Among the new-generation free trade agreements of Viet Nam, the TPP and the Viet Nam-EU FTA (EVFTA) are considered the two with the most significant impact for trade and investment policies. — VNS File Photo

Among the new-generation free trade agreements (FTA) of Viet Nam, the TPP and the Viet Nam-EU FTA (EVFTA) are considered the two with the most significant impact for trade and investment policies.

The VCCI, with support from the British Embassy in Viet Nam, completed a draft review of the EVFTA and TPP commitments on investment.

When the pacts take effect, investment commitments are expected to change Viet Nam's investment environment given that investors from 38 partner states account for a huge proportion of Viet Nam's Foreign Development Investment (FDI).

Nguyen Thi Thu Trang, Director of VCCI's World Trade Organisation Centre and a member of the review group, said the team reviewed TPP's Investment Chapter and Viet Nam's Investment Law, its guiding documents, relevant laws such as the Civil Law, laws on enterprise, State compensation liability and specialised laws related to market access of foreign investment.

They found that Viet Nam legal framework is compatible with most of TPP commitments on investment, especially basic principles on market access and removing investment barriers.

For example, Viet Nam's laws on investment and enterprises make no distinction between domestic and foreign investors, a fact compatible with the Nation Treatment principle.

Viet Nam's legal provisions also do not distinguish among investors from different countries, which is compatible with Most-favoured Nation Treatment principle.

However, she said, Viet Nam's legal framework does not address the overseas transfer of goods and money. Viet Nam regulates cases allowed for transfer while TPP regulates cases which could be limited for transfer.

When it comes to foreign investor-State dispute settlement, Viet Nam's legal framework does not provide for consultation and mediation, unlike the TPP. Moreover, its legal framework is completely different than the TPP with regard to arbitration procedures, Trang said.

The incompatibility could result in situations in which some actions following domestic laws but violating TPP commitments, she said, noting that foreign investors could sue Viet Nam's Government.

"Viet Nam has made efforts to fine-tune its legal framework since joining ... in the global integration ... but it should pay more attention to law enforcement to ensure the benefits for the parties involved," she said.

Trang also suggested that local businesses learn about Viet Nam's commitments to foreign investors. Learning the TPP commitments would also be useful to Vietnamese businesses that want to invest in TPP member countries, she said.

Pham Manh Dung of the LCT Lawyer Company and former director of the Legal Department under the Ministry of Planning and Investment, said that commitments on investment are not only included in TPP's Investment Chapter but also other chapters on finance, logistic or communication services, chapter on State-owned enterprises, small and medium enterprises, labour and labour dispute settlement.

"The VCCI's review could have been comprehensive if its scale was larger and if it could review legal documents issued by local governments and provincial/municipal People's Committees," he said.

He added that a similar review of Viet Nam's TPP commitments on intellectual property was needed because investors from developed countries care much about intellectual property protection.

Twelve Pacific Rim countries  signed the TPP in New Zealand in February, 2016. The TPP is now undergoing a two-year ratification period in which at least six countries – which account for 85 per cent of the 12 nations' combined gross domestic production - must approve the final text for the deal to be implemented. — VNS