Thayer Consultancy Background Brief

ABN # 65 648 097 123

Vietnam and the Comprehensive
and Progressive TPP
March 1, 2018

We are interested in your assessment of the Comprehensive and Progressive Trans-

Pacific Partnership Agreement (CPTPP0 that will be signed on March 8. Could you
provide your insights into the following questions?
Q1. Which are the advantages and disadvantages that Vietnam will receive after
signing the CPTPP?
ANSWER: Vietnam was prepared to sign the original TPP so the watered-down
requirements of the CPTPP do not represent any new challenge.
The main advantages for Vietnam are better market access with lower tariff rates, and
access to markets such as Canada, Mexico, Chile and Peru with whom Vietnam does
not have free trade agreements. The CPTPP is open to other countries to join and the
list could include South Korea, Taiwan, Indonesia, Thailand and the Philippines. This
would present greater market access for Vietnam, boost exports and GDP growth.
However, the overall benefit to Vietnam under the CPTTP will be much less than under
the original TPP. Vietnam will not have special access to the U.S. market.
Members of the CPTPP will now have preferential access to Vietnam’s market and this
will mean Vietnamese manufacturers and businesses will face increased competition.
Q2. Which measures Vietnam should implement to make full use of the CPTPP?
ANSWER: To take full-advantage of the CPTPP Vietnam needs to make its industries
more competitive by increasing the efficiency of production and the quality of the
goods that are made. More importantly, Vietnam will need to step up administrative
and labor reforms. Vietnam must carry out these reforms so that it can be designated
a market economy. This needs to be done to overcome restrictions some countries
place on Vietnam for not being a market economy.
Q3. What is the likelihood that the United States will re-enter the TPP (now CPTPP)?
ANSWER: President Trump seemed to reverse course by stating off hand in an
interview, “If we did a substantially better deal, I would be open to TPP.” The U.S.
Treasury Secretary Steven Mnuchin stated that renegotiating the TPP was on the table
and he hasheld high-level discussions with other countries about what needed to be
done for the U.S. to join. American farmers are lobbying the Trump Administration to
join the CPTPP to improve market access for their products.
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At the moment, President Trump favours bilateral trade agreements and has given
priority to the North America Free Trade Agreement. The CPTPP is open to new
members and it has suspended twenty provisions that were in the original TPP at the
insistence of the U.S. If the U.S. decided to rejoin the TPP this very likely would trigger
protracted negotiations.
While there are some straws in the wind, the United States is unlikely to join the CPTPP
any time soon.
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Suggested citation: Carlyle A. Thayer, “Vietnam and the Comprehensive and

Progressive TPP,” Thayer Consultancy Background Brief, March 1, 2018. All
background briefs are posted on Scribd.com (search for Thayer). To remove yourself
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Thayer Consultancy provides political analysis of current regional security issues and
other research support to selected clients. Thayer Consultancy was officially
registered as a small business in Australia in 2002.