Vietnam would benefit economically from the wide-ranging reforms that it would have to make under a sweeping Asia-Pacific trade agreement, a new report finds.
The nation will be required to overhaul its regulatory and legal frameworks under the Trans-Pacific Partnership (TPP), and that would unleash significant growth, the Progressive Policy Institute (PPI) said in the report released on Friday.
“Vietnam is poised to benefit significantly from the Trans-Pacific Partnership agreement,” said Ed Gerwin, PPI senior fellow for trade and global opportunity and the author of the report.
But a high-standard TPP — along with Vietnam’s new trade agreement with the European Union — requires Vietnam to commit to making major structural adjustments, the report said.
Those changes must include improvements in transparency, the rule of law, labor and environmental rules, the digital economy and rules for state-owned enterprises.
“Those of us who believe strong trade agreements can promote inclusive growth and positive change need to continue to remind Vietnam that adopting these necessary reforms — and sticking to them — will also deliver tangible benefits for Vietnam and its people," Gerwin said.
“These reforms in Vietnam will play a critical role in driving increased U.S. trade and commerce with a growing and vibrant Vietnamese economy,” he said.
In a 2012 study, the Peterson Institute for International Economics estimated that Vietnam’s income gains would be 13 percent higher and exports 37 percent higher in 2025 with TPP in place, the report said.
Much of these gains would come from Vietnam’s growing export of apparel and footwear that would grow through a phasing out of high duties in TPP partner countries, especially the United States.
While the report acknowledges U.S. benefits — support for better-paying jobs, increased exports and better wages — he noted that the TPP could lead to lost jobs and lower wages for some American workers.
That will require a renewed U.S. focus on comprehensive solutions, including assistance and better training for lower-skilled workers, the report said.
The report was made public on Thursday at a U.S. Chamber of Commerce event in Hanoi attended by U.S. and Vietnamese business leaders, as well as leading Vietnamese economic experts and proponents of economic reform.
The report found that under the TPP, each of the agreement’s 12 countries would see income gains and increased exports.
On Tuesday, U.S. Trade Representative Michael FromanMichael B.G. FromanOn The Money: Sanders unveils plan to wipe .6T in student debt | How Sanders plan plays in rivalry with Warren | Treasury watchdog to probe delay of Harriet Tubman bills | Trump says Fed 'blew it' on rate decision Democrats give Trump trade chief high marks US trade rep spent nearly M to furnish offices: report MORE wrote in an op-ed for Democracy Journal that the United States is working with other TPP partners on the steps they’ll need to take to meet their obligations.
He said that, for example, Vietnam would need to allow workers to form and join independent labor unions.
TPP will add an estimated 11 percent to the GDP of Vietnam by 2025, Froman said, citing the Peterson Institute.
He said the TPP will eliminate tariffs in Vietnam of up to 5 percent on a range of medicines, including antibiotics, corticosteroids, and antimalarial medications, as well as tariffs of up to 7 percent on essential medical supplies like gauze and bandages.
Congressional lawmakers have regularly expressed a variety of concerns about Vietnam’s participation in the TPP, relaying fears about low wages and the lack of protections for workers.
After the last round of TPP talks failed to deliver a final agreement, Rep. Sandy Levin (Mich.), the top Democrat on the House Ways and Means Committee, reiterated that Vietnam is one of the TPP countries that needs to overhaul its labor laws and maintain basic internationally recognized labor standards as well as adopt effective rules against currency manipulation.