Trump Nominees Give Vietnam’s Premier Hope for Trade Pact
Many Trump officials favor TPP, Vietnam’s prime minister says
(Bloomberg) -- Vietnamese Prime Minister Nguyen Xuan Phuc is holding out hope that incoming U.S. President Donald Trump will reconsider the Trans-Pacific Partnership, a trade deal that would be a major boost to the export-driven Southeast Asian nation.
Recent comments made by officials who are set to take senior roles in Trump’s cabinet give him reason to be optimistic of a possible agreement that can satisfy the U.S., Phuc said. Rex Tillerson, Trump’s pick for secretary of state, said in his Senate confirmation hearings last week he wasn’t opposed to the TPP, though he shared some of Trump’s concerns about the pact. The U.S. president-elect had vowed on the campaign trail to withdraw from the TPP on his first day in office, saying such trade deals kill American jobs.
“I still believe the new administration of the United States will reconsider its perspective on the TPP and will also try to achieve a new generation agreement that will benefit all parties concerned,” Phuc said in an interview with Bloomberg Television’s Haslinda Amin at the Government Office in Hanoi on Friday.
“Many of the newly-appointed members of the new cabinet are in favor of the TPP, so I think that Washington might reconsider its decision because it will also benefit the U.S.,” he said.
Phuc, 62, is working with other Asia-Pacific leaders to keep momentum going on the 12-nation trade treaty that’s been signed -- but not yet ratified -- by countries including the U.S., Australia, Japan and Canada, and was a cornerstone of President Barack Obama’s strategic pivot to Asia. TPP would represent nearly 40 percent of global economic output worth $30 trillion if it came into force.
Australian Prime Minister Malcolm Turnbull reaffirmed his commitment to the TPP on Saturday and urged resistance to protectionism ahead of a meeting with Japanese Prime Minister Shinzo Abe in Sydney. A key advocate of the agreement, Abe said over the weekend he’s working on an “early entry into force of the TPP.” Turnbull told reporters on Monday TPP members are weighing how the deal would work without the U.S.
Phuc will host the Japanese leader in Hanoi on Monday.
Vietnam -- an economy that’s been transformed in the past decade from a mainly farming one to a manufacturing hub -- is seen by the World Bank and others as one of the biggest winners from the TPP, providing an estimated 8 percent boost to gross domestic product by 2030. As a low-cost producer, Vietnam is one of the few economies in Asia still posting export growth as foreign investment from companies such as Samsung Electronics Co. continue to rise.
The economy expanded more than 6 percent last year and is set to be among the world’s best performers over the next two years with growth rates exceeding 6 percent, according to the World Bank. The government is targeting expansion of 6.7 percent in 2017.
The TPP is more ambitious than other agreements in not only reducing tariffs on a range of products, but also offering protection on intellectual property rights. That provided impetus for countries like Vietnam to implement business-friendly reforms to take advantage of the benefits from the trade pact.
China Relations
“Modernizers in Vietnam hoped that TPP would exert an external push for reform that they were unable to make internally given the domestic structural constraints,” said Alexander Vuving, a security analyst at the Asia-Pacific Center for Security Studies in Hawaii. It would also create a “strong force to draw Vietnam away from the Chinese orbit,” he said.
Even without U.S. support for the TPP, Phuc said Vietnam will work with the other member countries to find a solution that benefits everyone, while also seeking free-trade deals elsewhere, such as the Regional Comprehensive Economic Partnership, or RCEP, which is being pushed by China.
“Vietnam will continue to move forward because we have 12 other FTAs in place and three FTAs that are currently under negotiation, including the RCEP,” he said. “These will help our economy to continue to be propelled forward.”
Vietnam is seeking to steer a more independent course from China -- its biggest trading partner with bilateral trade amounting to $71.6 billion last year -- as territorial disputes with its fellow communist neighbor repeatedly mar relations.
‘Potential Market’
The Southeast Asian nation looks to China to “facilitate business” and “a potential market for goods and services of regional countries,” Phuc said.
The two countries have a complex relationship. They engaged in a 1974 clash near the disputed Paracel Islands and a bloody border war in 1979 over Cambodia. Relations were further tested in 2014 when China placed a deep-sea exploration rig off the Vietnamese coast in an area of the South China Sea claimed by both countries. That action prompted several clashes at sea and sparked widespread protests in Vietnam.
“We are boosting economic growth, but we will not compromise the environment, national security and independence," Phuc said. "And as long as we are able to uphold such principals, we should all work together for mutual development.”
China and Vietnam issued a joint statement on Saturday pledging to better manage maritime differences and avoid actions that complicate the situation in the South China Sea.
--With assistance from Karl Lester M. Yap Linus Chua and Haslinda Amin To contact the reporters on this story: Nguyen Dieu Tu Uyen in Hanoi at uyen1@bloomberg.net, John Boudreau in Hanoi at jboudreau3@bloomberg.net. To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net, John Boudreau at jboudreau3@bloomberg.net, Linus Chua