TPP’s demise sounds no death knell
The final doomsday countdown has begun for the Trans-Pacific Partnership (TPP). Donald Trump will take the oath to become the 45th president of the United States on Jan. 20.
But for all the touted benefits, the TPP’s collapse is not likely to be devastating for its member-nations, fortunately.
“Do not expect any dramatic economic consequences from TPP’s demise,” said Stephen Olson, a scholar at the Hong Kong University of Science and Technology. “Trade is already open and flowing at robust levels amongst many TPP partners and that will continue.”
According to the Asian Development Bank, from 2000 onward nearly 100 new free trade agreements (FTAs) have been signed in Asia alone. Within the TPP group, the game leader—the United States—has FTAs in place with 6 of its 11 members.
Vietnam, a comparatively small economy, has signed 12 FTAs with powerful economic blocs like the European Union, and with large economies like Japan and South Korea.
Prominent economist Võ Trí Thành, chair of Vietnam’s Asia Pacific Economic Cooperation (Apec) 2017’s organizing committee, said: “TPP’s demise is disappointing, but with or without TPP, the global trade liberalization trend is irresistible.”
His observations seem to match what the 11 remaining TPP signatories have been doing over the last couple of months.
Following Trump’s statement, there have been clear signals that TPP members in Asia are shifting their attention to other trade opportunities. The Regional Cooperation Economic Partnership (RCEP), a proposed trade initiative including the 10 Asean members plus China, Japan, South Korea, India, Australia and New Zealand, has been most talked about recently.
Negotiations on RCEP started in 2012 and 16 rounds have been completed so far, covering trade in goods and services, competition policies and dispute settlement, among other things. Even though some economists have said RCEP does not match TPP in terms of the level of liberalization, it is now an alternative choice for many TPP members.
If adopted, RCEP would be the largest free trade bloc in the world, accounting for 40 percent of global trade and 45 percent of the world’s population with a combined GDP of US$22 trillion.
When one country is said to benefit most from a pact, it also stands to lose the most from the pact’s demise. Several experts have remarked on this fact.
But a specter of gloom, with falling foreign investment and limited export markets, is uncalled for.
“With or without TPP, the Vietnamese economy will stay on a positive note because all the preparatory work and reforms in the lead up to TPP have been underway, leading to new, positive changes beneficial to the business community and national sustainable development,” Thành said.
Over the last three months, Vietnamese Prime Minister Nguyen Xuân Phúc has consistently sent out a firm message in response to people’s concerns about TPP: “With or without TPP, we will move on with our open-door policy and our ongoing reform process.”
Those who are familiar with Vietnamese politics know that the country’s independent open policy is not a newfound thing, but a consistent pursuit for the last 30 years.
Vietnam has entered into trade agreements with 55 nations. It is currently home to 21,666 FDI projects worth US$293 billion, with investors from more than 100 different countries.
Its enthusiastic involvement in the TPP negotiation process over the last seven years and its readiness to verify the agreement signal its strong commitment to international integration and trade liberalization.
But one additional fact can be highlighted here. Vietnam is also one of the first TPP members that put the agreement’s ratification on hold, even before Trump’s video statement was released. This caution shows Vietnam’s adaptability and flexibility to global fluctuations.
Over thousands of years, Vietnam has faced unexpected situations, and it has always managed to land on its feet. The “secret” is traditional: adaptation.
As a Vietnamese saying goes, “O bau thi tron, o ong thi dài” (Live in a gourd, you grow round. Live in a tube, you grow long).
Nguyen Hai Van is deputy editor in chief of Viet Nam News.
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