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TPP to expose nation to new challenges

2013-06-11 11:27:04

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The Trans-Pacific Strategic Economic Partnership Agreement  (TPP) will bring about opportunities for Vietnam to improve exports but also expose the nation to many new challenges, said experts at a seminar.

Speaking at the TPP seminar organized by the Can Tho branch of the Vietnam Chamber of Commerce and Industry (VCCI) last Friday, Thoi Ngoc Doan Thuy from Ba Ria-Vung Tau Province’s Department of Industry and Trade said TPP rules prohibit export subsidy and re-subsidy under any form.

Therefore, compared to regulations of the World Trade Organization (WTO), TPP rules will put trade ties between Vietnam and other member countries to disadvantages. Firstly, technical barriers of export markets will be stricter while Vietnam’s competitiveness is still low, causing obstacles to making use of tariff reductions.

Secondly, Vietnam will have to open the domestic market to other nations, removing 100% of tariffs. Local enterprises will face greater competition from international rivals, Thuy said.

Vietnam will also face problems such as intellectual property rights and investor-state dispute settlement (ISDS).

Concerning ISDS, Pham Duy Nghia, head of the faculty of law of the HCMC University of Economics, took an example of an enterprise from a TPP member country in the Mekong Delta city of Can Tho. If dispute occurred between this investor and local authorities, this investor would bring the case to an international court or arbitrary council, not a local court, a diplomatic or investment promotion agency.

Nghia told the Daily on the sidelines of the seminar that TPP would bring about lower tariffs and more goods export opportunities, create jobs and raise employees’ incomes. However, export markets will also set up strict requirements while Vietnam has to open its door for other TPP member countries. Local enterprises with low competitiveness may lose on the home market.

To help local firms cope with TPP challenges, Nghia said enterprises should monitor TPP negotiations and be aware of their future impacts on the local market.

Enterprises must identify export markets, standards they have to meet and consider using product components imported from TPP countries to enjoy the 0% tax rate, Nghia said.

Other experts at the seminar also said that local enterprises may find it hard to benefit from this 0% tariff as they have to meet high requirements for origins of goods, meaning materials must be imported from TPP member countries only.

However, the nation now relies heavily on materials imported from non-TPP countries. For example, garment and textile firms primarily import materials from China and South Korea.

There have been 17 rounds of TPP negotiations with the participation of 11 nations: Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the U.S. and Vietnam. Japan is expected to join TPP negotiations at the end of this year.