Indonesia Should Learn From Vietnam on TPP

Vietnam encourages Indonesia to follow its example and join the Trans-Pacific Partnership regional trade agreement

By Ronald Indrawan and Gilang Ardana
Monday, August 22, 2016

When weighing up membership in the US-led Trans-Pacific Partnership (TPP), Indonesia should look at Vietnam as an example of the great potential benefits from joining the regional trade deal.

This was the key message of Vietnam’s former deputy chief trade negotiator, Nguyen Nguyet Nga, at a foreign policy lecture held by Indonesia’s Ministry of Foreign Affairs, which was attended by various government officials, as well as foreign chambers and foreign embassies. 

“Indonesia, the largest economy in Southeast Asia, would have the opportunity to strengthen its leadership in the region by joining the regional trade deal,” said Ambassador Nga.

In her lecture she discussed these key points: Vietnam’s pathway to next generation free trade agreements (FTAs); why Vietnam decided to join the TPP; key issues facing Vietnam and; how Indonesia can benefit from TPP.  

Vietnam’s journey to TPP

Nguyen said that Vietnam has gained many benefits since joining the negotiations on the agreement in 2010, ranging from the transfer of technology, macro-economic gains, enhancing domestic readiness and market access for key export products to stronger ties with its trading partners.

However, Vietnam had to go through a long journey to get here, facing internal rejection, domestic constraints, and confidence issues.

“We faced various key issues ranging from technical issues to sensitive issues like labor and SOEs [state-owned enterprises],” she said.

Nga added that domestic constraints getting in the way of joining TPP were lacking competitiveness, issues in market access, the environment, intellectual property rights, government procurement, financial services and dispute settlements.

“However, we understand that joining TPP is the only way we can deepen our reform at home,” she said. “Thus, we go forward with it.”

She emphasized that FTAs and TPP were very important for Vietnam.

“FTAs are very important and TPP is also crucial for Vietnam,” she said. “TPP is a fresh impetus for reducing our economic dependence on the East Asian market and also attracting competitiveness.”

She added that the other benefits were better living standards, high-quality human resources, better working conditions, social security, a significant shift in the global economic setting which is increasing the role of developing countries, free flow of goods and services and investment and more opportunities for employment.

“If we did not join TPP, how could we get all these advantages?” she said, adding that Vietnam’s hard work and bravery was more than repaid as it is arguably the “biggest winner” in the TPP trade deal.

The agreement has not yet gone into effect, of course, and partners are eagerly waiting to see if the US Senate will ratify TPP despite the anti-trade rhetoric of the current presidential campaign. A lame-duck session of the Congress could act on TPP before President Barack Obama steps down early next year.

Lessons from Vietnam

Indonesia has yet to reach a decision over joining the TPP, but President Joko Widodo conveyed the country’s intention to join during his visit to the US last year. He said that the country needed to take a cautionary stance before moving forward, assuming TPP is ratified in Washington.

In response, Nga said that TPP can support Indonesia’s inclusive socio-economic development and reform, boost new resources and technologies for infrastructure development and also help to promote connectivity for remote areas and rural development. All of these, she said, are practically the same as the major gains of Vietnam. She even argued that Indonesia can gain more than her country.

“Indonesia will get more resources from TPP, seeing that Indonesia’s position is way ahead of Vietnam with G20, WTO, market access and much more.”

Responding to the question of Indonesia as a latecomer to TPP, Nga said that it should not be a worry.

“Indonesia will not be the only latecomer to join TPP, there will be also other latecomers. Being a latecomer actually puts Indonesia in a more advantageous position as Indonesia can have much time to assess the level of commitment of the TPP, especially commitment among members.”

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