Vietnam remains largest winner from Trans-Pacific trade pact without US: experts

Vietnam is likely to benefit the most from a landmark Asia-Pacific trade deal signed by 11 countries on March 8, according to international experts.

Vietnam remains the largest "winner" from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which replaced the previous Trans-Pacific Partnership (TPP) after the U.S. pulled out, Deborah Elms, executive director of the Asian Trade Center in Singapore, told VnExpress International.

“This is true even with the withdrawal of the U.S. and the gains that would have come from better access to the American textile, apparel and footwear markets. For Vietnam, the new market access in these sectors to the other 10 members remains significantly better than the current situation,” she said. 

Vietnam will also benefit in other sectors such as electronics, autos and food. These gains will be substantial and should be of significant interest to investors looking to move supply chains to match the CPTPP, Elms added.

The CPTPP will reduce tariffs in countries that together amount to more than 13 percent of the global economy - a total of $10 trillion in gross domestic product. With the U.S., it would have represented 40 percent.

Even without the United States, the deal will span a market of nearly 500 million people, making it one of the world's largest trade agreements, according to Chilean and Canadian trade statistics.

In addition to boosting exports, the trade deal is expected to attract more foreign investment to Vietnam.

Elms said the country is well positioned to capture companies that want to invest for export into CPTPP markets like Japan. “The use of Vietnam as a platform for exports is bright. This includes the building of robust supply chains with more intermediate suppliers and parts manufacturing.”

Many of these firms are finding other locations in Asia too expensive or too complicated and are looking for new investment opportunities. In addition, of course, Vietnam is increasingly attractive as a market in its own right as consumers become wealthier. By getting the policy frameworks aligned with CTPP now, Vietnam is instead being visionary, she stressed.

Elms is not the only international expert who is optimistic about the impacts of CPTPP to Vietnam.

Virginia B. Foote, co-founder and board president of the non-profit U.S-Vietnam Trade Council, said: “With the U.S. dropping out of TPP, certainly Vietnam loses by not having lower tariffs to sell into the U.S. market under CPTPP. [...] But there are strong economies in the CPTPP and much to be gained for Vietnam by upping its game and reputation.”

“Being part of the global economy has been good for Vietnam. I am confident it will continue to be,” she noted.

A U.S. return

For developing economies like Vietnam, Malaysia, Peru and Chile, the most attractive part of the TPP was the possibility of boosting exports to the United States. With the U.S. dropping out of the trade pact, they've lost that opportunity.

Most would like to see the U.S. return to the trade agreement, and U.S. President Donald Trump gave them hope when he told the World Economic Forum early this year in Switzerland that it was possible Washington might return to the pact if it got a better deal.

“We do hope the U.S will join, one day," Foote told VnExpress International. "The agreement was and is designed to be open to new membership and be a living, growing agreement. We hope the U.S will work towards membership eventually."

However, other foreign experts are concerned about the barriers that face a U.S. return.

CPTPP has suspended several proposed clauses in TPP which were important to the U.S. and provides that admission of additional members is dependent on acquiescence by all existing members, said Prof. Gary Hawke from Victoria University of Wellington, New Zealand.

Echoing Hawke, Elms said: “As the largest economy, it (the U.S) would give the agreement a heft that it otherwise lacks in becoming the base rules for trade going forward. But this administration seems rather bent on moving in the opposite direction, so it is unlikely at the moment.”

The 11 CPTPP state members, including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, represent a market of 500 million people, greater than that of the European Union's single market.

The pact will come into force 60 days after it is fully ratified by six of the 11 members.