Firms must be well-prepared to take full advantage of TPP

Friday, Jul 26, 2013 17:07

Vietnamese enterprises should learn more about TPP to take full advantage of it.—PHoto sggp
HA NOI (Biz Hub) — The Trans-Pacific Partnership agreement (TPP) will be one of the issues discussed during President Truong Tan Sang's official visit to the US.
Hoang Phuoc Hiep

Talking with Tuoi Tre (Youth) newspaper, Hoang Phuoc Hiep, a member of the Vietnamese negotiation team, said that enterprises must learn more about the TPP to take full advantage when it comes into effect.

Hiep: So far there have been 12 countries taking part in TPP negotiations, including Viet Nam. This is not only a big opportunity but also a challenge for the country.

The challenge is greater than that of joining the World Trade Organisation (WTO). Companies should know more about the TPP because they may have to change their strategies to adapt to it.

Tuoi Tre: The president of the American Chamber of Commerce in Viet Nam told the press that Viet Nam might benefit the most from the TPP among the countries involved in the agreement. Can you tell us how?


The TPP negotiations are being carried out following a lump sum principle. It means that countries which join TPP afterwards will not allowed to amend any of the finalised regulations. Viet Nam has an advantage because it will be one of the founding countries.

Unlike the WTO, individual countries will be able to opt out of different sectors, but once that decision is made, it cannot be reversed. This may lead to a situation where there are sectors we want to include/discard now, but later on we change our minds, so this needs careful consideration. Viet Nam can remove some sectors to our benefit, but other countries can also do the same.

Viet Nam has been instructed to increase governmental management of trade and services. The TPP will sue the central government if a local officer breaks TPP regulations, and private companies can take legal action if there is any trouble between them and the government. All this information will be made public.

Hiep: TPP participating countries such as the US, Australia, Canada and Japan are big markets which Vietnamese enterprises find difficult to enter. If the negotiations are successful, tax will be cut on thousands of goods, especially important export products such as agricultural products, seafood and textiles.

Viet Nam will have a chance to buy products from developed nations that can balance the market share with neighbouring countries, especially China. Joining the TPP will also help to increase the capacity and competitiveness of Vietnamese enterprises.

Tuoi Tre: You said that the challenge will be bigger than joining the WTO. What specific requirements do we have to satisfy?

Hiep: I cannot mention specific conditions and regulations because they are still on the negotiating table. However, it is not simple to gain preferences from the TPP. For example, products have to meet the requirements of environmental conditions of import countries: from the types of soil cotton plants are grown in to the working conditions in weaving factories. Viet Nam can meet them but input prices will be high.

For seafood, for example basa fish, Viet Nam can be sued for selling it below market price. However, signing the TPP will mean that we can be sued for not ensuring environmental factors such as chemicals in fish food and unsecured water sources.

Tuoi Tre: What will happen if Viet Nam imports materials to meet environmental regulations?

Hiep: The TPP tax is calculated based on the products' origin. There may be a regulation in the TPP says that three quarters of products must be made in the country of origin.

At the moment, Viet Nam imports materials to produce some of its main export products, such as textiles. If we fail to keep that proportion below one quarter, those products will not be entitled to the benefits of the TPP.

The TPP also includes a strict copyright clause that says that designs must be registered. While there are no employment regulations in the WTO agreement, there are in the TPP. The agreement has regulations on salary, working hours, employees' right to change jobs and so on. I think Vietnamese enterprises should be clear about them to be well prepared.

Tuoi Tre: Having participated as a delegation member in the WTO and TPP negotiations, what do you advise enterprises to do to take advantage of this chance to minimise problems when Viet Nam joins the TPP?

Hiep: Vietnamese firms will not be able to increase exports if they cannot compete with other TPP countries, and the same countries will be able to sell the same products in the Vietnamese market.

I think that the firms should conduct careful research on the TPP regulations. I think that many companies will adjust their strategies to enjoy the benefits of the TPP and export their products to participating countries. If the firms do not meet TPP requirements, they will have to turn to different markets such as Africa and Latin America.

It depends on the negotiations, but the process is expected to be completed in mid-2014. — VNS

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