THE STATE BANK OF VIETNAM BANKNG ACADEMY Foreign Languages Faculty GRADUATION THESIS THE IMPACTS OF COMPREHENSIVE AND PROGRESSIVE AGREEMENT FOR TRANS-PACIFIC PARTNERSHIP ON VIETNAMESE ECONOMY Supervisor : Ms. Can Thuy Lien (M.A) Student : Khuong Thi Linh Chi Class : K17 - ATCC Student ID : 17A7510019 Hanoi, May 2018 ACKNOWLEDGEMENT First and foremost, I wish to express the deepest appreciation to my dedicated advisor Ms. Can Thuy Lien for her understanding, wisdom, patience and enthusiasm. Without her expert and valuable guidance, this thesis would not have been possible.
I also place my sense of gratitude to all the lecturers of Faculty of Foreign Language and other faculties in Banking Academy for providing me with all necessary knowledge and facilities to complete the work. Last but not least, I would like to extend my heartfelt thanks to my entire family and friends. They are always a great source of unceasing encouragement and support during the whole journey. Student Khuong Thi Linh Chi DECLARATION I hereby declare that the graduation thesis entitled “The impacts of Comprehensive and Progressive Agreement for Trans-Pacific Partnership on Vietnamese economy” is a record of an original work done by me under the guidance of Ms.
Can Thuy Lien, Banking Acacdemy. The results embodied in this thesis have not been submitted to any other University or Institute for the award of any degree or diploma. Hanoi, May 2018 Signature Khuong Thi Linh Chi LIST OF TABLES AND FIGURES Name Page number Table 1 Macroeconomic impact of CPTPP on Vietnamese economy by 2030 15 Table 2 Vietnamese and foreign tariffs and NTMs ad valorem equivalents (trade-weighted) before and after trade liberalization, for market included in 16 CPTPP, % Figure 1 Sectoral changes in CPTPP 18 Figure 2 Exports by destination, baseline conditions 27 Figure 3 Export concentration in Vietnam in the baseline in 2015 28 Figure 4 Income distribution in Vietnam 2015 and 2030, baseline conditions 29 Figure 5 Poverty reduction in Vietnam, baseline conditions 30 Figure 6 People lifted from poverty due to FTAs, standard productivity 30 Figure 7 Gender-gap in 2017 and 2030, Household consumption per capita 32 Figure 8 Gender-gap effects of CP-TPP, Deviations with respect to baseline 32 Figure 9 Growth Incidence curves of FTAs, standard productivity 33 Figure 10 Growth Incidence curves of FTAs, productivity kick 33 Figure 11 Growth Incidence Curves for each FTA 34 LIST OF ABBREVIATIONS AANZFTA ASEAN-Australia-New Zealand Free Trade Agreement APEC Asia-Pacific Economic Conference ARF ASEAN Regional Forum Convention for International Trade in Endangered Spices of Wild Fauna CITES and Flora CPTPP Comprehensive and Progressive Agreement for Trans-Pacific Partnership EAS East Asia Summit EVFTA EU-Vietnam Free Trade Agreement FDI Foreign Direct Investment FPI Foreign Porfolio Investment FTA Free Trade Agreement GDP Gross Domestis Product ISDS Investor-State Dispute Settlement Mechanism LEFASO Vietnam Leather, Footwear and Handbag Association MARD Ministry of Agricuture and Rural Development NCIF National Center for Socio-Economic Information and Forecasting NFSC National Finance Supervisor Council NTBs Non-tafiff Barriers NTMs Non-Tariff Measures NZSCEP New Zealand, Singapore Closer Economic Partnership P3-CEP Pacific Three Closer Economic Partnership RCEP Regional Comprehensive Economic Partnership SEP Strategic Economic Partnership TPP Trans-Pacific Partnership Agreement TPSEP Trans-Pacific Strategic Economic Partnership Agreement UNCAC United Nations Convention Against Corruption USTR The United States Trade Representative VIFORES Vietnam Timber and Forest Product Association WTO World Trade Organization TABLE OF CONTENT ACKNOWLEDGEMENT DECLARATION LIST OF TABLES AND FIGURES LIST OF ABBREVIATIONS TABLE OF CONTENT INTRODUCTION. Research questions and objectives.
Research subject and scope. 3 CHAPTER 1: THEORETICAL FRAMEWORK OF COMPREHENSIVE AND PROGRESSIVE AGREEMENT FOR TRANS – PACIFIC PARTNERSHIP. Key differences between CPTPP and TPP. 12 CHAPTER 2: IMPACTS OF COMPREHENSIVE AND PROGRESSIVE AGREEMENT FOR TRANS-PACIFIC PARTNERSHIP ON VIETNAMESE ECONOMY.
Gross Domestic Product (GDP). Exports and Imports. Foreign Investment Inflow. Trade diversion and creation.
Poverty reduction and distributional impacts. Economic restructure and Institutional reform impacts. Vietnam and Australia. Vietnam and New Zealand.
Vietnam and Canada. Vietnam and Japan. 39 CHAPTER 3: RECOMMENDATIONS FOR VIETNAM TO UTILIZE OPPORTUNITIES AND OVERCOME CHALLENGES. Research rationale The joining into the World Trade Organisation (WTO) of Vietnam manifested the country’s integration into the world economy and the international market under free trade agreements.
The newest one, Comprehensive and Progressive Agreement for Trans – Pacific Partnership (CPTPP), is considered as a model treaty for the 21st century because of its overwhelming scale and influence in comparison with other regional and global trade agreements. The pact will create one of the world’s largest free trade blocs with a combined market of 499 million people and GDP of around $10 billion, accounting for 13.5 percent of the global GDP. The official signing of CPTPP took place in Santiago de Chile on March 8th 2018 (local time), with the participation of representatives from 11 member countries. In spite of the US withdrawal, the trade pact still brings huge economic gains for Vietnam.
It is expected to boost the economic development, generate jobs, reduce poverty, improve living standards, and promote innovation, labour productivity and competitiveness, transparency and good governance, as well as enhance labour and environmental standards. Nonetheless, opportunities and challenges are always parallel. CPTPP also presents problems for Vietnam when implementing commitments of the agreement. Thus, Vietnamese Government and enterprises need to find comprehensive solutions to utilize opportunities and overcome challenges.
As a result, the topic “The impacts of Comprehensive and Progressive Agreement of Trans – Pacific Partnership on Vietnamese economy” is chosen for this graduation thesis. Research questions and objectives This research focuses on three main questions: What is Comprehensive and Progressive Agreement for Trans-Pacific Partnership? 2 How will the trade pact affect Vietnamese economy when it comes into effect? What will Vietnam do to take full advantages and get over disadvantages from the pact? This research focuses on three main points. Firstly, the thesis aims to provide fundamental theoretical framework of CPTPP. Secondly, the impacts of CPTPP on Vietnamese economy are studied in six parts with both possitive and negative aspects.
Finally, recommendations for Vietnamese Government along with specific entities are offered to utillize opportunities and overcome challenges. Research subject and scope The thesis concentrates on analyzing the impacts of CPTPP on Vietnamese economy when the pact comes into force. Research methodology The thesis is researched with quantitative method which focuses on the collection and analysis of numerical data and statistic. Besides, it also uses the information acquired via qualitative research with a flavor of views and attitudes of various writers.
The qualitative data consists of information from monitoring and analyzing written source. Research structure Coupled with the introduction and conclusion, the thesis includes three main chapters: Chapter 1: Theoretical framework of Comprehensive and Progressive Agreement for Trans-Pacific Partnership Chapter 2: The impacts of Comprehensive and Progressive Agreement for Trans- Pacific Partnership on Vietnamese economy Chapter 3: Recommendations for Vietnam to utilize opportunities and overcome challenges 3 LITERATURE REVIEW In recent years, the impact of the Conprehensive and Progressive Agreement for Trans- Pacific Partnership on Vietnamese economy has attracted numerous economists and analysts. Some reseachers have approached this issue in both positive and negative sides. To be more specific, Pham Thi Hong Yen (2017), Central Economic Commission of Vietnam with paper “Welcoming the CPTPP – Vietnam continue to promote broader international economic integration”, generally assessed the advantages as well as disadvatages when Vietnam joins CPTPP and gave some solutions to effective implementation of the pact.
In addition, World Bank has published a report on March 5th 2018 titled “Economic and Distributional impacts of Comrehensive and Progressive Agreement for Trans-Pacific Partnership: the case of Vietnam”, which is conducted by Maryla Maliszewska, Zoryana Olekseyuk, and Israel Osorio-Rodarte. In this report, the potential impacts of CPTPP on Vietnam are compared to those of Regional Comprehensive Economic Partnership (RCEP) and the original Trans Pacific Partnership (TPP-12) by employing assumptions and scenario analysis. On the other hand, articles titled “Vietnam expects stronger foreign investment inflow in CPTPP period” of VietnamNet Bridge (2018) showed the bright future for foreign investment into Vietnam. Moreover, such articles titled “Vietnamese farmers expect higher profits with CPTPP trade agreement” of VietnamNet Brigde (2018), “The livestock sector is heavily influenced by CPTPP” of Customs News (2018), “CPTPP helps Vietnam's textile and garment industry maintain a growth rate of USD 3 - 3.5 billion” of Textile and Fashion Magazine (2018), “Vietnam’s textile industry to slash imports of raw materials” of VnExpress (2016), “Viet Nam footwear boasts strong development prospects” of Vietnamnews (2018), “CPTPP facilitates growth of Vietnamese timber industry” of Vietnam Investment Review (2018), “Wood industry sees promise of growth in CPTPP” of VOV (2018), “Domestic businesses expect positive impacts by CPTPP” of Vietnam News Agency (2018) and “CPTPP, EVFTA to benefit Vietnamese fishery sector” of Vietnamnews (2018) mentioned the impacts of CPTPP on agriculture and industry 4 sectors.
Besides, Hoang Anh, Quynh Lan of Customs News with “CPTPP – motivation and pressure for institutional reform” (2018) pointed out vital role of CPTPP in Vietnam’s complete institutional reform. Nevertheless, there are some shortcomings in the previous researcher’s observation and analysis. Firstly, the researchers simply study one aspect of impact on particular items. They point out some typical fields with substantial advatages but do not examize the disadvantages those fields also suffer and vice versa.
Secondly, the recommendations produced by the writers are sweeping since they do not focus on precise remedies for each sector. These general solutions are merely concerned with the whole economy, not the core element of the economy – the enterprises. Consequently, there is an opportunitie to clarify the points that previous analysises failed to see. Thus, this thesis will study the issue in further details by giving a theoretical overview of CPTPP, evaluating the impact of the pact on Vietnam economy, and finally suggesting practical recommendations for both Vietnamese Government and enterprises to maximize the benefits as well as overcome challenges.
5 CHAPTER 1: THEORETICAL FRAMEWORK OF COMPREHENSIVE AND PROGRESSIVE AGREEMENT FOR TRANS – PACIFIC PARTNERSHIP 1. Overview Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) was launched after the US withdrew from the Trans-Pacific Partnership (TPP) agreement. According to Wikipedia website, the TPP began as an expansion of the Trans-Pacific Strategic Economic Partnership Agreement (TPSEP or P4) signed by Brunei, Chile, New Zealand and Singapore in 2005. In 2008, additional countries (Australia, Canada, Japan, Malaysia, Mexico, Peru, the United States, and Vietnam) joined the discussion for a broader agreement, bringing the negotiating countries to twelve.
In January 2017, the United States withdrew from the agreement and the agreement could not enter into force. In May 2017, the left 11 TPP countries agreed to revive it and reached agreement in January 2018. On March 8th 2018 (local time), the revised Comprehensive and Progressive Agreement for Trans-Pacific Partnership was signed in Santiago de Chile. Membership 12 countries participated in negotiations for the TPP are Singapore, Brunei, New Zealand, Chile, Australia, Vietnam, Peru, Malaysia, Mexico, Canada, Japan and the United States.
All twelve signed the TPP on Febuary 4th 2016. On January 23rd 2017, US President Donald Trump signed a presidential memorandum to withdraw the United States' signature from the agreement. Other countries and regions that are interested in TPP membership include APEC members, South Korean, Taiwan, the Philippines, and Colombia as of 2010; Thailand and Laos as of 2012; Indonesia, Cambodia, Bangladesh, and India as of 2013 and Sri Lanka. History Brunei - a member of the Asia Pacific Economic Cooperation (APEC) since 1989 - has played an important role in the formation of the earlier trade agreements that led up to the creation of TPP in 2005.
In 2000 Brunei hosted the pivotal meeting of APEC where discussion began and later the ASEAN Regional Forum (ARF) in July 2002. In 2001 New Zealand and Singapore joined in the New Zealand/Singapore Closer Economic Partnership (NZSCEP). The Trans-Pacific Strategic Economic Partnership Agreement (Trans-Pacific SEP) built on the NZSCEP.