Vietnam has decided not to join the Trans-Pacific Partnership (TPP), with the trade deal’s future uncertain under incoming US President Donald Trump.- “The United States has announced it is suspending the submission of TPP to the parliament so there are not sufficient conditions for Vietnam to submit its proposal for ratification,”Prime Minister Nguyen Xuan Phuc told the National Assembly, according to Reuters.
The TPP deal is a project of incumbent US President Barack Obama aimed at increasing American exports. The future of the trade deal is highly uncertain in the Republican-dominated Congress and with President-elect Trump calling the project a “disaster”.
“TPP is now in the history dustbin for sure,” Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics, told Politico last week.
Asian countries have reacted differently to the increasing likelihood of the trade treaty failure. Malaysia is focusing on a China-led trade agreement, while Japan has been seeking to revive the TPP.
“We already have 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,” said the Vietnamese Prime Minister.
Among Vietnam’s free trade agreements is a deal with the Russia-led Eurasian Economic Union that came into power in October. Almost 60 percent of the tariffs between Vietnam and the bloc uniting Russia, Armenia, Belarus, Kazakhstan, and Kyrgyzstan have been eliminated with another 30 percent expected to be eliminated in the next five to ten years.
“We are ready to cooperate with the United States for co-development on the principle of respecting independence, territorial sovereignty, causing no harms to each other. In that spirit, I believe the Vietnam-US ties will be better in the coming time,”said Phuc.
Last week, Vietnam’s trade minister said traditional exports like textiles, seafood and footwear would remain competitive even without the US deal.
Ho Chi Minh City, Vietnam – Vietnam, with its strong export-led economy and potential for growth, is tipped to significantly benefit from the Trans-Pacific Partnership (TPP).
The country expects revenue to increase by as much as 50 percent when tariffs are applied under the 12-nation trade deal.
“Vietnam wants to have an open economy,” says Tran Du Lich, a former government trade adviser.
“We have been integrating with international and regional economies, with a number of free trade agreements.”
However, the TPP is in doubt due to opposition in the US.
President Barack Obama has been trying to push the deal through before the end of his term in January.
If he runs out of time, prospects for the deal’s success are dimmer because the two main candidates to replace him oppose the agreement.
US presidential candidate Hillary Clinton has voiced her opposition to the trade pact during her campaign.
“I will stop any trade deal that kills jobs or holds down wages, including the Trans-Pacific Partnership. I oppose it now, I’ll oppose it after the election, and I’ll oppose it as president,” Clinton said.
Door open for China
If the US Congress does not ratify the agreement, it will effectively collapse.
If the TPP does not happen, it could leave the door open for China to forge closer economic ties with some member nations.
In this region, that could undo a lot of President Barack Obama’s so-called pivot to Asia.
The United States and China are vying for influence in the region, and Vietnam is a key factor.
Despite strained political relations between Vietnam and China, the two countries are big trading partners.
China is not part of the TPP. If the pact fails, Vietnam may become even more reliant on its neighbour to the north.
Analysts believe the Vietnamese economy will continue to grow regardless.
“TPP will be good for Vietnam, but that doesn’t mean the economy in the future depends on it,” says Lich, the former government adviser.
“We’ve ratified more than 10 Free Trade Agreements, and we are a member of the World Trade Organization.”