Vietnam one of the poorest members of TPP’s first round of members. But the nature of its economy – manufacturing and export-driven – means that falling tariff barriers with the US and other member states could be a huge boon to its economy. TPP (Trans Pacific Partnership) offers Vietnam preferential access to markets representing 40 per cent of global GDP. This can provide producers in Vietnam with a significant advantage over non-TPP countries in areas such as apparel or agriculture. In such sensitive sectors in some TPP countries, duties can peak well into the double-digit range.
Moreover, TPP will tackle non-tariff barriers to trade as well, which often impose significant barriers to trade. For example, TPP will streamline customs procedures and improve transparency of related regulations. Such trade reforms will offer Vietnam an economically important expansion of market access to the TPP region.
Vietnam’s competitively low cost of labor, compared to the other Asean nations in the TPP like Brunei, Singapore and Malaysia, and its young and growing middle-income economy, makes it an appealing destination for companies to expand into. The TPP will significantly enhance Vietnam’s attractiveness both as a market and a production hub. However, even if it is immediately implemented, TPP will not have a major impact on trade until at least 2021.