America is courting Vietnam for TPP deal

Sherman Katz

Sherman Katz, senior advisor to the United States’ Centre for the Study of the Presidency and Congress, shares his views with VIR’s Nguyen Hanh.

You are working on a report on best practices for Vietnam accessing the WTO. Why is Vietnam your case study?

My goal is to develop lessons for other countries who are now joining or recently joined the WTO.

For example, I am looking at the commitments of Vietnam’s top leadership, the US-Vietnam bilateral trade agreement (BTA) as a stepping stone to the WTO, and the coordination of the development plan with WTO accession.

Vietnam’s 5, 6, 7 and 8 per cent economic growth not so long after joining the WTO wasn’t necessarily because of entering the WTO, but the WTO helped. Vietnam has been able to take advantage of the opportunity and I want to find out why, I think other countries can probably benefit from that.

What is your observation of Vietnam’s implementation of its WTO commitments?

We in the United States sometimes refer to Chile in Latin America as a model in terms of strong economic, strong legal institution and doing well economically. Perhaps Vietnam will turn out to be the Chile of South East Asia. I have been very impressed by the intense commitment of people in your government. I think the responsibility of Vietnamese officials to do what the WTO called on them to do is very high.

I understand one of the reasons the United States went out of its way to ask Vietnam to participate in the TPP free trade agreement is precisely because Vietnam was an example of a country which did what it said it was going to do.

There are lots of accusations of China not making good on its WTO commitments. Did you mean Vietnam was different?

Exactly. That’s my impression. We had a lot of talks in my meeting with the American Chamber of Commerce in Vietnam today about China not living up to its commitments, particularly in the realm of subsidies. Take the solar panel business as an example.

China’s  heavy subsidies take much larger than a fair share of that market and they are taking in part away from American companies that produce this. I encourage the United States to use sticks as well as carrots in the relationship with China.

Vietnam has been seen as a good actor that’s living up to its commitments, I think, leading the United States trying to bring Vietnam along into the TPP.

It is controversial in Vietnam as to whether our country should join such an ambitious and high-standard free trade agreement like TPP. What are your views on this debatable point?

I probably don’t yet know about the strengths and weaknesses of Vietnam’s economy. But I have an impression that so far it has been the United States more than Vietnam which has been interested in Vietnam coming into the TPP. I also have an impression that Vietnam made many major reforms in order to join the WTO.

Now the US wants the TPP to be a 21st century high-standard trade agreement and I can understand if Vietnam may hesitate to make further reforms in order to meet that standard while it has already taken on so much and it already benefited. The additional cost of the further reform may outweigh the benefits.

In your meeting with the Amcham Vietnam, you discussed whether governments are negotiating trade agreements on behalf of   their corporations or their  people. Do you have any recommendations for the Vietnamese government balancing the benefits of its corporations and its people when negotiating TPP or a free trade agreement with the EU?

That implies that I know more about your economic and political system than I really do. But I have an impression so far that your government is a heavy investor in your economy, not only literally but also metaphorically.

By that I mean the progress of your economy is the strong interest of the government and therefore I think that your government will hopefully act in the way that produces broad benefit for your society, for the greatest number, just as your government did in the the cases of the WTO and BTA deals.

This is without the kind of political game we have in the United States where corporations who are the major contributor get access to policy makers and therefore get sweetheart deals in trade policy.

The US administration, as I understand, wants to see the TPP framework finalised by November, before APEC leaders meet in Honolulu. Is this timeline feasible?

Number one, the idea of finishing the negotiations by November is too ambitious, that’s not going to happen. Number two I think it’s a mistake to push too hard to make that happen because the deal has real potential to be a quite positive deal.

I don’t think we should rush it. I think we miss an opportunity to include Japan if we move too quickly. I think in Honolulu, Hawaii [where the upcoming 10th TPP negotiation round to take place], we can say we have reached a benchmark progress. But, I think we need to continue to work beyond that to build a solid foundation for TPP. 

*Sherman Katz has served as a trade policy issues advisor to the Presidential campaigns of Barack Obama, Bill Clinton, Walter Mondale, Jimmy Carter, Edmund Muskie and George McGovern.