President Donald Trump’s withdrawal of the U.S. from the TPP sparked an active debate in Vietnam among mid-ranking officials and scholars about Vietnam’s trade policy in general and suitable responses to the U.S. withdrawal. This ongoing discussion identifies two major problems and three responses for Vietnam, the TPP’s least developed member.
The failure of TPP would mean a huge loss for Vietnam, especially in relation to reducing the country’s trade dependence on China. Vietnam’s trade deficit with China is an important reason why the TPP is significant in Vietnamese eyes. In 2014, Vietnam had a total trade surplus of $2.4 billion, but a yawning trade deficit of $28.7 billion with its largest neighbour. That year the U.S. was Vietnam’s largest export market accounting for about one-fifth of total exports, while China was the largest source of imports accounting for roughly 30% of total imports to Vietnam.
For Vietnam, joining TPP was a major means to achieve the second stage of “Đổi Mới” (renovation, Doi Moi was first launched in 1986) reforms by opening the door to more competent, transparent governance and by increasing external pressure to overhaul domestic corporations to be more competitive. As this outside pressure from the TPP has been reduced, important second-stage domestic reforms will be delayed. For instance, the new labour law has been delayed by at least nine months.
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