US Wobble On TPP Unsettles Vietnam

US Wobble On TPP Unsettles Vietnam

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Vietnam is widely seen as the country with most to gain from the Trans-Pacific Partnership – signed this year with much fanfare by twelve countries from both sides of the Pacific.

Vietnam is forecast to receive a substantial boost to GDP from the trade pact. It would also benefit from a closer strategic partnership with the US. Some analysts even believe that domestic political reform could finally receive some impetus from provisions in the agreement.

But just as Vietnam gears up to reap a potentially rich harvest, hopes for early ratification of the TPP in the US are beginning to fade.

“A rape of our country,” concluded Donald Trump of the pact in one of his latest tirades against trade deals.

Hillary Clinton, who backed the agreement while secretary of state, and once described the TPP as “the gold standard in trade agreements”, has since been spooked, first by strong protectionist arguments from her Democratic challenger, Bernie Sanders, and now from Donald Trump.

“I oppose it now, I’ll oppose it after the election and I’ll oppose it as president,” she declared this month in Michigan in the heart of the US rust belt.

Communist party enthusiasm


President Obama has not given up on achieving ratification, but he looks increasingly lonely as once enthusiastic free traders turn sceptical. The New York Times reports that the administration will begin trying to win over waverers in Congress in September, but will not call a vote until after the election for fear of embarrassing Mrs Clinton.

“There is a big gap between the rhetoric of the campaign and even in what you see in the polls,” said the US Trade Representative, Michael Froman. “It’s going to be hard. But the votes will be there.”

Few others are so optimistic. An electoral rebellion by blue collar workers left behind by globalisation has been one of the hallmarks of the election campaign, signalling a broader collapse in political support for trade deals.

In Vietnam, the Communist party hierarchy became more enthusiastic for the TPP as the negotiations went on.

They came to see the substantial economic gains that could be expected from tariff free access to the US and Japanese markets.

But it was the broader strategic impact of the TPP that perhaps carried most clout in Hanoi.

Foreign policy failure

President Obama billed the TPP as a central pillar of his “pivot to Asia”. It was seen as a sign, from Tokyo to Hanoi and Kuala Lumpur, that the US was in Asia to stay and prepared to bolster allies and partners against the economic and military might of China.

Failure to ratify the TPP would signal a much wider foreign policy failure and cement the US’s reputation as an unreliable partner with a short attention span and an essentially domestic policy agenda.

It would feed into China’s narrative that Washington does not have the staying power to remain a force in the western Pacific and that neighbouring Asian countries have no choice but to accept Beijing’s leadership.

Campaigners for political change and a more pluralistic system in Vietnam would also be dismayed by Congress’s rejection of TPP.

Provisions in a bilateral TPP clause between Hanoi and Washington opened the way for free and independent trade unions. It is hard to see the communist authorities allowing such changes without external pressure.

Economic analysts believe that Vietnam will continue to grow, and attract large amounts of foreign investment, even without the TPP.

But the damage to Washington’s standing in east Asia could persuade some in the Communist party hierarchy that they backed the wrong horse and must return to the embrace of their ideological comrades to the north.

Much is at stake and TPP enthusiasts insist that all is not lost, but they will be aware that out of work car workers in Michigan can not be expected to care too deeply about the balance of power in the South China Sea.