Kazakhstan)
II. Why does Vietnam need TPP and RCEP?
6 ASEAN countries joined RCEP negotiations but not TPP:
Indonesia, Myanmar, Thailand, Cambodia, Laos, Philippines
4 ASEAN countries joined both:
Vietnam, Singapore, Malaysia, Brunei
Reasons why TPP & RCEP important for Vietnam:
1. Vietnam’s export-oriented economy needs further export
expansion
2. Special importance of region covered by TPP and RCEP
for Vietnam
1. Vietnam’s export-oriented economy needs further export
expansion
Since late 1980s Vietnam follows export-led growth strategy
This strategy utilized by Japan since 1960s, NICs (Korea, Taiwan,
Singapore, HK) since 1970s, China since early1980s
As result, Vietnam’s exports rise rapidly (Figure 1):
Exports: US$ 340 million in 1986 => 132.2 billion in 2013
Average export growth 1986-2013 = 24%
Openness (total trade/GDP): 53% in 1990 => 170% in 2013
=> Vietnam in top group in terms of openness
Vietnam sets export target of US$ 255-265 billion by 2020
To reach this, new FTAs including TPP and RCEP are pivotal
II. Why does Vietnam need both TPP and RCEP?
II. Why does Vietnam need TPP and RCEP?
1. Vietnam’s export-oriented economy needs further export expansion (cont.)
Figure 1: Vietnam’s foreign trade rises rapidly (1983-2013)
-20
30
80
130
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Exports ($US billion)
Imports ($US billion)
Trade balance ($US billion)
a) Vietnam’s export-oriented economy needs further export expansion (cont.)
Table 4: Vietnam’s trade value and export/GDP ratio (1990-2013)
1990 2000 2010 2013
Trade value (US$ billion)
Exports 1.7 14.5 71.0 132.2
Imports 1.8 15.6 82.8 131.3
Trade/ GDP ratio (%)
Exports/GDP 26.2 46.5 69.2 85
Imports/GDP 27.4 50.2 89.0 85
Total trade/GDP 53.6 96.6 158.2 170
II. Why does Vietnam need TPP and RCEP?
2. Special importance of region covered by TPP and RCEP
Importance to world
4 world largest economies (US, China, Japan, India) are among countries negotiating for TPP and/or RCEP
20 countries negotiating for TPP and/or RCEP all located in Asia-Pacific region, which accounts for 50% of world GDP and trade
Importance to Vietnam
This region accounts for 80% of Vietnam’s trade with world
Many TPP and RCEP members are Vietnam’s most important trade partners and/or largest FDI investors in Vietnam
US, Japan, China, Korea, Thailand, Malaysia: among top 10 of both Vietnam’s trade partners and FDI investors (Table 5)
II. Why does Vietnam need TPP and RCEP?
Table 5: TPP and RCEP members as Vietnam’s top
trade partners and FDI investors
Country TPP RCEP Rank in Vietnam’s
export markets
Rank in Vietnam’s import
destinations
Rank in FDI in Vietnam (% total)
US X 1 7 7 (4.6%)
China X 3 1 9 (3.2%)
Japan X X 2 3 1 (15.0%)
Korea X 4 2 3 (12.7%)
Malaysia X X 5 8 8(4.4%)
Thailand X 9 6 10 (2.7%)
Singapore X X 11 5 2 (12.8%)
Indonesia X 12 10 26 (0.14%)
Australia X X 7 13 21 (0.6%)
II. Why does Vietnam need TPP and RCEP?
III. Vietnam’s preparation for participation in TPP and RCEP
1. Vast opportunities provided by TPP and RCEP
a. Further expansion of export markets
b. Opportunity for Vietnam’s major export industries
c. Easing import restriction measures imposed by importing
countries
d. Opportunity to increase FDI
1. Vast opportunities provided by TPP and RCEP
a) Further expansion of export markets
Most TPP and RCEP members already Vietnam’s largest trade partners
Joining TPP and RCEP, Vietnam hopes to further expand these major markets
Conclusion of TPP and RCEP will lower tariff rates (0-5%) => greater
access for Vietnam’s goods to world largest markets (US, Japan, China)
However, benefits Vietnam would gain from TPP and RCEP come mainly
from exports of goods. Gains from exports of services insignificant because
Vietnam’s exports of services is quite small.
III. Vietnam’s preparation for participation in TPP and RCEP
1. Vast opportunities provided by TPP and RCEP
b) Opportunity for Vietnam’s major export industries
TPP and RCEP expected to give further impetus for garment, footwear, seafood, wood products
These groups now among Vietnam’s top exports (Table 6)
Garment #2 (13.5% exports): 50% to US, 10% to Japan
Footwear #4 (6.3% exports): 30% to US, 5% to Japan
Seafood #6 (5.1% exports): 17% to US, 12% to Japan
Wood products #9 (4.2% exports)
TPP and RCEP =>new opportunity to expand markets for these industries (especially US, China, Japan - world’s top importing countries):
Garment: US tariff now 17%=> 0%
Footwear: US tariff now 12%=> 0%
Seafood: tariff now 30%=> 0-6%
Wood products: tariff => 0%
III. Vietnam’s preparation for participation in TPP and RCEP
III. Vietnam’s preparation for participation in TPP and RCEP
1. Vast opportunities provided by TPP and RCEP
b) Opportunity for Vietnam’s major export industries
Table: Vietnam’s top 10 export product groups in 2013
Rank Products Export value (US$ billion) % of total exports
1 Mobile phones and parts 21.5 16.3
2 Garment 17.9 13.5
3 Computers, electronics 10.7 8.1
4 Footwear 8.4 6,3
5 Crude oil 7.2 5.5
6 Seafood 6.7 5.1
7 Transport equipment and parts 4.9 3.7
8 Other machinery, equipment 6.0 4.6
9 Wood and wood products 5.5 4.2
10 Rice 3.0 2.3
Total exports in 2013 132.2 100,0
III. Vietnam’s preparation for participation in TPP and RCEP
1. Vast opportunities provided by TPP and RCEP
c) Easing import restriction measures imposed by TPP and RCEP
countries
Joining TPP and RCEP: Vietnam given rights to consult with partner
governments over their possible anti-dumping and anti-subsidy
measures
d) Attracting more FDI from TPP and RCEP members
TPP and RCEP members now top list of100 countries investing in
Vietnam: Japan #1, Singapore #2, Korea #3, US #7 (Tab. 4)
Joining TPP and RCEP gives opportunity for Vietnam to establish
more favorable investment environment
=> Attract more FDI from TPP and RCEP members
III. Vietnam’s preparation for participation in TPP and RCEP
2. Big challenges of TPP and RCEP
a) Rising foreign competition
b) Many vital sectors will be affected
c) Rule of origin (RoO)
d) Possible rise of anti-dumping, anti-subsidy, TBT, SPS measures
e) High IPR requirements
f) ISDS mechanism
g) Reduction in tariff revenue
2. Big challenges a) Rising foreign competition:
TPP and RCEP requires Vietnam open up (at high pace) domestic market for foreign goods & services
Many domestic companies and sectors will be hurt:
SMEs
Agriculture
Retail
Banking
b) TPP rule of origin (RoO):
a product exported by one TPP country to another TPP country must have TPP origin in terms of its materials/parts, in order to get preferential treatment (Eg “yarn-forward” clause
for garment; parts for computers and other equipment)
Vietnam’s export industries based mainly on assembly: importing most of materials/parts, then assembling them to make final export product)
Vietnam imports many materials/parts from non-TPP countries => Little benefit because of RoO
III. Vietnam’s preparation for participation in TPP and RCEP
III. Vietnam’s preparation for participation in TPP and RCEP
2. Big challenges
c) Possible rise in anti-dumping, anti-subsidy, technical, SPS measures
Conclusion of TPP and RCEP
=> Increase in Vietnam’s exports to member countries
=> Possible rise in anti-dumping/anti-subsidy/technical and SPS
measures by importing countries
d) Tough IPR requirements
TPP longer copryright terms=life of author+70 yrs after author’s death.
For comparison: WTO TRIPS sets the term at 50 yrs.
Tougher IPR requirements will increase Vietnam’s cost of purchasing
licenses, copyrights, trademarks
2. Big challenges
e) Investor-state dispute settlement (ISDS): more rights to investors,
less power to host government
Foreign investors given rights to sue host country government at
international/regional/foreign arbitration institutions
Foreign investors can demand host country government to compensate for
their losses, allegedly caused by domestic law/regulation
f) Reduction in tariff revenue
Required tariff cut to 0% for wide range of goods imported from
member countries will reduce tariff revenue => reducing government
budget
III. Vietnam’s preparation for participation in TPP and RCEP
III. Vietnam’s preparation for participation in TPP and RCEP
Measures to overcome challenges
Get business sector involved in negotiations
Provide information on details of negotiations for business
sector
Help enterprises (especially SME) increase their competitiveness
Support vital sectors in preparation for participating in TPP
and RCEP
Build up supporting industries to meet “rule of origin” => gain
maximum benefits from TPP and RCEP
Adjust domestic legal system in line with TPP and RCEP
requirements
End of presentation
Thank you!
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