TPP negotiations concluded: Historical milestone

Following more than five years of intensive negotiations, yesterday saw the 12 trade ministers of Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, US, and Vietnam announce the successful conclusion of the Trans-Pacific Partnership (TPP) negotiations in Atlanta.

The TPP will support jobs, drive sustainable growth, foster inclusive development, and promote innovation across the Asia-Pacific region. Most importantly, it achieves the goal that member states have set forth of an ambitious, comprehensive, high standard and balanced agreement that will benefit our nation’s citizens.

Commenting on this historic event, Warrick Cleine, chairman and CEO of KPMG in Vietnam and Cambodia, said that the conclusion of the TPP negotiations was fantastic news for Vietnam.

“While we have already seen an increase in manufacturing-related foreign direct investment (FDI) over the past few years, some in anticipation of this agreement, we expect to see a further surge in interest in the coming years.”

“This will not only be from TPP participant countries, such as the US and Japan, but from any country whose manufacturers are seeking easier and more secure access to some of the world's most exciting consumer markets,” he said.

Importantly, the TPP will also bring greater focus from Vietnam's export partners on the defined country of origin of goods exported from Vietnam.

“We expect that the TPP will provide greater incentives for business investment in vertical manufacturing, that is, investment in materials and component manufacturing. This will increase the amount of value added activity in the Vietnamese manufacturing sector,” Cleine said.

Pham Hong Hai, CEO of HSBC Vietnam, also felt optimistic about this event.

"This is a really huge step forward towards global economic integration in a world that is becoming not only more inter-connected but also more inter-dependent,” he said. “As a pro-trade policy bank, HSBC welcomes the TPP agreement which will boost trade and investment flows across the Asia-Pacific region.”

According to him, the TPP has the potential to raise incomes and living standards in developing economies across Asia – multiplying the potential market for every commodity, every manufacturer, every service, and every technology. “Vietnam is expected to emerge as a big winner from the TPP, seeing higher demand for its textiles, apparel, and footwear products.”

The deal could raise Vietnam’s gross national income by 10 per cent by 2020, according to HSBC Global Research.

“I firmly believe that the TPP will exert positive pressure on the country, pressing for faster reform to transform Vietnam into a more competitive and efficient economy,” Hai stressed.

However, Cleine noted that the TPP also required participant countries to make substantial commitments in areas such as state procurement, labour law, intellectual property rights, and international dispute resolution.

“For Vietnam, this is likely to substantially influence the government's legislative and reform agenda for several years to come. From a business perspective, the commitments that the Vietnamese government has made in these areas provide great comfort regarding the direction in which Vietnam is headed," he said.

"Of course, the TPP is a multilateral agreement, which means that while markets will open to Vietnam, there are corresponding commitments from the Vietnamese side. We expect to see the business sectors of various other TPP countries to look at Vietnam in expectation of enhanced market access and investment opportunities,” he added.

According to Cleine, Vietnam's young and growing population provides an attractive consumer market for these multi-national companies, and consumers will benefit from greater variety and dynamism from the business sector. For Vietnamese businesses, however, the need to be internationally competitive has never been greater.

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