Many economists believe that Vietnam will gain more from the Trans-Pacific Partnership than just about any other country. The country relies on exports as the foundation of its economy, and the TPP is conducive to global trade.
Vietnam, which is officially a socialist republic, will gain more than just power to export more goods at lower prices, the country will also gain a reason to cut back corruption and strengthen workers’ rights. As a point of entry, the country must adhere to certain rules regarding The fact that Vietnam’s government, the Communist Party of Vietnam, is willing to make reforms to their soon-to-be privatized State Owned Enterprises is a testament to just how much the country wants to strengthen its relationship with the United States via the TPP. In fact, out of all the countries involved in the Trans-Pacific Partnership, Vietnam may be the only one that has overwhelming popular support from the people.
Forty years after the Vietnam War, the relationship that Vietnam has with the United States is complicated; but when you look at it from a global trade standpoint, the facts are clear. In 2013, Vietnam was the US’ 27th largest trade partner, with the exports from Vietnam totaling around $24.6 billion (compared to the US’ $5 billion worth of exports to Vietnam). The US supplies Vietnam with goods such as electrical machinery ($611 million) and cotton ($403 million), while Vietnam exports finished goods such as apparel (34% of US apparel imports are from Vietnam), footwear ($2.9 billion), furniture and bedding ($2.6 billion). Besides cotton, Vietnam also imports US agricultural goods such as soybeans, dairy, and tree nuts, while the country sends the US products like coffee and seafood. Thanks to the TPP’s excising of certain tariffs, Vietnamese shrimp and tuna will no longer have tariffs that were on average between 6 and 7%. The US gets way more than she gives in this relationship, and from 2012 to 2013 there was a huge 21% increase of the trade deficit between the US and Vietnam.
The TPP will boost Vietnam’s economy. And we’re not talking just a little boost, either. Some economists predict that the country will add $36 billion to its GDP and that exports will increase by nearly 30%. This is because companies will take advantage of the TPP and its low or non-existent tariffs and move their factories to Vietnam. While the country will become much closer to the US, Vietnam’s entry into the TPP stands to challenge its relationship with China, a country that has become increasingly aggressive towards its neighbors. China is Vietnam’s number one trading partner, but has recently stirred the pot by placing an oil rig off of Vietnam’s shore – an act that could be taken as an aggressive one. Vietnam’s participation in the Trans-Pacific Partnership will, much to the delight of the US, will make the country far less reliant on China. The low labor costs that are prevalent in Vietnam have already made it easy for Vietnam to take on some of China’s apparel manufacturing, and with the TPP making it even more profitable, Vietnam will likely gain even more foreign investment in this area. According the Eurasia group, the country may increase apparel production by up to 50% in the next decade.
The Trans-Pacific Partnership opens great opportunities for Vietnam. While lowered tariffs may expose some of the country’s industries to outside competition, in the end even that will help shape a stronger Vietnam as private companies innovate and grow with competition. After years of war followed by a too-long stretch of government corruption, the people of the country stand to benefit from the TPP’s focus on ensuring member countries adhere to labor standards, allow labor unions, and pay attention to human rights.