Download Vietnam`s Perspective on Regional Integration

Vietnam’s Perspective
on Regional Integration
Vo Tri Thanh
Central Institute for Economic Management (CIEM)
([email protected])
Washington D.C, 14 June 2016
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30 Years of Doi Moi: Peformance & Challenges
 Significant achievements: (i) From a poor to a (low-) middle income
country; (ii) From a largely agriculture - based to a more industrialized & services
– based economy; (iii) From a close to an open economy … but not
outstanding: Low quality of growth; limited spill-over from FDI; weak position in
the global/regional value chains; widening income/asset gap; polluted and
deteriorated environment
 Key challenges: (1) How can VN get out of “low cost labour trap” and
lay down fundamental foundations for overcoming “middle-income trap”?
(2) How can VN achieve (rather) high economic growth while ensuring
social and environmental sustainability?
 Nature of Doi Moi: To enlarge both sets of (economic) choices by people
and the country’s (people’s and institutional) capability to exploit benefits from the
newer choices
 The major reform dimensions: Market-oriented reforms; Macroeconomic
stabilization; “Open door” policy and international integration
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VN & International Integration Strategy
 Three pillars: (1) WTO as basis for further integration; (2) East Asia
integration (AEC & “Centrality”; ASEAN +1 & + 6 FTAs); (3) FTAs (esp. TPP,
VN-EU FTAs and some others)+ Cooperation with key partners
(“Comprehensive/& strategic partnership”)
Signed and pending FTAs involving Vietnam
■ TPP: Population: 900
mill.; 28% world trade &
37% world GDP
■ RCEP: 48% world
population; 30% world
trade; 30% world GDP
■ EU: Population: 500 mill.;
20% world trade; 26%
world GDP
■ ASEAN (2013)
Population: 625 mill.
GDP: USD 2400 bill.
Trade: USD 512 bill
FDI inflow: USD 122 bill.
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FTAs as a Catalyst for Reform & Development
 Expansion of exports & economic activities
 Expansion of investment (especially FDI). A way for restructuring the
economy. Especially agricultural sector
 A pressure/catalyst for institutional reforms & improvement of business
environment (Esp. TPP; VN-EU FTA & AEC)
 Geo-political considerations
 Despite challenges and several technical issues, the commitments under
FTAs, especially TPP, VN-EU FTA & AEC, basically consistent with the
reforms VN would like to and/or should follow in her new stage of
development). Some recent observations:
 Changes & development of legal framework (Law of Enterprises; Law of
Investment; Law of Public Investment; Law of Gov’t Procurement; Decree on
PPP,…)
 Efforts to improve business environment (Resolution 19, Resolution 35)
 Attempts to restructure SOE, banking, and public investment sectors
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Economic Impacts of Development of ASEAN++ FTA (RCEP)
16.0
13.4
14.0
12.0
9.5
10.0
8.3
8.0
5.8
6.0
4.0
5.0
3.3
3.0
2.3
2.9
2.0
0.0
ASEAN
Coexistence of Five ASEAN+1 FTAs
Coexistence of Five ASEAN+1 FTAs and CJK FTAs
ASEAN+6 FTA
Note: Cumulative Percentage Point, deviation from baseline, 2011-15. Source: Itakura (2013)
Income gains in TPP, EVFTA, & RCEP
Projected
2025 ($b)
Change in 2025 ($b)
TPP EVFTA RCEP
Change in 2025 (%)
TPP EVFTA RCEP
Real income
United States
20,273
77
0
0
0.4
0.0
0.0
Vietnam
340
36
19
17
10.5
5.5
5.1
WORLD
103,223
223
26
644
0.2
0.0
0.6
2,813
123
0
-4
4.4
0.0
-0.1
Vietnam
239
68
37
30
28.4
15.6
12.5
WORLD
28,415
305
44
1,383
1.1
0.2
4.9
Exports
United States
Source: Cited in Petri & Phuc (2015)
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AEC - a Reference Point for Regional Integration
■ ASEAN: Very diversified in terms of dev’t, institutions, and political
system
■ AEC Paradigm
 Objectives: Prosperity + Narrowing development gap
 Pillars: Good, services, and investment Liberalization (single market & production
base) + Facilitation & Connectivity (MPAC) + Cooperation + Open region
 Main ideas: (i) Creation of opportunities (Liberalization); (ii) Reduction of
transaction costs associated with production networks and value chains & Easier
access to new opportunities (Facilitation + Connectivity); and (iii) Improvement of
institutional capacity and HR dev’t (Cooperation, e.g. IAI and other donors’
programs)
 AEC is a process (Vision of AEC beyond 2015; New context of 21 Century?)
■ AEC is reference point for RCEP
 ASEAN is driving force? The Expert Roundtable (ERIA, 5/2013): RCEP needs to
be consistent with 4 pillars of the AEC
 RCEP should be designed well to have “significant improvements over the
existing ASEAN+1 FTAs”
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■ Major issues/challenges
 Minimization of FTAs’ “spaghetti-bowl” problems thanks to harmonization of
RoO and facilitation (e.g. “behind – the – border” regulations; “NSW”, standards
and conformance)?
 ASEAN Centrality as facilitator of process and as the driver of substance?
 Implementation mechanism/enforcement in RCEP (DSM; review;
committees/secretariat) and role of ASEAN Sec?
 Liberalization and dealing with non-traditional security issues (natural
disasters; infectious diseases; food and energy security; labour migration, etc.)
 Feasibility for an EA Cooperation & Dev’t Fund (IAI → IEAI)? The cooperation
and coordination to support CLMV (institution reforms, capacity building; SMEs
dev’t programs)?
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RCEP & TPP: Similarities, differences and FTAAP
■ Similarities: Both see trade liberalization as a positive-sum game.
Both commit to deepen liberalization of trade in goods, services and
investment. Both commit also to incorporate elements of open
regionalism
■ Differences:
 RCEP is very much based on AEC, not just with widely scoped liberalization
but including also various dev’t agenda with a philosophy of community-building
(in an Asian manner) through deepening economic integration and narrowing
dev’t gaps (ERIA 2014). Both AEC and RCEP can be seen as processes.
 TPP is driven by US (and in line with US foreign policy objective of pivot
toward Asia). It’s seen to be a high quality FTA aiming to establish a 21st century
FTA to address next generation issues (labor & environmental standards,
competitions, SOEs, gov’t procurement, IPRs +,e-commerce…). TPP is a “single
undertaking” arrangement
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 Are both being convergent to FTAAP?
Supporting factors
 Both commit to open regionalism and further liberalization. Market forces and
interaction are being strengthened thanks to new arrangements
 The gains will be larger if the tracks proceed to region-wide integration
 The world trading system, and ACE and RCEP, whatever the case, should be
dealing with “21th Century trade issues” (TPP appears to be especially close to
that, although controversial issues remain). Also, any region-wide agreement will
have to reconcile high/higher standards with the capacities and needs of diverse
economies (for cooperation to help reduce development gaps). Thus, TPP is not
in conflict with RCEP.
Risks
 Inappropriate way in dealing with regional geo-political problems
This can be aggravated by unequal distributed benefits from further integration
among economies in the region
 ASEAN Centrality at risk? But it also appears that adverse side effects could be
managed with thoughtful policy responses (high economic Interdependence;
dialogue and role of ASEAN (Petri and Vo 2012)
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The Role of APEC
■ Features of APEC:
 Objectives: liberalization of trade and investment.
Institutions: APEC Summit; Consensus + non-binding (V-APEC: National IAP).
Three dimensions: Trade & investment liberalization; business facilitation +
Structural reforms; ECOTECH
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■ APEC can play an important role for promoting regional
development and integration
 To continue supporting the open regionalism, the convergence of TPP and
RCEP, and “ASEAN centrality”
 To minimize the “spaghetti-bowl” problems of FTAs’ ROOs; to harmonize
standards; to promote competition & structural reforms; etc.
 To enhance the whole regional connectivity (APEC 2013: to develop a
blueprint detailing areas for multi-years cooperation and activities based on the
concept of MPAC)
 To coordinate efforts in capacity building (esp. for less developed economies).
 To be a lively example of a new relationship between very different economies
for regional stability and development for all
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Thank you!
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