Trade
Time for Vietnam to get cracking on CPTPP reforms
Author: Nguyen Anh Duong, Central Institute for Economic Management
Following years of effort, in 2015 Vietnam concluded negotiations for the Trans-Pacific Partnership (TPP) trade deal. After the US withdrawal from the trade pact, Vietnam worked with the remaining members to revive it under the name of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Indeed, Vietnam was the seventh member to ratify the CPTPP.
Vietnam’s enthusiasm for the CPTPP stems largely from hopes it will induce further domestic reforms by aligning external pressure over domestic vested interests, an approach the country has relied on since 1986. The long process from negotiation to ratification has allowed Vietnam to build domestic institutional capacity in a number of regulatory areas, including around data flows, state-owned enterprises (SOEs) and intellectual property (IP).
Vietnam’s regulations on cross-border data flows have seen little change since the CPTPP’s entry into force in 2019, despite calls from the business community. The other signatories gave Vietnam five years to amend to the strict data localisation requirements from its 2018 Cybersecurity Law which are inconsistent with the CPTPP’s e-commerce chapter. Though Vietnam is yet to announce any upcoming legal changes, in practice the country may be less restrictive than it appears — in 2019 it ranked 7th globally in cross-border data flows.
SOE reform has also seen insufficient progress since 2019. Vietnam planned to equitise 127 SOEs from 2017–2020 but fell short by 54. Those that were equitised did see an improvement in operational efficiency, yet no material progress was reported for the SOE sector overall.
Changes to Vietnam’s IP protection regime have proceeded more rapidly. In 2019 the country amended its IP law to meet CPTPP commitments as per an agreed roadmap set out in the trade pact. Vietnam has now fulfilled commitments related to patent applications, geographical indication, enforcement and customs measures.
While the CPTPP only requires the establishment of an electronic trademark system, Vietnam went even further by making the system available for all kinds of IP rights. Vietnam has also drafted further legal amendments for National Assembly approval in 2022 aimed at addressing any remaining IP issues related to commitments made under the CPTPP.
Within Vietnam, there has been debate as to how swiftly reforms related to the CPTPP should have proceeded. Some experts on economic integration have called for an earlier and more radical phase in meeting Vietnam’s CPTPP commitments as part of a unilateral reform approach. But the pay-offs from such an approach were diminished by the US TPP withdrawal under former US President Donald Trump and the Biden administration’s apparent lack of enthusiasm for resurrecting the trade pact.
China’s application for CPTPP membership in September 2021 stirred up new discussion on whether Vietnam should take the CPTPP more seriously and could be another incentive for Vietnam to accelerate reform. Some experts have suggested China could meet the CPTPP standards if it can negotiate similar exemptions to those given to Vietnam under the pact. Still, had Vietnam been bolder in its SOE reforms to date, it might not have been named as an example of relaxed entry into the CPTPP.
Likewise, in terms of data flows, targeting the exemptions that Vietnam enjoyed under CPTPP would be a possibility for China. China’s application to join the Digital Economy Partnership Agreement between Singapore, Chile and New Zealand is another factor for consideration. If Vietnam was able to swiftly improve domestic regulations to facilitate cross-border data flows — at least in line with the CPTPP commitments —Vietnam could help preserve high standards of the CPTPP and eventually realise its aim of contributing to writing global trade rules.
Implementing the remaining IP commitments under the CPTPP is another complex task for Vietnamese regulators.
Making IP regulatory changes just in line with CPTPP commitments gives Vietnam some space in how to implement rules domestically and perhaps shape new rules in future trade negotiations. But as the IP commitments are phased in with a roadmap, a series of amendments to Vietnam’s IP law over time may only increase the changeability — instead of the adaptability — of its regulations. Vietnam may need a more concrete approach to IP policy given that in 2019 the country ranked only 19th among APEC member economies in the adaptability of its legal…
Trade
Fixing fragmentation in the settlement of international trade disputes
Fragmentation in global trade due to the lack of development in multilateral trade rules at the WTO has led to an increase in FTAs. The Appellate Body impasse has further exacerbated fragmentation, requiring a multilateral approach for reform.
Fragmentation in Global Trade
Fragmentation in global trade is not new. With the slow development of multilateral trade rules at the World Trade Organization (WTO), governments have turned to free trade agreements (FTAs). As of 2023, almost 600 bilateral and regional trade agreements have been notified to the WTO, leading to growing fragmentation in trade rules, business activities, and international relations. But until recently, trade dispute settlements have predominantly remained within the WTO.
Challenges with WTO Dispute Settlement
The demise of the Appellate Body increased fragmentation in both the interpretation and enforcement of trade law. A small number of WTO Members created the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) as a temporary solution, but in its current form, it cannot properly address fragmentation. Since its creation in 2020, the MPIA has only attracted 26 parties, and its rulings have not been consistent with previous decisions made by the Appellate Body, rendering WTO case law increasingly fragmented.
The Path Forward for Global Trade
Maintaining the integrity and predictability of the global trading system while reducing fragmentation requires restoring the WTO’s authority. At the 12th WTO Ministerial Conference in 2022, governments agreed to re-establish a functional dispute settlement system by 2024. Reaching a consensus will be difficult, and negotiations will take time. A critical mass-based, open plurilateral approach provides a viable alternative way to reform the appellate mechanism, as WTO Members are committed to reforming the dispute settlement system.
Source : Fixing fragmentation in the settlement of international trade disputes
Trade
WTO ministerial trading in low expectations and high stakes
The WTO’s 13th Ministerial Conference is set to focus on e-commerce transparency, investment facilitation, and admitting new members. However, progress may be hindered by disputes, especially regarding fisheries subsidies.
The World Trade Organisation’s 13th Ministerial Conference
The World Trade Organisation’s (WTO) 13th Ministerial Conference is set to take place in Abu Dhabi on 26–29 February, with expectations of deals on electronic commerce transparency, investment facilitation for development, and the admission of Timor Leste and the Comoros as WTO members. Despite these positive developments, the expectations are relatively modest compared to promises made at the 12th Ministerial Conference, which included addressing fisheries subsidies and restoring a fully functioning dispute settlement mechanism by 2024.
Challenges in Dispute Settlement and Agricultural Trade Reform
However, challenges remain, especially in the deadlock of dispute settlement since December 2019 due to a US veto on the appointment of Appellate Body judges. Progress in restoring the dispute settlement mechanism has stalled, and discord continues regarding India’s grain stockholding policy as a potential illegal subsidy. Restoring a fully functioning dispute settlement mechanism hinges on addressing US concerns about perceived bias against trade remedies in relation to China’s state subsidies.
Geopolitical Tensions and the Future of Trade Relations
The likelihood of reaching agreements amid geopolitical tensions between Western democracies and China appears slim, with issues surrounding subsidies and global supply chains causing rifts in trade relations. As nations focus on self-reliance within the global value chain, opportunities for trading face obstacles. Advocacy for open markets and addressing protectionist sentiments remains crucial for fostering resilience to external shocks and promoting economic growth.
Source : WTO ministerial trading in low expectations and high stakes
Trade
Getting Vietnam’s economic growth back on track
Vietnam’s economy grew 8% in 2022 but slowed in 2023 due to falling exports and delays in public investments. The economy’s future depends on structural reforms and reducing dependency on foreign investment.
Vietnam’s Economic Roller Coaster
After emerging from COVID-19 with an 8 per cent annual growth rate, Vietnam’s economy took a downturn in the first half of 2023. The drop was attributed to falling exports due to monetary tightening in developed countries and a slow post-pandemic recovery in China.
Trade Performance and Monetary Policy
Exports were down 12 per cent on-year, with the industrial production index showing negative growth early in 2023 but ended with an increase of approximately 1 per cent for the year. Monetary policy was loosened throughout the year, with bank credit growing by 13.5 per cent overall and 1.7 per cent in the last 20 days of 2023.
Challenges and Prospects
Vietnam’s economy suffered from delayed public investments, electricity shortages, and a declining domestic private sector in the last two years. Looking ahead to 2024, economic growth is expected to be in the range of 5.5–6 per cent, but the country faces uncertainties due to geopolitical tensions and global economic conditions.
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