The Trans Pacific Partnership (TPP), which includes 12 Pacific Rim countries, successfully concluded in Atlanta on Monday after over five years of negotiations. This historic agreement, which will help lower tariffs and open markets in 40 per cent of the world's economy, has received praise world-wide.
Viet Nam News reporter Mai Huong talked with Adam Sitkoff, Executive Director of the American Chamber of Commerce (AmCham) in Ha Noi, about the pact's significance to the US and Viet Nam.
What is the significance of the conclusion of TPP's negotiations to participating members, particularly the United States? What is the difference between TPP and other free trade agreements?
The United States, Viet Nam, and 10 other Pacific Rim nations reached final agreement on the largest trade agreement in history earlier this week. I believe this is welcome news for American and Vietnamese companies, investors, workers, farmers and consumers.
Unlike previous free trade agreements that mainly focused on lowering import tariffs, the TPP sets standards that will shape commerce in the 21st century and addresses many non-tradition issues such as climate change, collective bargaining rights, music piracy — even rules about how your online data is stored.
This agreement will enable the private sector greater access into key markets, will stimulate competition, will attract additional foreign investment, and will help build key supply chain infrastructure – thus creating significant opportunities for Vietnamese businesses, and jobs and higher incomes for Vietnamese workers.
For the United States, the TPP will strengthen the US economy by increasing American exports to fast-growing Asian economies. If it takes effect, the TPP would also be a powerful demonstration of President Obama's "pivot to Asia". A report by the Peterson Institute predicts that TPP could yield US$78 billion in annual income gains for the United States.
The United States is the biggest market of Viet Nam's exports. Which way do you expect bilateral trade to develop after the TPP takes effect?
AmCham views the Trans-Pacific Partnership as extremely important to the bilateral economic relationship and to US-Viet Nam relations overall. The TPP will have a transformative effect on Viet Nam's business environment and offers new opportunities to help Viet Nam's strategic drive to industrialise, modernise and globalise.
The Ministry of Industry and Trade predicts that the TPP will raise the country's gross domestic product (GDP) by an additional $23.5 billion in 2020 and $33.5 billion in 2025. Viet Nam's key export sectors including garment-textiles, footwear, and seafood products are expected to see great growth under TPP. The agreement also makes Viet Nam a more attractive destination for foreign investment so I expect that US-Viet Nam trade will continue strong growth.
But the benefits of the TPP for Viet Nam are not without challenges. Among the biggest is fulfilling the strict terms of the TPP's labour chapter, which for the first time would make any country's violations of ILO standards subject to trade penalties.
Viet Nam is seen the least developed among 12 TPP nations. What is your assessment on the country's ability of meeting the strict demand set by the agreement?
Many experts predict that of all the countries in TPP, Viet Nam has the most to gain. The TPP will bring in more foreign investment and opportunities and the provision in the agreement can help drive the reform process here.
TPP is a high-standard trade agreement that won't be easy for Viet Nam to implement. The United States and others stand ready to help Viet Nam with technical assistance programmes to help overcome some of the challenges in the agreement. Ultimately, complying with the strict demands in the TPP will make Viet Nam a more competitive and attractive place to do business.
Many Vietnamese producers are afraid of losing their markets to competitors from other TPP's members? What is your suggestion?
Anytime a country integrates into the world economy, there are winners and losers. The TPP offers tremendous opportunities for Vietnamese companies, investors and workers. At the same time, when markets open, the less competitive can have a difficult time adjusting. AmCham continues to encourage the government and VCCI to engage with Vietnamese businesses in order to best help them prepare for the opportunities and challenges that TPP will bring.
The agreement reached in Atlanta should be ratified by each country's government to be valid. How long do you expect it will take to full effect?
Each TPP country will now undertake its own process for ratifying the agreement. In my home country, the ratification process is quite long and complicated.
The first steps are expected to begin later this week when President Obama formally sends Congress a notice of intent to sign the agreement, which starts a 90-day waiting period. Congress gets to spend the first 30 days of that time privately reviewing the documents and consulting with the White House.
Next comes the public phase. The full trade deal will be open for anyone to review for 60 days, allowing interest groups like AmCham to provide feedback. This window will provide critical insight into how much popular support the deal may receive. A poor reception during the public phase could make it difficult for President Obama to rally support when it comes time for Congress to vote.
The next step will be for the US International Trade Commission to conduct a full economic review of the deal. The agency has up to 105 days to complete that work but the process could take much less time. Once the implementing bill is introduced in the House and the Senate, Congress has a maximum of 90 days to approve or disapprove the trade deal but this can move much more quickly.
So, nobody knows when the TPP will actually start but AmCham hopes that both America and Viet Nam can take advantage of the TPP quickly. — VNS