Footwear production in a Vietnamese company. (Source: VNA)Vietnam is expected to be one of the biggest winners of the Trans-Pacific Partnership (TPP) agreement, especially its garment and footwear sectors, thanks to the elimination of tariffs in the US and other major importing nations, the US Associated Press (AP) has analysed.
According to the press, TPP – an ambitious Pacific Rim trade deal – will boost the economies of its 12 participating countries by opening their markets to one another, but gains will not be portioned equally among parties.
Apart from Vietnam, Japanese car and auto parts makers and Malaysia's electronics and semiconductor industry will also benefit from the trade pact, which was agreed upon in Atlanta, the US on October 5.
Once ratified, the deal will become one of the world largest free trade agreements, accounting for 30 percent of global trade and about 40 percent of the world’s economy. It will promote trade liberalisation and tighten labour and environmental standards across member nations.
Many benefits of the deal will flow to Vietnam, where the economy has been growing at a decent clip as manufacturers expand their local presence, the agency noted.
AP quoted Rajiv Biswas, Asia Pacific Chief Economist at IHS Global Insight, as saying the pact is really transformational for Vietnam as domestic garment firms will have a major advantage over other exporters into the US market, which currently imposes a 17 percent duty on clothing imports.
Vietnam’s footwear industry will benefit from competitive disadvantages in the US, Mexico and Canada, which will see benefits in other industries such as agriculture, machinery and electronics.
Vietnam’s participation in the TPP combined with a recently signed European Union free trade agreement is expected to help the country attract foreign investment, the AP stressed, citing that leading manufacturers such as Samsung Electronics have been setting up its factories in Vietnam for several years.
This demonstrates Vietnam’s rising attractiveness over China, which has been considered a long-time global powerhouse, it added.
Economic experts say Vietnam's economy will see the biggest growth speed because of its relatively small per-capita GDP.
By 2025, Vietnam's economy will grow 11 percent with a 28 percent increase in exports, according to a July report released by Eurasia Group, the leading global political risk research and consulting firm .
"This percentage increase dwarfs the gains made by any other country," the report said. Vietnam will become the "preferred destination" for low-cost manufacturers looking to stay competitive with industries relying on cheap labour”.
According to Eurasia Group, manufacturers, especially garment makers, are scrambling to move part of their production to Vietnam.
It cited that Hong Kong-based garment maker Lever Style, whose clients include Hugo Boss and J. Crew, has been shifting its production from southern China to Vietnam in recent years.
“The TPP trade pact will encourage us to migrate even more production," AP quoted Lever Style Chairman Stanley Szeto as saying.
The press concluded its analysis with a comment by economic analyst Marcel Theilant from Capital Economics – a London-based economic research consultancy, which affirmed that “ most significantly, the wider economy should benefit as previously protected sectors are exposed to competition”.-VNA
