chapters will stimulate institutional reforms to strengthen and standardize rules and transparency and support the creation of modern institutions in Vietnam,” the World Bank
(WB) has said in a report themed “Taking Stock” released on December 2.
The landmark trade accord is not only removing trade barriers and enhancing market access to key export markets, but it will also have tangible impacts on regulatory quality, intellectual property rights, investor protection, competition, SOE management, labor and environmental standards, food safety, public procurement, and liberalization of services, says the report.
The report highlights TPP-sourced benefits for Vietnam in trade, investment, growth and job creation. Vietnam has unique comparative advantages, particularly in labor-intensive manufacturing and sectors currently subject to high tariffs.
“By enhancing access to key export markets, the TPP is expected to boost overall trade. It is also expected to lead to further increases in FDI inflows to build up export capacity, including in upstream suppliers to sectors subject to strict rules of origin,” the report notes.
The report cited preliminary results as saying that the TPP could add as much as 8% to Vietnam’s GDP, 17% to its real exports, and 12% to its capital stock over the next 20 years.
However, Pham Minh Duc, senior WB economist, pointed out challenges that Vietnam will face when joining the U.S.-brokered deal. They are rules of origins, given Vietnam’s high dependence on imported materials in key sectors, state-owned enterprises, decline in government revenue, and labor and environment issues.
The TPP was concluded on October 5, 2015 after more than five years of negotiations. The combined GDP of the TPP market, which embraces 12 prospective members, is equal to $28 trillion, or about 36% of world GDP, and accounts for more than a quarter of world trade.