January 24, 2015
– Tremendous efforts failed to turn the Trans-Pacific Partnership Agreement (TPP) into reality in 2014, and its conclusion is now set for the new year. Latest information shows that negotiators may begin reconsidering legal aspects of the chapters already fully discussed before reaching the consensus on a joint agreement.
An informal round of negotiations will take place late this month in the U.S., which looks set to be followed by another round in late February or March, which would be a ministerial meeting for demonstrating political determination and resolve the remaining issues. Nearly 30 problems in the TPP negotiations have largely been handled.
“TPP” was among the buzzwords of last year. Businesses proved to be anxious, experts voiced great concerns and lawyers were running out of patience. “Where is TPP? Please give me a copy [of its rules] for reference,” they grumbled in a meeting with TPP chief negotiator Tran Quoc Khanh about a year ago, who had to try to calm them down. “TPP is still under negotiations and so far there’s been no text at all,” he told the disgruntled listeners some of whom were insisting that Vietnamese enterprises would vanish from the market in the game to be played ahead.
“I cannot give any comment, but I would like to ask if anyone could give me an example of a country whose economy had immediately fallen into predicament, instability or collapse after signing a free trade agreement (FTA) and having free trade relations with the U.S., Canada, Australia and New Zealand?” Khanh said. “I would also like to give a few words on the remark that our competitiveness is weak. Right from the time we were in talks over a bilateral trade agreement with the U.S. in 1997, I already heard of such a remark. But nothing happened. And then, when negotiations on the accession to the World Trade Organization (WTO) took place, I once again heard that our economy could not withstand, our businesses would collapse. That did not happen either. It is true that a lot of businesses have been struggling in recent years, but I believe things won’t happen the way many experts have stated.”
In July 2014, Truong Dinh Tuyen, an adviser to the negotiation delegation, met with businesses in HCMC. Le Trong Nhi, a financier, asked, “After seven years as a WTO member, we have fallen into the traps we ourselves laid. And now, with the TPP, which is more stringent, in your opinion, what should private enterprises prepare for the time to come?”
Tuyen gave a neutral answer. “The WTO membership is neither a magic wand nor a complete pitfall, but it just creates opportunities and poses challenges,” he said. “It is up to us if we can seize such opportunities. ‘Us’ here includes the State and businesses. And whether we could overcome the challenges or not also rest in our hands.”
Tuyen also remarked that businesses had yet to take up the opportunities and beat off the challenges. Two reasons could be cited: the crisis and the weak financial system. “Businesses have a bad tradition. They do business with an opportunist’s mindset and without workable strategy. They are ready to take advantage of policy changes for profit. When institutions get transparent, businesses are forced to have proper, long-term strategies. Initially, things may be difficult, but that is the way it should be. There’s no alternative.
As discussed at length as it may be, nobody has any idea what the TPP exactly is. A mystic aura is surrounding this agreement, which is described as the epitome of the 21st century. Not only is the TPP a mystique to the business community, it is also an unknown to the powers of the member states, even on the negotiating table.
This new-generation FTA is expected to immediately lift 90% of tariff lines, with the remaining 10% to be removed in the following years, in the third, fifth, seventh and tenth year particularly, but it is unknown if tariff reduction will be linear or staircase-shaped.
Secret tug-of-war
Contrary to what it may seem, there are serious conflicts behind the TPP. Not all 12 members sit together, but this is the game of bilateral negotiations with secret tariff offers, unbeknown to the third party. Beef, for example, as one of the five “sacred temples” of the Japanese agriculture, is now the battlefield between the two most influential negotiators: the U.S. and Japan.
Japan has signed an FTA with Australia, another TPP negotiating partner, with the tariff declared to be 19.5%. Now, the country is making “concessions” to lower the tariff to this level in its talks with the U.S., meaning to halve the tariff. Since Australia and the U.S. are big beef producers, Japan has a reason to worry. Meanwhile, in the case of Vietnam, for example, Japan may slash the tariff to 0% for confidence that her domestic agriculture will not be threatened. Meanwhile, the tariff on Vietnamese textile imports stateside will decrease 95%, but the U.S. may offer the tariff lines where exports from Vietnam are not worth considering, and retain 5% of its largest tariff lines to bargain on other issues. And thus, the conflicts will go on and on from this round of negotiation to that meeting, with no ending in sight.
There are some secret deals that even the most powerful legislators do not have the least idea about. This makes the U.S. Congress angry, and some lawmakers have said secrecy is killing democracy. On the other hand, negotiators themselves are caught in a dilemma: if they reveal the content of negotiations to lawmakers, it will not be right if they are disapproved; but if they do not, they may face a risk that their proposals will not be passed. The fact that the Democrats lost the last election is good news for the TPP. The new chairman of the Senate Finance Committee, Orrin Hatch, remarked that the grant of the trade promotion authority (TPA) would be one of his priorities when the new Congress convened.
And so, the TPP remain engulfed in a mystic atmosphere. Once in a while, several pieces of information are leaked, some rumors are spread, and a couple of political statements are made. Still, some know quite clearly the terms related to them: Herculean businesses which are lobbying behind. They always have the most updated information. They are not to blame because lobbying is now a common reality. During the seventh round of talks in HCMC, as observed by economist Pham Chi Lan, the U.S. delegation had a room dedicated to the officials and businesses specializing in lobbying. During discussions, the negotiators often went into this room for consultation. Of course, consultation was limited to a certain level because if exposed, they would meet with opposition, and the pressure would come back on the negotiating table.
Towards the end, the toughest parts of the TPP talks have surfaced: intellectual property, State-owned enterprises, market access, textile-garment, environment, etc. On the negotiating table now are stressful battles of wits. As chief negotiators of the TPP are at the ministerial level, following each round of negotiations is now a ministers’ meeting to resolve the thorny problems with the help of the ministers, and for the heads of state to demonstrate their political determination. However, political determination may mean nothing on the negotiating table. Agreement in principle may play no role in detailed technical negotiations.
Opportunities the TPP offers are really enormous, but they are accompanied by formidable challenges. Vietnam’s message is quite clear: the TPP is a pressure for institutional reforms. “Triumph on the negotiating table may not be beneficial for the country, as it might affect protection. It is institutional reforms which really count,” said Tuyen.
(By Hoang Thuc Minh – The Sagion Times)