In this article we will discuss the impact of TPP on Vietnam.
Vietnam is likely to be the biggest winner of the Trans-Pacific Partnership. Vietnam’s economy relies largely on exports and TPP slashes an estimated 18,000 tariffs among the dozen participating countries. In a decade, the country’s gross domestic product will be boosted 11 percent and exports may soar 28 percent in the period as companies move factories to the Southeast Asian country.
FOREIGN INVESTMENT- Vietnam’s low-wage economy means a lot of foreign firms would look to relocate their operations here. Key industries for this are- logistics, industrial parks, fisheries and garments.
APPAREL– Reduced import duties in the U.S. and Japan will benefit the country’s apparel manufacturers. Vietnam may have a 50 percent increase in apparel and footwear exports in 10 years, according to the Eurasia Group.
SEAFOOD– Elimination of import taxes on shrimp, squid and tuna, now averaging 6.4 percent-7.2 percent will benefit this industry. However, Vietnam will still face strict rules-of-origin on materials, which could limit these benefits.
GLOBAL COMPETITION– Vietnam’s agricultural industry, particularly livestock, and pharmaceutical companies are expected to struggle with the more efficient global operators.
Overall, the TPP is very favorable for Vietnam; it is aggressively seeking economic partners to balance its relationship with China. However, the agreement still needs to be passed by the governments of the 12 nations. The failure of TPP would leave Vietnam more economically isolated and dependent on China. The uncertainty of the TPP is holding Vietnam from committing to the deal.