How TPP Will Transform Southeast Asia: A Case Study Analysis
Few have paused to consider what the TPP means for the four Southeast Asian nations in negotiations: Vietnam, Malaysia, Singapore, and Brunei. A range of issues are at stake, from currency manipulation to regulation of state-owned enterprises (SOEs), which have particular relevance for Southeast Asia’s state-centric economies. The TPP could bring about significant financial and social reforms to these countries, opening the playing field to foreign investors while introducing progressive labor standards and environmental protections.
Many of the rising “tigers,” as Asian economic powers like Singapore came to be known following rapid growth in the last half-century, benefited from protectionist policies and high tariffs reducing foreign competition. Vietnam and Malaysia in particular maintain some of the world's highest tariffs and non-tariff barriers (NTBs) against foreign businesses. So why would these economies want to open their doors to change now?
According to a study by Peterson Institute, Vietnam may stand to gain the most under the TPP framework. Jack Sheehan, a partner at DFDL specializing in cross-border legal services,:
In 2012, Vietnam exported almost $7bn (£4.2bn) worth of apparel to the US, which accounted for 34% of US apparel imports. Vietnam also exported $2.4bn worth of footwear…The TPP will allow Vietnam to export apparel to the US at a 0% tariff rate, which will make Vietnamese exports even more competitive.
Phasing out high tariffs will expose domestic industries to increased competition from overseas investors, but ultimately these structural reforms will set Vietnam’s economy on stronger ground and promote innovation in local firms.
Reference: The Diplomat