Issues mount as final round of TPP negotiations wrap-up

  • by VNBUSINESS
  • July 30, 2015

The final round of negotiations for the Trans-Pacific Partnership (TPP) have on July 26 concluded in Hawaii and all that remains is ratification by the individual separate governments of the 12 member nations.

Leading economists and government officials have said if Vietnam elects to join the TPP, the value of its agricultural exports could explode and potentially double over the next few years.

The proposed TPP agreement, whose provisions are only now starting to surface, encompasses twelve countries, namely: Vietnam, the US, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru and Singapore (TPP12).

The combined goods and services trade of the TPP 12 parties is approximately US$27.5 trillion, comprising 40% of the global gross domestic product (GDP) and one-third of world trade.

This broad coverage trade seems to support the assertions that Vietnam’s agriculture stands to benefit tremendously, especially in light of the fact that Vietnam is currently one of the largest exporters of farm produce to the US.

Most of the TPP negotiations have been undertaken by those at the bargaining table based on the principle that all tariffs, quotas and other trade barriers on agricultural products be totally eliminated.

Vietnam’s current strengths in exports to the US market lie in coffee, cashew nuts, pepper, rice, and tea and the lapse of tariffs would contribute to making agriculture more profitable and generate funds for investment into improved technology.

Vietnam’s East Asian neighbour, Japan, is also one of the TPP12 and the country’s third largest customer – with major purchases including coffee along with a wide variety of fruit and vegetables.

In addition, Australia and Mexico are two other TPP12 big consumers of Vietnam’s high quality agricultural products.

However, whenever there is a principle, there are always exceptions in real life and most certainly not all tariffs will be eliminated as sources in the US have reported the US has tried to maintain tariffs on its sugar and dairy products.

According to Japanese media sources, the results of the negotiations seem to be that: tariffs on rice, wheat and sugar will not be eliminated and current tariff rates will be maintained.

In addition, tariff rates will only be reduced and not entirely removed on beef, pork and dairy products in the Japan market while import quotas of US rice and wheat increased. However, the exact size of the reduction has yet to be made public.

Currently, in line with rules set by the World Trade Organization, Japan imports a total of 770,000 tons of foreign rice per year, including 360,000 tons from the United States, without applying a tariff.

All indications at this point in time seem to suggest that Vietnam’s agriculture will see a bright future with passage of the TPP as tariff reductions expire and quotas are increased in the massive TPP12 market.

It has often been said that the TPP is in many respects more like managed trade between the TPP12 than it is per se – free trade – but without a doubt it is a bold new step in the right direction for Vietnam’s agriculture.

However, in order to seize the TPP opportunities, Vietnam’s agriculture will need to radically restructure to gain a solid foothold in the global market, Doctor Dang Kim Son, Director of the Institute of Policy and Strategy for Agriculture and Rural Development cautions.

Agriculture needs revolutionary breakthroughs in management and investment in order to meet the welcomed and major challenges brought about by this historic agreement Son has said.

Source: VOV

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