On the 4th of October 2015, the date on which Trans-Pacific Strategic Economic Partnership Agreement (TPP) was concluded might be considered as a landmark in the international economic integration process of Vietnam. Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, and Vietnam – the countries currently party to the agreement include 40% of the world’s GDP and 26% of the world’s trade. The initial statistics have demonstrated its significance and its potential influence on the world economy.
Different to other regular trade agreements which mostly deal with goods and custom duties between member states, TPP, with 30 chapters encompassing a broad range of regulatory and legal issues, making it a much more central part of foreign policy and even domestic law-making. Beside goods trading and customs, sanitary and phytosanitary, government procurement, intellectual property, labor and others trade related issues are also addressed in the TPP. Although TPP has not been effective as it needs to be ratified by the member states, it is expected to significantly impact the member states in three aspects: exportation, investment and institutional reform.
The facilitation of a comprehensive market access to crucial markets in various continents such as America, Asia, and Oceania is estimated to foster the exportation of members. Moreover, challenges in modern trading such as digital economy, state – owned enterprise are also addressed in order to promote innovation, productivity and competitiveness of the members.
An array of investment protections and innovations are encompassed in TPP, so as to ensure an equal treatment to foreign investment and provide a transparent, opened market for investors. The role of international arbitration of investment dispute is also enhanced with strong safeguards to prevent abusive and unreasonable claims.
However, a member state only benefits from TPP’s innovations once the institutional requirements promulgated in TPP are satisfied. TPP shall deeply intervene in the institutional structure of member states in order to create a framework for the regulations applied to all the entities, including enterprises, state-owned enterprises, the Governments and also the citizens. All the requirements in intellectual property, environment, labor and others need to be fulfilled by the member states so as to set up a common ground based on the same features. In one hand, such requirements shall dramatically transform the institutional structure, and shorten the gap between member states of TPP, which is now relatively big. On the other hand, it also lay down challenges for small countries such as Vietnam to improve the weaknesses in the legal system and to keep up with the development pace of the group.
In summary, every trade agreement brings advantages as well as disadvantages to member states. TPP is not an exception, though its potential is worth waiting for. Once Vietnam agrees to join the common ground, there are rules we need to follow in order to take advantages from it. However, one that cannot be denied is that by ratifying TPP, Vietnam has taken a big step in the international economic integration and a transformation of the economy as well as infrastructure is expected to come shortly.
Comments: Perhaps we should address a particular industry that will be most influenced by the ratification and implementation of TPP. This article rather generalizes its impact in the legal system, economic development and investment environment in Vietnam. This may not be useful information as the information provided here does not cover a specific industry. Perhaps we can write an article analyzing the anticipated changes in the investment landscape for strong industries Vietnam has such as Textiles, Garments, Electronics (mobile phones, specifically), among others.
By Vietnam Law Insight
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