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CPTPP Serving Vietnam as Opportunities and Challenges

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CPTPP is originated from the Trans-Pacific Strategic Economic Partnership Agreement (TPSEP) (it is also so call P4) signed in 2005 by Singapore, Chile, New Zealand and Brunei. Since September 2008, the United States, Australia, Peru, Vietnam, Malaysia, Canada, Mexico and Japan have jointly negotiated at the aim of setting up the Trans-Pacific Partnership Agreement (TPP). The TPP negotiation process ended in 2015 under the agreement of the 12 member states; however, Trump administration announced its withdrawal from the agreement in January 2017. After a number of adjustments, including postponing the implementation of the 20 TPP provisions with the expectation that the United States would return to the Agreement, the 11 remaining TPP members unanimously continued to promote this process by establishing Comprehensive and Progressive Agreement for Trans-Pacific Partnership -CPTPP). After completely reviewing the content and approved by the member parliaments, estimated by March 2018, CPTPP will officially become a large economic zone in Asia-Pacific with a population of over 460 million, contributing 14% of world GDP and 1/6 of global trade.

The agreement is expected to establish a new common framework for regional free trade arrangement for Asia-Pacific countries, to support trade, to attract foreign investment, and to promote institution reformation in those countries. CPTPP has the basic advantages as the members of the negotiation are the countries that have been strongly committed to the trade liberalization. Given the disclosed commitments, CPTPP is considered as a model treaty for the 21st century because of its overwhelming scale and influence in comparison with other trade agreements regionally and globally.

Given the competitiveness, the economic size and the inadequacies of the current institutional system, it is surprised that Vietnam has strongly participated in CPTPP. Compared with other members, it has the least competitive economy and the loosest legal system. Despite its 20-year-old experience in the process of international economic integration, Vietnam lacks the practices in a highly competitive and demanding integration environment since it is only familiar with first-generation FTAs, where the open commitments and reform pressures are readily accepted in a transitional and distinctive economy.

Meanwhile, CPTPP’s regulations set out in the negotiations are evaluated as far beyond the ability of the current economy of Vietnam. What is the motive of Vietnam to join CPTPP?

Given the economic size of the members and the terms of trade liberalization, joining CPTPP is obviously advantage to empower Vietnamese economy in the Southeast Asia in terms of economic growth, trade as well as FDI attraction. In the economic perspective, Vietnam is a country to achieve the most benefit from the CPTPP.

Firstly, the opportunities to increase the export of goods that are the advantages of Vietnam (i.e. textiles, footwear, electronic products and equipments) are relatively high by combining the tariff reduction and the experiences in these markets.

Secondly, the attraction of foreign investment into Vietnam is greatly promising. The access to large markets such as Japan and Canada together with the clearer commitments to improve the investment environment and protect intellectual property rights will become a significant attraction for international investors. Moreover, Vietnam, under the framework of CPTPP, is able to attract large inflows from the member countries through the membership of regional economic organizations such as AFTA and ACFTA.

Thirdly, the chances of faster economic growth are strongly wide. The expansion of the major export industries such as textiles, footwear, fishery, etc., will help stimulate the income growth from domestic production, thereby support the increase of the overall demand.

Fourthly, Vietnam will have an opportunity to form a more comprehensive economic structure. CPTPP will urge the domestic investors as well as the regional ones to invest in the supporting industries to create local material resources given the extremely high standards on the place of origin.

Fifthly, it is a chance to complete the institutions that govern the market economy. CPTPP sets out a clear legal framework for not accepting concessions to any business. Because of its high and foreseen requirements on policy transparency, compared to many other agreements, CPTPP could become one of the important premises for Vietnam to carry out institutional and market reforms thoroughly and comprehensively.

However, among the countries participating in CPTPP, Vietnam achieves the lowest level of development and faces big challenges.

Firstly, the production industry structure is not consistent with the provisions of CPTPP. The economy is not well-prepared and the supporting industry is weak. With regard to the requirements of origin, the sectors which are the advantages of Vietnam’s export sector are not able to exploit the concessions from the CPTPP because their inputs do not contain domestic factors.

The second challenge is from the stagnation of the enterprise system. The adaptability to the market economy of Vietnamese enterprises is weak. The lack of an effective investment strategy for the supporting production industry and “traditional outsourcing” works have made the overall benefit of the economy declined.

Thirdly, the limitation of state enterprises’ role in the national economy becomes a content of CPTPP. The external pressure is positive only if it meets the community benefits. If the selection of CPTPP is purely commercial-economic aspect, it will not cause the objection against the reformation within the SOE system.

The fourth challenge is from the increasing competition of goods from the members of CPTPP. At present, Vietnamese enterprises are well-protected by the high tariffs. The trend and demand for zero tariff reduction will be applied to CPTPP members in the coming time. In the analysis of the export structure of CPTPP countries, it can be seen that the manufacturing industries of Vietnam facing difficulty are automobile industry and agriculture, especially the husbandry which remains mall and fragmented, and unable to compete against the large, experienced and traditional competitors.

The fifth challenge from the requirements of intellectual property protection in CPTPP is much more critical. The continuing possibility of “appearing to court” by infringing intellectual property law is present in countries previously without adequate preparation of intellectual property law. Furthermore, the requirements for increasing the level of protection of intellectual property rights over inventions, copyrights, and trade marks can lead to the escalation of drug prices and create a health burden to the emerging economy like Vietnam. More than that, the measures to protect intellectual property related to biology also affect agriculture which accounts for more than 60% of the population of Vietnam. The prices of agricultural products such as veterinary drugs, fertilizer, etc. will thereby grow significantly, which increases costs and reduces the efficiency of agricultural production in general.

In regard of the need for economic reform and the promotion of economic growth, the process of further integration into the world economy is not allowed to slow down. The question is what Vietnam needs to do to facilitate the upcoming integration roadmap.

Firstly, administrative reform and severely corruption offence are the most important things. It is shown that the WTO supports free market economy so that it could operate and develop only in a healthy competitive environment. Since the joining in the WTO, Vietnamese economy has not really created a healthy competitive environment. Meanwhile, corruption has created more conditions for interest groups to ramp up and distort even the good national policies. If the administrative procedures remain cumbersome and troublesome, corruption will still restrain the required transparency in corporate management. In accordance, CPTPP is not an opportunity, but a challenge to the whole system.

Secondly, the reformation of the legal environment and policies to ensure a single “standard” prescribed by CPTPP is a difficult for Vietnam. But in the long run, this reform of the institutional environment towards the international “rules” is a necessary condition for growth in the context of globalization. In this perspective, although adjusting the policy system involving the regulation of CPTPP is a difficult and costly process, Vietnam’s commitments can be seen as an external “push” to provide additional momentum for domestic efforts towards a transparent institutional environment and economic growth.

Thirdly, it is needed to organize the perfect communication to all classes of people, especially the business and the production circles in the countryside. The participation in CPTPP without fast updating to the farmers might cause the loss of market, the high pressure of competition, and even the legal disadvantage in disputes and sues.

Fourthly, the reform of SOE and the development of SMEs is the key solution. Given the population and economic growth, the number of enterprises in Vietnam is relatively low. This is a major constraint in economic development, employment, creation of competitive markets and the mobilization of resources from society.

In the context of limited resources and high demands of work, the development of these types of enterprise is appropriate not only to the internal capacity but also the preferences of CPTPP. Hence, it is essential to reform SOEs in a substantial way and enable them to have a transparent business environment.

Assoc.Prof.Dr.BuiThanh Nam, University of Social Sciences and Humanities, Vietnam National University, Hanoi

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Southeast Asia

A struggle for rule of law: Detained Bahraini footballer catapults Thailand to centre stage

Dr. James M. Dorsey

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Mounting pressure on Thailand to release from detention soccer player Hakeem al-Araibi has not only refocussed international attention on alleged abuse of human rights and due course of law in Bahrain but also the apparent continued ability of autocratic and authoritarian regimes to enlist global police organization Interpol in efforts to silence critics.

The arrest by Thai authorities of Mr. Al-Araibi, acting on an Interpol red notice arrest warrant issued despite the fact that he had been granted political asylum in Australia, raises questions about the effectiveness of Interpol safeguards against exploitation of its powers.

It is also a reflection of a far broader global battle for continued rule of law that is being challenged by autocrats, authoritarians, populists and nationalists on multiple fronts.

“It’s really emblematic of this breakdown of multilateral institutions, particularly those premised on western liberal democratic values which in the wake of the cold war we saw come into ascendance. These institutions were not built with the internal safeguards and mechanisms to protect them against bad faith actors. Once you let them inside the gates, nothing prevents them from poisoning the well,” said Jonathan Reich, an attorney who has worked with Russian business people and anti-corruption dissidents targeted by Russia via Interpol.

Mr Al-Araibi’s case further highlights the incestuous and inextricable relationship between sports and politics that international sports associations strenuously deny.

Nowhere is that relationship increasingly more evident than in the Gulf with Mr. Al-Araibi’s arrest; the politicization of the Asian Cup as a result of the rift between Qatar and its boycotting detractors, Bahrain, the United Arab Emirates and Saudi Arabia; Saudi and UAE efforts to substantially increase their influence in global soccer governance, and the Saudi-Qatar dispute over broadcasting rights.

Qatar’s winning of the Asian Cup on Friday was as much a sports achievement as it was a political statement of the country’s resilience and ability to host the 2022 World Cup that had been called into question from day one and was targeted by its Gulf detractors since they declared a diplomatic and economic boycott of the Gulf state 18 months ago.

Mr. Al-Araibi has been kept in prison to allow Bahrain to formally request his extradition even though Interpol withdrew the non-binding red notice a week after issuing it. He was on Friday remanded for another 60 days in prison as a Thai court held hearings on the request.

The focus on Interpol safeguards as a result of Mr. Al-Araibi’s continued detention and the organization’s inability to ensure that its mistakes can be corrected was bolstered this week by documents leaked by dissident Turkish journalists in Europe that allege abuse of Interpol procedures by Turkish law enforcement and intelligence.

The documents allege that Turkey has obtained through Interpol information about dissidents in Belgium, Germany and Poland on the basis of purported false charges that nonetheless failed to result in the issuance of a red notice warrant.

Mr. Al-Araibi’s detention since November when he arrived with his wife in Bangkok for their honeymoon and the Turkish leak are but the two latest incidents that point fingers at Interpol procedures.

Fair Trials, an international criminal justice watchdog, has documented numerous cases of abuse of Interpol procedures, applauded the organization for efforts to avoid abuse, and called on it to introduce further safeguards.

In one prominent case, Interpol was put in an embarrassing position in October when its then president, Meng Hongwei, was arrested on a visit to his native China after the police organization had accepted a resignation letter purportedly signed by Mr Meng and tendered by the Chinese government, which said he was being probed over suspected corruption. Interpol said it had no choice but to comply with the request.

Mr. Al-Araibi’s case bolsters the call for further safeguards and focuses attention on the need for mechanisms to counter the fallout of abuse.

A player for Bahrain’s national team, Mr. Al-Araibi was arrested in November 2012 while walking to a cafe in Bahrain to watch a Real Madrid-Barcelona game and beaten in detention. He was accused of vandalizing a police station at a time when he had been playing in a match that had been aired on live television.

Mr Al-Araibi spent three months in detention and was sentenced to ten years in prison but managed to flee to Australia before the verdict was issued by a judge, who like Asian Football Confederation (AFC) president and world soccer body FIFA vice president, Sheikh Salman bin Ebrahim Al Khalifa, is a member of Bahrain’s ruling family.

Mr. Al-Araibi’s case erupted as Sheikh Salman is running for another term in AFC elections scheduled for April.

Mr. Al-Araibi asserted that Sheikh Salman, who at the time of his arrest in the Gulf state was head of the Bahrain Football Association (BFA) and has long been accused of involvement in the arrest and abuse during mass anti-government protests in 2011 of some 150 Bahraini athletes and sports executives, had failed to respond to requests for help from the player’s family and lawyers.

Sheikh Salman has said he had not received a request for assistance. Sheikh Salman has consistently denied any association with the 2011 events despite the fact that Bahrain’s state-run news agency linked him to the arrests in several reports at the time.

Conspicuously, Sheikh Salman has remained silent about Mr. Al-Araibi’s case while the AFC only this week called for the first time for his return to Australia in a statement by its vice president, Praful Patel.

The AFC this week said Mr. Patel rather than Sheikh Salman was responsible for Middle Eastern affairs. It said Sheikh Salman had been recused from overseeing the region because of potential conflicts of interest. It was the first time that the AFC disclosed the recusal.

FIFA secretary general Fatma Samoura and International Olympic Committee president Thomas Bach have been calling for Mr. Al-Araibi’s release for several weeks.

For Bahraini exiles like S. Yousif Almuhafdah, a Berlin-based human rights activist, Mr. Al-Araibi’s case is one way of focusing attention on Bahrain and trying to ensure that others are spared the soccer player’s fate in a world in which the cards are stacked against them.

Says Mr. Almuhafdah, who was detained in the same cell as Mr. Al-Araibi before both men left Bahrain: “Nothing will change any time soon. But we have a responsibility to those who stayed behind and remain behind bars.”

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France returns to Laos

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The geographical location of Laos, a small landlocked state surrounded by China, Thailand, Myanmar, Vietnam and Cambodia, has made it imperative for this country to pursue a well-balanced multi-faceted foreign policy that hinges on the development of a mobile system of economic and political counterbalances.

Regional integration is key to the economic development of Laos. A major integration mechanism is ASEAN, of which Laos has been a member since 1997. 99% of Laos’ residents believe that their country’s membership in this organization yields tangible economic benefits; 92.5% say it has improved their personal financial standing.

As a member of ASEAN, Laos is committed to developing relations with China, Thailand and Vietnam but pursues a preferential policy as regards each of them.

China remains number one investor in the Laotian economy ($ 8.5 billion) with the bulk of the finances channeled into the mining, transport infrastructure and energy sectors. In 2016, trade turnover between the two countries reached $ 2 billion , a significant amount for Laos with its less than 7 million population. The largest Chinese-Lao project is the railway from Kunming Province (PRC) to Laotian capital, Vientiane. China is ready to inject more than $ 6 billion in the project

Meanwhile, Laos has been stepping up cooperation with Vietnam, which maintains a wait and see position in relation to China. Laos views Vietnam as a political and ideological counterweight to China. Cultural ties with Vietnam serve as an additional means of preventing the transformation of Beijing’s economic influence into the ideological one. Members of the ruling People’s Revolutionary Party of Laos receive training in Vietnam.

With a view to diversify foreign economic and foreign policy relations, Laos is developing contacts with France, whose colony it used to be in the past. Paris is seen as a remote neighbor of Laos, a partner in the economic and cultural spheres. Since 1991 Laos has been a member of the international organization for the cooperation of the francophone states “Francophone”. According to the French Embassy in Vientiane, the number of Laotians who speak French amounts to 3% and has been increasing over the past 12 years.

Laos is home to two branches of the Institut Francais du Laos (IFL) – an organization that promotes the French language and culture abroad; the French language is on the curriculum of three of the country’s five universities. In March 2018, Laos was visited by leaders of “Francophone”, and in May 2018 – by representatives of the Francophone University Agency. The official mission of the latter is to create a new French-language communication and educational space. The visits resulted in the signing of agreements on further cooperation with both organizations.

The period that saw a catastrophic fall in the demand for the French language in Laos since the mid-1970s is coming to an end. Nevertheless, the Lao Ministry of Education has designated English as a compulsory subject in schools for the 2019 academic year. The decision was prompted by the currently prevailing position of English worldwide and Vientiane’s intention to develop economic ties not only with the Francophone, but also with the Anglosphere.

Along with the cultural influence, France is trying to build up its economic presence in Laos. In May 2018, a French delegation led by French Ambassador Claudine Ledo visited a special economic zone in the province of Savannakhet to examine the prospects for French investment. For Laos, France is the ninth largest trading partner accounting for only 0.2% of the Lao market but it holds top position among non-Asian countries in the volume of investment.

Trade turnover between Laos and France has been fluctuating in recent years between $ 34 and $73 billion. France is prepared to invest in the Lao economy but the volume of investment is determined by the extent of Vientiane’s openness to foreign investment flows and the ability of the Lao economy to ‘digest’ them.

The year 2019 will mark greater cooperation within ASEAN for Laos. Last year, economic issues within ASEAN prevailed over political ones in connection with trade conflicts between the United States, the European Union and the People’s Republic of China. ASEAN countries are planning to launch the Regional Comprehensive Economic Partnership program (RCEP).

If the program is fulfilled, it will become the largest trade agreement in the world. The cumulative GDP of the countries participating in it makes up 25% of the global GDP, the population accounts for 45%, and the trade turnover amounts to 30% (5). Australia, New Zealand, Japan, South Korea may all be attracted to the program. This will provide Vientiane with more opportunities to diversify foreign economic relations amid China’s growing financial presence in Southeast Asia.

France was the first European country to sign a partnership agreement with ASEAN. Paris regards this organization as key to its policy in the Indo-Pacific region and a major economic partner. The volume of French investments in the ASEAN economy in 2017 reached € 16 billion. France’s share in the ASEAN market is 1.6%. This figure has not changed for ten years.

Paris aims to give cooperation with ASEAN a new impetus, which will impart more momentum to French-Lao relations.

First published in our partner International Affairs

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Southeast Asia

On Refugees… And Myanmar: It’s Not Just The Rohingya

Dr. Arshad M. Khan

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… And my life’s cold winter that knew no spring; Of my mind so weary and sick and wild,  Of my heart too sad to sing.  — Paul Laurence Dunbar

The world now has more refugees than at any time since after WW2, more than the population of Britain.  They are often the consequence of wars usually instigated by great powers directly or through proxies.  Civil strife accompanied by the demonization of minorities, killing and expulsion is another reason.  Such is the story of the Rohingya in Burma, or Myanmar as it now likes to be known.

It is a country with the river Irrawaddy as a central artery.  Bordering it is the heartland, peopled by the Bamar who make up 68 percent of the population and are Buddhist.  The Rohingya are Muslim, look different and have lived in Rakhine state for at least five centuries.  During WW2 they supported the British while the Buddhist Burmese supported the Japanese, their coreligionists.  It brought lasting enmity.  After years of propaganda and vilification, the Rohingya were stripped of citizenship.  Not unlike Nazi Germany targeting Jewish people, new restrictive laws curtailed liberties, marriage rights, even children — limited to two.  The vilification turned most neighboring Buddhist villages against the Rohingya, and those attacking and burning their villages were often these neighbors when not the military.

In this latest violence, 90 percent of the Rohingyas were driven out and about three-quarters of a million sought refuge across the border in Bangladesh.  The story does not end with the Rohingya for there are other threatened minorities in Burma occupying the periphery in the north and south:

In northern Shan state, a simmering conflict with the Taang National Liberation Army dating back to 1963 has displaced 300,000.  The army emboldened by the relatively meek response to the assault on the Rohingyas have intensified their efforts also against the ethnic Kokang’s  Myanmar National Democratic Alliance Army.  The consequence is an addition to the tens of thousands that had streamed from earlier conflicts over the border into China.  Also in the north the largely Christian Kachin minority formed the Kachin Independence Army to defend their villages.   The ongoing conflict has displaced more than 135,000 internally.  And in the south the conflict with the Karen (Buddhist, Animist and 15 percent Christian) resulted in over 100,000 refugees … this time in Thailand, plus a 100,000 diaspora to the rest of the world including some 65,000 in the US.  Myanmar’s perverse antipathy towards all its minorities makes a mockery of the Nobel Peace Prize awarded to Aung San Suu Kyi, its leader.  Is meaningful censure an answer, or is innate tribalism an unconquerable primitive amygdala response?

The top five refugee hosting countries might also come as a surprise.  Amid all the news of Angela Merkel’s generous offer to accept everyone entering her country, Germany is not one of them.  Shortly thereafter her party lost by-elections and she is departing.  The actual figures are Turkey (3.5 million), Pakistan (1.4 million), Uganda (1.4 million), Lebanon (1 million) and Iran (0.98 million).  The chaos in countries adjoining them (think of Afghanistan, Iraq, Syria and Somalia) explains why, and the great power with a finger in each pie, when not actually baking it, is also not difficult to discern.

Imagine being forced to flee with just the clothes on your back or just a bag.  A word here also for the people who had to do just that to escape wildfires.  They all have our heartfelt sympathy, often taking a concrete form through donations to help.  A happy new year to everyone and a better one for the unfortunate among us.  We can try to make it so.

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