Death Of TPP Trade Deal A Blow For Vietnam's Promising Economy

Vietnam was set to be one of the major beneficiaries of the Trans-Pacific Partnership trade deal, which now seems all but dead after the U.S. president-elect Donald Trump declared withdrawing America from the pact would be one of his first actions in office.

Vietnam’s manufacturing-led economy, particularly the textiles sector, was set to reap the reward of slashed tariffs among the 12 Pacific-rim nations who signed on to the deal, which also included Japan, Australia, Canada and Mexico.

The country’s economy is still well positioned to continue growing, with various other trade deals giving it good access to international markets. These include the recently negotiated EU free trade deal and other agreements through the Association of Southeast Asian Nations.

Vietnam’s trade minister Tran Tuan Anh was quoted on a government news site saying the textile, seafood and footwear sectors would remain competitive even without the TPP. “We are always ready for integration, not just because of TPP, but because it is a requirement and also a motivation for development," he said.

Yet while the broader Vietnamese economy will continue to perform well even in the face of the demise of the TPP, it is the loss of the other, less well-known elements of the deal that are a disappointment for the country.

Under the deal, worker and environmental protections would have been necessary to implement, including workplace heath and safety regulations, the elimination of child labor, and the protection of endangered species. These kinds of reforms were sorely needed in some of the signatory countries to the deal like Vietnam, Peru and Brunei.

Importantly for Vietnam, it would have allowed workers to form independent trade unions and collectively bargain with employers, a move that would have almost certainly seen a rise in average wages. Independent unions have not previously been allowed in the Communist Party-ruled country. There is no word yet on if this reform will continue, however it is difficult to imagine it going ahead without the carrot of unfettered access to the U.S. market.

Technically, the Trans-Pacific Partnership could go into effect if at least six of the 12 countries ratify the deal, but only among those countries that give it the green light. Again, without the world’s largest economy as part of the agreement, it seems unlikely that other nations will be rushing to jump on board.

There is a restive mood afoot in much of the developed world where trade is concerned at the moment. Such sentiment recently almost upended the EU-Canada free trade deal. However, there is no question global trade, spurred by such agreements, has pulled millions of people in developing nations, such as Vietnam, out of poverty. This is why the death of the TPP is a such a setback for the country.

Source: forbes.com/sites/davisbrett/2016

Collected by Nhu Vu SAPUWA