TPP negotiators prioritize quality

Speaking at the conference on TPP negotiations in HCMC last Friday, Tran Quoc Khanh, head of the Vietnamese TPP negotiation delegation and Deputy Minister of Industry and Trade, said that the team is trying to conclude the agreement as soon as possible. However, negotiators from participating countries agreed that no agreement is still better than a bad agreement. They will not sacrifice quality of the TPP agreement due to time pressure, Khanh said. Related sides will organize mid-term negotiation rounds regularly and a ministerial meeting will be held early next year, maybe in January, he added. There have been 19 official TPP negotiation rounds, many mid-term sessions and three ministerial meetings. However, the agreement cannot be concluded this year as expected earlier. Vietnamese negotiators are divided into 20 groups to look into nearly 30 issues. However, over 20 issues still need further discussion, including tough problems such as merchandise, investment, trading, intellectual property and State-owned enterprises (SOEs). For instance, in the garment and textile sector, Vietnam theoretically will benefit from the TPP and enjoy a 0% tax rate while exporting goods to TPP member countries. However, the nation will face problems with the “yarn forward” Rule of Origin, which requires the TPP nation to use TPP member-produced yarn in textiles in order to receive duty-free access. As Vietnamese enterprises mostly import materials from countries outside the TPP agreement, they will get no benefits from the agreement if the “yarn forward” rule is approved. Local enterprises are considering a solution for the problem, importing cloth and producing garments in Vietnam to enjoy tax incentives. However, this solution in the long term may turn the enterprises into subcontractors while the local textile and dyeing industries may fail to grow up. Vietnam still offers cheap labor costs and the garment industry is developing. But if a neighboring country one day stands out for low labor costs, foreign investors may move all their workshops there immediately, Khanh said. The negotiation team is trying to solve the problem to bring about benefits to enterprises in the short term and sustain development in the long term, he added. According to the Vietnam Textile and Apparel Association, the nation’s apparel export value has surpassed US$20.5 billion this year compared to last year’s figure of US$17.5 billion. SOEs are also a tough problem as TPP members have requested that SOEs must follow market rules and secure transparency in operation. Meanwhile, Vietnam has over 1,000 SOEs, which is a large number compared to other TPP nations. Besides, TPP members have yet to reach agreement in intellectual property rights, Khanh added.