Trade ministers of TPP countries attend a press conference (Source: VNA)
Once ratified by member country parliaments, the newly-reached Trans-Pacific Partnership (TPP) agreement will open up a new road to the future of cooperation and integration in the region, which requires each member to improve itself to greet both opportunities and their coupled challenges.
October 5, 2015 marked a historical milestone for the 12 TPP countries as their trade ministers reached final consensus on the world’s largest free trade agreement after more than five years of negotiations.
The TPP is a multi-lateral free trade agreement that involves not only goods and services but also non-trade affairs.
Once it comes into effect, it will delineate the world’s largest free trade area with a population of 800 million people, representing about 40 percent of the global gross domestic product and 30 percent of the global trade turnover, evidence of the agreement’s massive potential impact on the global economy and each member economy.
Therefore, TPP negotiations were also one of the most difficult and long-lasting processes in regional and global trade history. Before reaching the final consensus in Atlanta, the participating countries underwent more than 20 rounds of negotiations, during which they failed to meet deadlines and even seemed to come to a dead end on a number of occasions.
Reaching this consensus is quite an accomplishment, as the agreement comprises high standards, with numerous ambitions for trade, technology, intellectual property, labour and the environment. Notably, the TPP will help remove tariff barriers while facilitating investment flows among the 12 member states.
In the next 10 years, the agreement is expected to increase the global GDP by 1 percent each year.
More than simply creating a “new playground” for the regional economies, the agreement will contribute to forming the economic-trade-investment structure of the Asia-Pacific in the future.
For Vietnam, as an active member of the international community, participating in an important regional structure like TPP will help the country take full advantage of opportunities brought by regional and international restructuring and international economic integration.
The pact is expected to help raise the country’s gross domestic product (GDP) by an additional 23.5 billion USD in 2020 and 33.5 billion USD in 2025, and adding 68 billion USD to the country’s total export earnings in 2025. Under the deal, major markets such as the US, Japan and Canada will eliminate import taxes, creating impetus for Vietnam’s exports.
Vietnam will also have new opportunities afforded by the newly formed supply chain and the improved investment environment after the trade deal is put in place.
Recently, many big foreign groups have invested in new projects or expanded their production in Vietnam in anticipation of the TPP. As such, foreign investments in the country can be expected to increase significantly once the pact becomes effective.
With high standards on transparent governance and State apparatus performance, the agreement will motivate Vietnam to keep improving the socialist rule of law; speed up administrative reform; and combat corruption, extravagance and bureaucracy.
However, it also means that Vietnamese businesses will face challenges, including pressure on market openings and fierce competitiveness, requiring them to be well-prepared.-VNA
