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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

President Ho Chi Minh and his ideas about the world peace

Prof. Pankaj Jha

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The world would be celebrating the 130th birth Anniversary of President Ho Chi Minh on May 19th ,2020. He was named as Nguyen Sinh Cung after his birth inHoang Tru in Central Vietnam but adopted Ho Chi Minh (“Ho the Enlightened One”) as his name in early 1940s. He aspired for collective consciousness and loyalty to the nation. He proposed independence within society rather than independence of each individual.

President Ho Chi Minh was one of the strong supporters of Asian unity, and in one of the messages send to Prime Minister Jawaharlal Nehru during the Asian relations conference he said that this solidarity would make the Asian countries the mightiest defenders for the world speech and democracy. Alluding to the fact that Asian family is critical for unification and independence, he said that the brotherly countries in Asia would support Vietnam so that the objective of unifying North and South Vietnam could be realized.

President Ho Chi Minh was equally concerned with regard to peace in Asia and the world and during one of the welcome party speeches given in the honour of Prime Minister Nehru in Hanoi in 1954, he said that in order to maintain understand and peace, the people and the government of the Democratic Republic of Vietnam are determined to execute correctly the ceasefire agreement signed in Geneva. He thanked the International Control Commission managed by Indian, Polish and Canadian delegates for having toiled hard and worked closely with the general headquarters of the Vietnam people’s army and gained sound results.

In most of his correspondence related to the ceasefire agreement between France and Vietnam, he was apprehensive that the imperialist powers should show some resolve to maintain peace. In one of the interviews given to the Indian news agency in 1954 on the question of the ending of the war with French, he said his purpose was to ‘…. promote peace, foster unity, independence and democracy across the country’. In performing these duties, he reiterated, “we are willing to sincerely cooperate with Vietnamese individuals or groups who supports such policies, regardless of their political and religious beliefs’’.

During the June 1954 Prime ministers of China, India, and Myanmar signed a joint declaration which stressed of the five guiding principles(Panchsheela) which included the respect for sovereignty and territorial integrity; do not violate each other; do not interfere into internal affairs of each other; treat each other equally on the basis of mutual benefits and live peacefully together. President Ho Chi Minh completely endorsed these five principles of peaceful coexistence.

In his separate meetings with the three leaders of China (Zhou Enlai), India(Nehru) and Myanmar (U Nu), he buttressed the need for Asian peace and understanding. In one of the interviews given to the Indian New Age weekly on the question of building of military alliances and bases, he said that these military blocs and bases are threat to peace in Asia and the entire world. He also indicated very often to the growing coalition movement of Asian and African peoples. He always aspired for peaceful unification of North and South Vietnam and holding of elections under democratic process as further enunciated by the Geneva accords.

President Ho said in one of his speeches given on February 7th 1958, ‘at the present time, peaceful forces have been developing, more and more people have been raising their voices for disarmament, stopping nuclear testing and hydrogen bomb, protesting NATO, Baghdad and South East Asia bloc, requesting the world leaders to organize conferences for minimizing the tensions across the world.’

In the joint statement given during his visit to India in 1958, the two leaders (Ho Chi Minh and Nehru) specifically indicated that ‘the developments in the areas of aeronautics, atomic and hydrogen warfare has put the need for peace more than ever’. The two sides agreed that it was imperative to organize a high level conference to find solutions so that the atomic and hydrogen weapons test can be stopped. There was a need for gradual disarmament and easing of the world situation, and expressed the hope that the conference will soon be convened addressing the subject. The two sides stressed that the military blocs have made the international situation precarious and determined that there is need for ideological adversaries to maintain the world peace as well as develop understanding among nations.

In his congratulatory message given on the occasion of India’s Afro Asian solidarity conference 1955, he said, ‘…the conference would be contributing to the cause of fight for the end of colonialism, disarmament and the end of the Cold War to protect freedom, independence and bring peace’.

President Ho Chi Minh was also very influenced by the Buddhist ideals of peace, forgiveness, spirituality, minimalism, and non-ego as the critical elements of human survival and global peace.Ho Chi Minh idea was to develop human affection, sacrifice world pleasures for the people; self-improvement, regular quality exercises, developing human ethics, forge close bonding with people and creating a mass grassroots movement for people’s solidarity. He also looked into the Buddhism ideals which included philosophy, developing a peaceful outlook towards the world, sincerity, goodness, beauty, mercy, impermanence and protecting oneself from misfortune, and the problems germinating because of more pompous live than usual. He even during the visits to different nations and official letters alluded to the spiritual integration, mercy, altruism, ethics, human quality and empathy with fellow human beings.

In fact, one of the ideas that President Ho Chi Minh derived from Buddhism was related to peaceful humanity of Buddhism and Buddhist consciousness in every activity.

If one analyses the resonance in President Ho Chi Minh ideas, it was primarily aimed at bringing about global peace through anti-colonialism and reducing the influence of imperialist powers so that development and growth can be ushered among the newly independent nations. In his letters, he has reposed faith with regard to Geneva accord and time and again in his personal correspondence stressed on democratic principles and respecting will of the people. However, he was conscious of the fact that imperialist powers will not give away easy freedom to the colonies that they possess. In order to pressurize the imperialist powers, he had urged the newly independent countries to avoid power bloc politics and strive for the betterment of the people. His commitment towards his people and unification of Vietnam through peaceful means has been largely unreported but looking into the letters that he had sent to various leaders one thing crops up in each of the letters that he had always striven for global peace and development. It was the last line in most of his letters.

During his visit to India, he had visited Punjab to look into the construction of the Bhakra Nangal dam and was astonished to see that how a single dam could resolve the problems related to power generation and dedication in that particular region. Also during his leadership, he was very of the fact that prolonged wars are not good for the society and the general people. His stress on disarmament, and against Cold War highlights this fact that he was foreseeing the tension which might get intensified because of Cold war. He had full faith in the UN as an institution and was categorical that the global body must undertake initiatives to protect the rights of the people and the suffering of the people in the dependencies should be reduced.

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Southeast Asia

Vietnam’s success in dealing with the Covid-19 pandemic

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Vietnam’s handling of the coronavirus pandemic has been lauded globally. The total number of covid19 as of May 15, 2020 was estimated at 312, and  the country has not reported a single death.

Vietnam’s success in dealing with the pandemic has been attributed to some decisive, but tough, steps which it enforced without dithering like  some of its neighbors in ASEAN. These measures included, a lockdown from April 1, 2020 (which lasted for less than a month) , quarantining of international travelers for a period of 14 days, effective tracing,  Vietnam’s experience in dealing with the SARS epidemic of 2003 also stood the ASEAN nation in good stead. The fact, that Vietnam a country with a population of over 900 million people, has performed far better than many developed countries, has also been recognized globally. Vietnam’s effective handling of the pandemic is all the more remarkable given the fact that it shares a border, and close economic linkages, with China.

Economy

While the ASEAN nation has been able to control the virus, like other countries its economy is likely to be impacted adversely. It’s growth, rate this year has been estimated at 2.7% this year according to the International Monetary Fund (IMF) (according to the World Bank, Vietnam’s growth will be around 1.5%, but it will escape a recession). Even in the aftermath of the pandemic, Vietnam is likely to fare better, in terms of GDP, as compared to other ASEAN nations, but this is nowhere near the robust economic growth witnessed in previous years(in 2019, Vietnam grew at 7.02%). In recent years, the ASEAN nation emerged as an important manufacturing hub, and has been able to draw in significant FDI (Foreign Direct Investment) in manufacturing from a number of countries, including Japan and South Korea, and  has not been dependent merely upon China. In 2019, pledged investment in the manufacturing sector was estimated at a little less than 25 Billion USD (24.6) USD.

Investor friendly policies, efficient labor force and the country’s strategic location have played an important role in Vietnam’s success in drawing FDI, and emerging as an economic hub, not just within Asia but globally. Addressing a business conference, on May 9, 2020, attended by participants from multilateral institutions like the IMF, the World Bank and the Asian Development Bank, Chambers of Commerce, and domestic and international business groups, the Vietnamese PM, Nguyen Xuan Phuc sought ideas to kickstart the economy. He also stated, that his governments would make all necessary efforts, to ensure that Vietnam attains 5% growth. The Vietnamese PM stated that foreign investments would be crucial, if Vietnam was to achieve this objective.

 Vietnam’s economy post-covid

The question on most people’s minds is that how will Vietnam deal with the economic challenges posed by the covid19 pandemic. While in the short run, there are numerous challenges, the fact that many companies are keen to shift out of China is likely to help the ASEAN nation. According to many analysts, while some companies are likely to shift to other Asian countries like India and Bangladesh, Vietnam is likely to emerge as a preferred destination, as a result of it’s location, logistical advantages and trade pacts with numerous countries including the US.

 It would be pertinent to point out, that Vietnam had benefitted immensely from the China-US Trade wars, with numerous companies clearly preferring Vietnam, over its other competitors.

Japan which has earmarked over 2.2 billion USD for its manufacturing firms to shift from China, is likely to encourage it’s companies to move to Vietnam (Japan was the second largest investor in Vietnam in the first quarter of 2020). Strategic ties between both countries have also witnessed an upswing in recent years. It would be pertinent to point out, that Vietnam along with Japan, also happens to be a member of the Trans Pacific Partnership (TPP) and this will help in bolstering economic linkages with other member states (already some member states within TPP are working closely to keep supply chains intact)

Steps taken

Apart from its economic relevance, Vietnam is also important from a strategic context. It is the ASEAN chair for 2020, and its increasing relevance in the Indo-Pacific region mean that not just Japan, but even other key players in the Indo-Pacific, are likely to bolster strategic and economic linkages with the ASEAN nation in a post corona world.

Vietnam’s stature has risen not just because of its handling of the coronavirus pandemic, but also ramping up of medical equipment production — such as masks. It was able to provide masks not just to neighboring countries in ASEAN, but also the US, Russia, Germany, France and UK. The ASEAN nation, despite paucity of resources, has emerged as a key stakeholder in the battle against the deadly pandemic. In a post corona world, the ASEAN chair is likely to emerge as an important global player, both in the economic and strategic context.

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Southeast Asia

Singaporean Daren Tang Appointed as the Next WIPO Director General

Kester Kenn Klomegah

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On May 8, Daren Tang, Chief Executive of the Intellectual Property Office of Singapore (IPOS) was officially appointed as the next Director General of the World Intellectual Property Organization (WIPO).

WIPO is a specialized United Nations (UN) agency based in Geneva, Switzerland, with 193 member states and an annual revenue in excess of $600 million. Tang will take over the helm of WIPO on 1 October 2020 for a term of six years. This marks the first time a Singaporean will lead a UN agency, and WIPO’s first Director General from Asia.

In his acceptance speech, Tang thanked all member states for their support and paid tribute, in particular, to the WIPO staff and out-going Director General Dr Francis Gurry.

He further outlined the global challenges faced by the world today, including the “deeper forces of unilateralism and parochialism” threatening to undermine multilateral institutions, and urged member states to respond by working “even more closely together” through a common, global effort.

Tang noted in his speech that WIPO has grown stronger and more relevant since its inception 50 years ago due to the “proven willingness of all member states to share joint responsibility, confront challenges, and transform together.”

Laying out his plans for WIPO, Tang prioritized the need to build an inclusive, balanced, vibrant, and forward-looking global intellectual property (IP) ecosystem.

Senior Minister of State (Law and Health), Edwin Tong, congratulated Daren for being the first Singaporean to lead a UN Agency and to be appointed as Director General of WIPO. This is a momentous occasion for Singapore.

Edwin Tong pointed out that under Daren’s leadership as Chief Executive of IPOS we have seen Singapore’s IP ecosystem flourish. During his term, Singapore has risen in ranks to become second globally and top in Asia for the best IP protection in the World Economic Forum’s “Ideas Today. Assets Tomorrow.”

As he takes on the new role as Director General of the WIPO, it is expected that Daren will lead the organization towards building a more vibrant IP community internationally. Daren will continue his great work at WIPO and contribute towards moulding the future of the global IP ecosystem.

Chairman of the IPOS Board, Dr Stanley Lai, on behalf of the IPOS Board of Directors, extended heartiest congratulations to IPOS Chief Executive Daren Tang for his new appointment as the next Director General of the WIPO.

Dr Stanley Lai said: “We are confident that he will bring the same vision orientation, energy, outcomes, and capabilities that have come to define him during his time at IPOS into the auspices of WIPO. Having worked with him for several years, the Board is certain that the global IP community will be served by a Director General who is exceptionally attuned to the interests of countries, economies, and also equipped with a deep understanding of IP and its forceful impact on innovation and global development, especially during these challenging times. These qualities will serve WIPO, the member states and the larger IP community well.”  

Dr Lai added, “IPOS remains committed as an active member of the international IP community, and we will continue to partner and support the important work of WIPO. We wish Daren every success and look forward to working with him and WIPO to build the future of the global IP ecosystem.”

Daren Tang will relinquish his role as the Chief Executive of IPOS, a statutory board under the Ministry of Law, where he drove the strategic transformation of IPOS from an IP registry and regulator into an innovation agency that helps to build Singapore’s future economy.

His term saw major updates to Singapore’s IP Hub Masterplan, legislative and policy reforms to the IP regime and a scaling up of international engagement. Currently, IPOS has cooperation agreements with over 70 regional and international partners.

Under his leadership, Singapore ranked second globally and top in Asia for the best IP protection in the World Economic Forum’s Global Competitiveness Report and IPOS was also recognized as the world’s most innovative IP office by the World Trademark Review in 2020.

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