Govt official says Vietnam needs to compromise for trade deals

Govt official says Vietnam needs to compromise for trade deals

Government adviser Truong Dinh Tuyen speaks about the TPP and European FTA talks at a recent conference in Hanoi April 2. Photo courtesy of Thoi bao Kinh te Saigon Online

A free trade deal with the EU and the Trans-Pacific Partnership agreement could be signed this year if Vietnam resolves its differences with partners on private investors and workers, an official said.

Truong Dinh Tuyen, the government’s senior adviser on international integration negotiations, said at a recent meeting in Hanoi that significant headway has been made in talks on a free trade agreement (FTA) with the European Union and the TPP with 11 other countries including the US, Japan, and Australia.

The TPP would hopefully be signed late this year and the FTA early next year if Vietnam could work out its differences on establishment of labor unions and privileges extended to state firms, Tuyen told the heads of 32 state-owned enterprises.

Vietnam only has the General Confederation of Labor and does not give workers the right to establish their own unions as required under the TPP.

The former minister of trade said he had told partner countries in earlier talks that Vietnam could not accept this requirement.

But he said Vietnam would have to devolve power to labor unions at the lower levels as a “compromise.”

He said without specifying that Vietnam and the US have worked out seven out of the 10 issues on which they had differences.

But Vietnam is facing difficulties in meeting treaty requirements to scrap all privileges extended to state-owned enterprises.

Vietnamese SOEs get easier access to land use and loans from state-owned banks than private firms.

Once it signs the FTA, the Vietnamese government would have to give up its power to designate bank credit, Tuyen said, warning that “violations will be penalized.”

He said TPP partners and the EU account for half of Vietnam’s exports, or more than US$50 billion a year, and are also its biggest investors.

“The deals, once signed, will create an extremely huge export market for Vietnam’s goods, with (most) tariffs immediately cut down to zero.”

The TPP envisages cutting 90 percent of the tariffs to zero immediately and the rest within 10 years.

But Tuyen also reminded that the requirement of origins for export materials would be a big challenge for Vietnamese businesses, who are forced to import foreign feedstock and raw materials.

For instance, garment and textile exports will be bound by the yarn-forward regulation, which requires the export items to be made in a TPP country right from the yarn stage.

Most Vietnamese firms import yarn from China, which is not a TPP member.

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