10:24 | 05/12/2015 Cooperation
(VEN) - The Trans-Pacific Partnership (TPP) countries broke the rules in international trade negotiations to publish the full text of the TPP agreement, helping Vietnam better prepare for opportunities and challenges to be posed by the TPP.
Vietnam needs to strengthen foundations ahead of the TPP - Photo: Can Dung
Free capital flows
The TPP devotes a separate chapter to investment, aiming at protecting investors of a TPP country in the territory of other members.
According to the agreement, host countries must create an attractive investment environment through the implementation of standards for protecting foreign investors such as equal treatment and fairness. They also have to pay compensation to investors for nationalization or expropriation.
The TPP will allow investors to sue local governments to international arbitration and authorize international arbitration to make binding rulings on compensation for investors if host countries or their organizations violate the agreement. And investors have the right to participate in arbitration in the International Center for Settlement of Investment Disputes (ICSID) or other organizations. Moreover, host countries must treat foreign investors in an equal and fair manner and acts of injustice and discrimination are not allowed.
According to Dr. Phan Minh Ngoc, the TPP would ensure the sanctions of host countries for public benefits such as health, safety and environmental protection to avoid abuse of suing local governments to international arbitration. He also said that the TPP would only allow compensation in money.
If the TPP is signed, it would help 12 member countries attract strong capital inflows in order to create a breakthrough in economic development. In addition, Vietnam will have the motivation to accelerate institutional reforming, improve policies and promote transparency. Moreover, human resources in the state apparatus must actually change thinking to avoid challenges posed by commitments.
Motivation for high-tech agriculture
According to the Ministry of Agriculture and Rural Development, the Vietnamese TPP negotiation team has reached many important agreements on agriculture, forestry and seafood.
According to tariff commitments by the US, around 98 percent of Vietnamese agricultural exports will enjoy tariff incentives of zero percent after the agreement takes effect. In addition, import duties for 92.68 percent of seafood exports and 100 percent of furniture exports will be removed. In terms of rice, as many as eight countries will eliminate all tariffs immediately, except Chile and Mexico which will eliminate tariffs following the committed roadmap.
Regarding environmental commitments, to the TPP requires member countries to remove subsidies for fishing activities which are identified as causing negative impacts on marine resources and to eliminate all forms of subsides for illegal fishing vessels.
The TPP also states that TPP member countries will eliminate export subsidies for agricultural products after the agreement takes effect. The TPP will not permit the application of preventive measures for agricultural products originating from its member countries.
According to the Ministry of Agriculture and Rural Development, TPP provisions will have major impacts on the Vietnamese agricultural sector. A large market with non-tariff barriers among the 12 TPP countries will help Vietnamese agricultural products expand export markets and improve access to the world’s largest markets, while enabling to participate in the global supply chain. This move will create motivation and pressure for domestic businesses to promote investment in production towards reducing material exports and increasing export of processed products with high added value.
However businesses in the agricultural sector will have to face difficulties in meeting requirements of the rules of origin due to the dependence on imported raw materials. For example, seafood is Vietnamese key export item. However, Vietnam has to import billions of dollars of seafood materials for processing and exports each year.
The Ministry of Agriculture and Rural Development said that Vietnam should focus on improving competitiveness of enterprises, agriculture, forestry and seafood, while at the same time increasing productivity and developing human resources.
Member countries will review the legal documents and then attempt to have their parliaments ratify the agreement prior to signing. The official signing ceremony is expected to take place in the first quarter of next year. Until then, Vietnam and other member countries will still have time to build on internal strengths to cope with challenges and seize opportunities.