Fresh impetus for economic reforms

Friday, 2014-01-03 22:23:33
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Nhan Dan - As an adviser of the Vietnamese delegation negotiating the Trans-Pacific Partnership Agreement (TPP) and the former chief negotiator of the Vietnamese delegation to the WTO, Truong Dinh Tuyen has recently returned to Vietnam from the US after the latest round of TPP negotiations, and has granted an exclusive interview to Nhan Dan newspaper on the issue.

Q: Would you please tell us if there was any information or signal for the possibility of announcing the completion of the TPP after the Ministerial Meeting in Singapore?

A: The mid-term negotiations in Salt Lake City, Utah (US) ran from November 19-25, and talks on the chapter on intellectual property, one of the most complicated chapters, went on for two more days. The pace of negotiations was very rapid and almost every day negotiators worked until 8:30pm and even heads of delegations worked until 10pm.

Thus, negotiations have achieved a certain progress and the gap was narrowed considerably. However, there are many contents on which consensus has not yet been reached and those were submitted to the political level to resolve at the TPP Ministers’ Meeting in Singapore from December 6-11.

If ministers are highly determined and flexible enough, especially those from the US side, there remains a possibility for completing the basic content committments in 2013. But, I think that the chance is only 50/50.

Q: What are the important results that the Vietnamese delegation achieved in Utah and how do they make sense to the country?

A: In Salt Lake City, the most important and meaningful thing for Vietnam was that Vietnam held bilateral working sessions with the US and other partners to reach consensus on the way to approach several of the most difficult and sensitive contents for Vietnam. Under this approach, Vietnam will continue to discuss with the US and other partners specific issues regarding the commitments.

Q: Many foreign experts say that Vietnam is to be one of the major beneficiaries of the TPP (most countries benefit by about 1 to 2 percentage points from TPP, but Vietnam benefits by about 5 percentage points). However, this assessment does not include the institutional changes in the country. What do you think about this issue?

A: It is true that there have been such assessments from abroad but these calculations were based purely on initial assumptions. The added value that the country will achieve depends on many factors including (1) the level of commitment of negotiating members, so far there has not been a final commitment level and (2) the competitiveness capacity of the economy, which depends on the reform process. However, I believe that by joining TPP, we will create new incentives to boost reforms and take advantage of opportunities to overcome challenges and make the economy develop rapidly and sustainably.

Q: People often talk about the sectors that will benefit from TPP, such as garment, textiles and footwear, but the origin of goods still remains a problem as Vietnam mainly imports materials from other countries. Which sectors will face difficulties and how is the level of difficulties? Is the trade-off suitable to the domestic economic structure, environment and labour or not?

A: The market of TPP countries is very large, including the world's largest economy (the US) and the world's third largest economy (Japan), which are also among Vietnam’s biggest export markets. However, joining TPP is only a necessary condition in a more and more deeply globalised world.

We need to create sufficient conditions from our internal strength to take advantage of the new opportunities and overcome challenges. TPP has both short-term and long-term benefits and challenges.

The short-term benefits are the growth of several major commodities such as garments, textiles and footwear exported to the US and other TPP members as the tax rate will be slashed (almost to 0% when the agreement takes effect, and the rates of other commodities will be cut as planned).

Joining the TPP and implementing commitments under the agreement will bring us long-term benefits as we will have to carry out a series of reforms on economic institutions and managerial mechanisms, which will lead to a correct, balanced and highly competitive business environment and the effective distribution and use of resources. These factors will create opportunities to attract investment from economic sectors and foreign investors, creating more jobs and boosting economic growth.

In turn, investment will increase production power, accompanied by an increase in commercial activities on the domestic market and the export market as well. Of course, along with these opportunities, we will be faced with many difficulties and challenges. The competitiveness pressure will be fiercer and some industries will have troubles due to the opening of their markets and the cuts to import tariffs, including agricultural and industrial goods with low competitiveness.

The burden of enforcement commitment is also very important. If the agreement is violated, involved parties will be sued under the dispute settlement mechanism which is strictly binding. Notably, if the opportunity is seized, challenges will be overcome and bigger opportunities will be created, but if not, the challenges will overwhelm the opportunities, which will turn into long-term and difficult problems. The way to take advantage of opportunities and overcome challenges is to simulate reforms under the thinking that challenges will create pressure to rise up and turn challenges into opportunities. These are the dialectics of development.

Q: Could you please mention some noteworthy memories of WTO negotiations in the past as well as of TPP negotiations? Facing huge opportunities, do you have any doubts or concerns when we integrate into the world economy?

A: As a former Minister of Commerce, I was assigned by the Government to directly guide bilateral trade agreement (BTA) negotiations and negotiations to access the WTO. I had to confront powerful partners and undergo stressful negotiations. There were many memorable moments during the two long-term and complicated negotiations. The most interesting thing for me was that there were times I left the negotiating room during unbearably tense situations, but when the negotiations concluded, I had gained the respect of all of my partners, and we have since become friends despite their political positions.

Vietnam joined the negotiations for the TPP in 2008, but I have only participated in the process as an adviser since the 17th session in Lima, Peru in May, 2013, responding to the request of Prime Minister Nguyen Tan Dung. I have only worked on the TPP negotiation process for a short time, and I hold a different role from my former one, so my contribution is also more limited.

Although the TPP negotiations cover complicated and extensive contents, our younger generation has grown up very fast. We have a team of professional negotiators – from the governmental chief negotiator to leaders of ministries and sectors’ negotiating groups – specialising in specific areas. They are all respected by our partners due to their negotiating skills and they know how to protect the legitimate interests of the country. I think it is a good thing and one of the results of renewal.

From that, my concern is that of how to promote the potential and intelligence of the Vietnamese people. As I have said, humanpower is our competitive factor and the quality of human resources is the long-term competitive advantage of the country. It is necessary to translate this to the competitiveness capacity of national governance and the competitiveness of each business as well. Unfortunately, due to varied reasons, we have not yet done much in that regard.

Thank you very much!