Vietnam Has the Votes to Ratify CPTPP, Despite Concerns

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By Lien Hoang

Vietnam lawmakers expressed support Nov. 5 for a massive Pacific trade deal that they’re likely to ratify officially in a week, despite domestic concerns that Vietnam’s businesses and single labor union may not be ready.

Most members of the National Assembly approved of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership when it was put to a floor debate, according to the parliament’s summary of the day’s actions on its website. The post said the CPTPP could add 1.3 percentage points to Vietnam’s economic growth and give exports a 4 percentage point boost annually, though the figures would have been higher had the U.S. not pulled out of the then-Trans-Pacific Partnership in 2017.

The 11 remaining countries opted to go on without the U.S. last year, and are now preparing to enact the rebranded CPTPP in December as a bulwark against global protectionism. Enough members, including Australia, Canada, and Japan, ratified the trade deal by October for it to take effect, while countries from Thailand to the U.K. are interested in joining.

Vietnam is the CPTPP member with the lowest income per capita, at less than $2,000 annually, and the most to gain, especially for its clothes, shoes, furniture, and food exports. But several lawmakers are concerned that the Southeast Asian country will struggle to compete with its richer peers. The majority of people do low-skilled work, but Vietnam needs to move to a knowledge economy, said Hoang Thi Hoa, the member of Parliament from Bac Giang province.

“Knowledge is the basic input of production and of the economy in developed countries,” she said in the Nov. 5 debate, broadcast on the National Assembly’s TV station. “Developing an innovative industry has to begin with the creativity, skills, and talents of the individual, and has the potential to create wealth.”

Readiness Concerns

Besides high-tech and high-skilled sectors, legislators worry Vietnam’s pork and beef industry is not prepared for the coming influx of CPTPP rivals. The trade bloc will cover more than 13 percent of the world economy, cut import tariffs, and introduce rules for the environment, state companies, and the internet economy, such as digital payments.

In earlier discussions, Vietnam’s lawmakers also wondered how the communist country would break up the labor union monopoly held by the ruling party. The Pacific trade agreement requires Vietnam to permit new unions to form, but the government postponed 2018 legal revisions that would have allowed them.

Parliamentarians said the national labor union needs to innovate to attract members and compete with other unions in the future, according to a National Assembly website recap of deliberations Nov. 2. They noted shortcomings of the current union, such as its lack of support for workers going on strike, while also warning that new unions could be manipulated in the interests of employers or political ends.

Vietnam “must accept that there will be more organizations representing workers, besides the labor union currently operating at businesses,” the Nov. 2 post said in a summary of remarks by Le Quan, a member of Parliament from Hanoi. “These can be seen as rights that are recognized around the world in modern society.”

In November 2017, CPTPP members granted Vietnam a grace period of three years before they would punish the country of nearly 100 million people for violating its labor commitments.

If Vietnam ratifies the trade pact Nov. 12 as scheduled, it will be the seventh country to do so.

The 11 CPTPP members are Australia, Brunei, Canada, Chile, Japan, Mexico, Malaysia, Peru, Singapore, New Zealand, Vietnam.

To contact the reporter on this story: Lien Hoang in Ho Chi Minh City at correspondents@bloomberglaw.com

To contact the editors responsible for this story: Seth Stern at sstern@bloomberglaw.com; Jerome Ashton at jashton@bloomberglaw.com; Madelyn Callahan at macallah@bloomberglaw.com

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