The Trans-Pacific Partnership: an Overview

Transcription

1 The Trans-Pacific Partnership: an Overview

2 12 Countries 40% of the World Economy Slide 2

3 What explains Vietnam s gains? More exports of manufactures (21% to 35%) More access to imported goods (24% to 39%) Increased FDI (7% to 11%) Stronger linkage to production chains, overall productivity gains (16% to 28%) Support momentum of reforms, growth

4 Opportunities for Vietnam 1 Increase market access opportunities: Promote Vietnam s exports, especially to the U.S. market for products Also improved market access and tariff reductions in other TPP countries e.g. U.S. tariff rates are already low for electronics, appliances, and a multitude of other low-end manufactured products, but rates in many of the other TPP countries (or potential TPP countries) are high

5 Export gains by country (gains from trade effects) GDP ($bill) Value change ($bill) % GDP 2025 TPP FTAAP TPP FTAAP Australia Brunei Canada Chile Japan 1, Korea Malaysia Mexico New Zealand Peru Singapore United States 2, Vietnam TPP economies 7, Others 20, World 27, ,

6 Vietnam's Export Changes Baseline Change in exports $bill TPP Asian track Two tracks FTAAP Primary products Rice Wheat Other agriculture Mining Manufactures Food, beverages Textiles Apparel, footwear Chemicals Metals Electrical equipment Machinery Transport equipment Other manufactures Services Utilities Construction Trade, transport, comm Private services Public services Total

7 Seafood U.S. tariffs range up to 35% for canned seafood Other ag products (fruits, nuts, etc.) U.S. tariffs can be as high as 30%-130% (e.g. for some peanuts) Flowers U.S. tariffs up to 10% Footwear U.S. tariffs average 17% (and can go as high as 48% for some sneakers) Accessories (hats, gloves, hair clips, etc.) U.S. tariffs average 23.5% Auto parts U.S. tariffs average 25% Wool cloth U.S. tariffs average 25% Brooms and other straw materials U.S. tariffs average 32% Ship parts U.S. tariffs go as high as 50% Slide 7

8 Promote investment Opportunities for Vietnam 2 New investment in: Infrastructure Real estate Distribution Education Etc.

9 Investment International vote of confidence differentiate Vietnam from every other developing country looking for investment; International investors like TPP, and the seal-of-approval it connotes improved bond ratings and renewed investment flows; will pump up the overall economy and markets Access to the larger TPP market should increase incentives for investors to move electronics and appliance factories to TPP countries; Vietnam and Malaysia are the logical destinations Slide 9

10 FDI Gains by country (Vietnam FDI grows) GDP ($bill) Stock increase ($bill) % GDP 2025 TPP FTAAP TPP FTAAP Australia 1, Brunei Canada 1, Chile Japan Korea Malaysia Mexico 1, New Zealand Peru Singapore 1, United States 7, Vietnam TPP economies 15, Others 40, World 56, ,

11 Garments a Special Case Garments U.S. tariffs are high (up to 50% for some synthetic garments), and would go down BUT only for clothes made from cloth that comes from TPP countries ( yarn forward ) since most of Vietnam s cloth comes from China now, they would not get day one benefits without a workable short supply mechanism Regardless, this should eventually move textile mills to TPP countries; Vietnam and Malaysia are the logical destinations Slide 11

12 Opportunities for Vietnam 3 Help make better use of the opportunities offered by the restructuring process Take advantage of the trend of regional economic integration Rules of Origin help Vietnam Better regulatory and legal environment for all

13 VND nghìn tỷ (1994) Reform will Bring Productivity Gains (Investment not leading to Growth) GDP đầu tư chính phủ xuất khẩu

14 Formal commitment to reform the new generation aspects of the TPP require reforms Vietnam must make (e.g SOE restructuring, IPR) to grow Slide 14

15 Improved Business Climate directly address complaints from U.S. and local businesses in Vietnam (IPR protection, increased international financial service providers, more level playing field for private firms, etc.) Slide 15

16 Opportunities for Vietnam 4 Raise Vietnam's international status, and promote relationships with key partners International stability and a secure international environment brings economic security and stability

17 Overall All TPP track members benefit Emerging economies like Vietnam benefit most