Trans Pacific Partnership Sunset

Next Story

7 Reasons to Visit & Love Hoi An

Impact of the Demise of the Trans Pacific Partnership

Firstly, happy year of the Rooster- Chuc Mung Nam Moi.

With the likely demise of the Trans Pacific Partnership (“TPP”), following g the withdrawal by the USA, the big question is how will this impact Vietnam and what it means for the bi-lateral Vietnam –USA relationship.

Whether or not Vietnam will lose its attraction in terms of FDI, is not in my opinion directly related to TPP, although we did see some US investment on the back of the expected TPP, but more to do with how foreign investors perceive the Investment environment in Vietnam and the ease of doing business.

It is true that Vietnam would have been a major beneficiary of the TPP, particularly in the textile, garment and footwear sectors and whilst the US should continue to be a major market without the decrease in tariffs it will not grow at the same rate it would have done with TPP. However, we have to realize that Vietnam has not actually lost anything it will just forgo future projected benefits.

Vietnam’s attraction as a destination for foreign investment will not be adversely impacted by the collapse of the TPP, but the TPP did have several conditions requiring institutional reforms and the question is will the Government recognize the benefits of these required reforms and implement them regardless.

The TPP was the first trade agreement to subject Vietnam to enforceable labour commitments like freedom of association, collective bargaining, and minimum work conditions. Additionally, Vietnam signed a labour implementation plan with the United States that identifies specific actions needed to comply with TPP and which are subject to an additional layer of enforcement. Whilst the Government has stressed it will continue with its economic reforms regardless of TPP, it remains to be seen how broad these will be.

We should also remember that Vietnam has signed several major trade agreements including the EU Vietnam FTA (scheduled to come in effect in early 2018), and the Regional Comprehensive Economic Partnership, to which Australia is a party. All these will help stimulate trade and FDI.

Tags


More From the Author

  • The Income Disconnect
  • Grant Thornton: Fiscal Deficit And Divestment Strategy
  • Grant Thornton: Vietnam Retail in Top Three for Private Equity
  • Grant Thornton: Vietnam A Regional Investment Star
  • Green Energy in Vogue
  • Grant Thornton: Contributions to Vietnam’s GDP and Balance of Payments
  • Vietnam’s economic performance
  • Vietnam’s Agro Industry: A Neglected Value Opportunity
  • The Opportunity for Renewable Energy
  • Decree on Equitisation
  • Steady Growth Expected in Private Equity Investment
  • Mergers and Acquisitions Update
  • Grant Thorton – The Beer Market in Vietnam
  • Grant Thorton – Vietnam Tourism Update
  • Vietnam’s Stock Exchange
  • Vietnam Startups Revisited
  • Leave a Reply

    Subscribe Today

    We will send directly to your inbox the latest Vietnam investment commentaries, travel tips and "in the know" tidbits! 
    Join the Vietnamese IN CROWD!
    First Name
    Email address