BTA-WTO-TPP Milestones in int’l integration

The sixth high-level meeting of leaders of TPP member countries

Exports increase

Before it became an ASEAN member in 1995, Vietnam, in the eyes of the international community, was a small but resilient country that had gone through two wars of resistance against the French and the Americans, with almost no economic potential or advantages. The BTA it signed with the US was more like a declaration on the normalization of Vietnam’s relations with the US and the opening of the Vietnamese economy to investors from the most powerful country in the world.

The BTA allowed Vietnam to learn about market liberalization, investment commitments, national treatment principles, and nondiscrimination between domestic and foreign businesses, goods and services.

When the first round of BTA negotiations took place in September 1996, Head of the Vietnamese negotiation delegation Nguyen Dinh Luong said, “Vietnam is not a strong economy with large businesses, and we know too little about the US, while they are much stronger and more capable than us.”

As an information and communications technology reporter, I still remember that when the BTA was signed, the media argued so much about how wide Vietnam should open the domestic telecommunications market, or should it allow foreign banks to open their branches or the establishment of companies with 100 percent foreign capital in Vietnam or not. These were new and sensitive matters at that time.

After the BTA was signed, the US had quickly become Vietnam’s largest export market with the export value almost doubling from US$1.51 billion in 2001 to US$2.89 billion in 2002. In 2014, trade between the two countries reached US$36.3 billion, a 24 fold increase compared with 2001 - the year that saw Vietnam becoming the largest exporter to the US among ASEAN member countries and standing among the top 15 exporters to the US worldwide. Notably, Vietnam has recorded a continuous trade surplus with the US (US$2.45 billion in 2002, US$5.93 billion in 2005, US$14.24 billion in 2010, US$30.6 billion in 2014, and about US$39 billion in 2015, a rise of 37 percent compared with 2014).

Six years after signing the BTA, Vietnam became the 150th member of the WTO. This event had a strong impact on foreign direct investment (FDI) in the country. Total registered FDI in Vietnam grew from over US$10 billion in 2006 to US$21.3 billion in 2007 and US$68 billion in 2008. Vietnamese exports have grown an average 20 percent annually. Vietnam has seen strong changes in the domestic distribution and retail market. The appearance and growth of modern-styled convenience stores, supermarkets, and shopping centers has changed domestic consumer habits.

WTO principles include nondiscrimination rules based on a high-level consensus in trade agreements between member countries and are applied in trade liberalization to ensure equality between domestic and foreign products.

The TPP consists of provisions in fields that have never been mentioned in previous trade agreements, such as government procurement, labor, and environment. Deputy Minister of Industry and Trade Tran Quoc Khanh, Head of the government negotiation delegation, expects the TPP will open new opportunities for Vietnamese goods. The TPP is predicted to help Vietnam increase its gross domestic product (GDP) by US$23.5 billion by 2020 and US$33.5 billion by 2025, and the export value by US$68 billion by 2025.

Institutional gains

Trade negotiations with foreign partners create not only a motive for economic growth but also a pressure requiring the entire economy to change to adapt itself to the global playing field. Specifically, Vietnam needs to promote institutional reforms, and improve transparency and the business environment to enhance the competitiveness of the entire economy.

After the BTA was signed, Vietnam issued and amended a number of laws such as the Law on Enterprises, Law on Credit Institutions, and Law on Intellectual Property. Notably, the Commercial Law had been rewritten to include the freedom of enterprise.

As a WTO member, Vietnam has increased the transparency of its laws and regulations. All laws and administrative decisions must be made public before taking effect. Therefore, regulations that face opposition from the public have been abrogated. WTO applies no quotas or licenses that limit import volumes. Before Vietnam joined the WTO, businesses had to apply for import and export licenses from the former Ministry of Trade. Today, businesses just have to register with the Ministry of Planning and Investment when they implement business registration procedures.

Since Vietnam joined the WTO, Vietnam has amended and issued 86 laws to improve transparency and facilitate economic development in accordance with WTO principles.

The TPP is a new-generation agreement with very high standards in terms of transparency, corruption prevention, as well as supply chain and business facilitation. “This is a heavy pressure to the administrative management apparatus. Vietnam needs to overcome this pressure when implementing its commitments,” Deputy Minister Tran Quoc Khanh emphasized.

Thu Hang