The Trans-Pacific Partnership ( TPP ): Key Issues In Prmting Trade, Grwth & U.S. Cmpetitiveness in Vietnam The Asia Pacific regin will be the primary engine f glbal ecnmic grwth ver the cming decades, and Vietnam has prven t be ne f the imprtant cuntries in this key regin. It is vitally imprtant t ensure that the reginal trade and brader regulatry architectures develp in a way that prmtes crss-brder investment, transparency and level playing fields fr all market participants, and eliminates barriers that wuld discurage trade and market access, and this includes ensuring that these architectures develp in Vietnam and in U.S.-Vietnam trade. Success is imprtant nt nly fr the cuntries already at the negtiating table alng with the United States Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapre and Vietnam but als t ensure that the TPP lays the fundatin fr further entrants and verall ecnmic integratin in the Asia-Pacific regin. AmCham Vietnam therefre applauds the United States decisin t enhance its engagement in the Asia Pacific regin and t pursue TPP as a lynchpin f its trade strategy in the regin. A firm and increasing cmmitment t the Asia-Pacific regin via a strng and expanding TPP will allw cmpanies t eliminate duplicative and unnecessary barriers, disseminate reginal and internatinal best practices and enhance ur cnnectivity t mst f the wrld s fastest-grwing ecnmies and custmers. Mrever, in the ASEAN regin with its many free trade agreements (FTAs) bth within ASEAN and with many key reginal trading partners, the TPP prvides pprtunity fr U.S. cmpanies t cmpete with ther cmpanies frm thse FTA participants n a mre equal fting. Backgrund The TPP is being negtiated as a 21st century free trade agreement. It is designed nt nly t eliminate all tariffs in principle, but als t address the stubbrn nn-tariff barriers and behindthe-brder business envirnment issues that impede the smth flw f trade and investment acrss the Asia-Pacific regin. Fr the TPP t succeed, aspiring TPP member ecnmies must embrace its high-standard and market-pening terms and cnditins. TPP cmes at a timely juncture, when ther structures, such as bilateral FTAs between ASEAN and its plus six negtiating partners Japan, China, Krea, Australia, New Zealand and India are already setting the templates fr key issues like rules f rigin, harmnizatin f dcuments and the like. TPP is the best way fr the United States t be centrally invlved in the prcess f setting reginal standards, and avid the risk f exclusin frm the evlving Asia-Pacific trade architecture. As a 21st-century agreement, the TPP can address tday s needs n transparency, cmpetitin plicy, intellectual prperty, market access, issues invlving state-wned enterprises, and gvernment prcurement regulatins, amng thers. The TPP can als address newly emerging trade issues such as supply chain cnnectivity, regulatry cherence, innvatin, and SME develpment. Such an agreement wuld underpin the gal f inclusive grwth where all participating cuntries and citizens f all levels benefit.
Key Deliverables fr 2011 The U.S. Gvernment and its TPP Partners shuld substantially cmplete negtiatins n the key pints f a cmprehensive TPP Agreement by the end f 2011. Thrugh negtiatin runds in Singapre, Vietnam, Australia and the United States ver the curse f the year, it is clear that there will be many challenges: the negative list apprach f the TPP is a new feature fr many f the aspiring ecnmies, and sme f the brader regulatry cherence prvisins, prtectin f intellectual prperty and transparency may require buy-in frm a far wider grup f stakehlders than traditinal trade agreements. In Vietnam, there appears t be sme lack f understanding f the benefits f the TPP, and we encurage increased U.S. engagement at all levels t help the Vietnamese wrk thrugh new r difficult cncepts, and t help build verall supprt fr the TPP. The United States, mrever, will have its wn challenges, including the expectatins f many Asian ecnmies fr prgress n areas currently tariffed by the United States, such as textiles. Despite these challenges, and the certainty f hard negtiatins, every effrt shuld be made t achieve an agreement in principle n all key issues by the time f the APEC Summit in Hnlulu. This will be a fitting cap t a successful American-led APEC year. Alng with this key gal, AmCham Vietnam respectfully ffers the fllwing recmmendatins fr the TPP negtiatins. - Cntinue t cnsult clsely with the private sectr in the negtiatin prcess: As the key drivers f bringing gds and services t market and prviding American jbs, the U.S. private sectr is keenly interested in a successful utcme, and is pleased t cntinue t prvide market-based input n the measures that will have the mst cncrete benefit fr market access in the regin. - Grant Trade Prmtin Authrity: AmCham Vietnam urges Cngress t grant Trade Prmtin Authrity (TPA) t President Obama. TPA will indicate t TPP partners that the U.S. is cmmitted t ratificatin f the agreement. This authrity is necessary t negtiating timely and effective exprt pening agreements, and fr reasserting America's glbal leadership in prmting U.S. gds and services. Further, it will give the U.S. a strng hand at the negtiating table t get the best pssible deal fr U.S. jb creatrs. - Negtiate a Cmprehensive Reginal Agreement: AmCham Vietnam encurages the negtiating partners t craft a cmprehensive agreement that is truly reginal in nature t serve as a building blck t an eventual FTA fr Asia-Pacific (FTAAP). T streamline the spaghetti bwl f bilateral FTAs and cut cmpliance csts fr business, the TPP must endeavr t include elements that will prmte intra-reginal surcing and allw reginal supply chains t becme mre integrated. Sme examples f these are: intra- reginal duty free access, simplificatin, harmnizatin f rules f rigin, harmnizatin f dcumentatin and prcedures, and regulatry cherence and mutual recgnitin. - Create 21st-Century Agreement: AmCham Vietnam urges the U.S. Gvernment t negtiate a cutting-edge agreement t address mdern day realities and adpt initiatives n which APEC has achieved cnsensus. The agreement shuld: Remve Trade Barriers: The U.S. Gvernment shuld cntinue t fcus n at-thebrder, acrss-the-brder, and behind-the-brder barriers t trade in TPP negtiatins, and t bear in mind mdern supply chain patterns in the regin. We urge the United States t lead by example in all areas, ffering WTO-plus cmmitments and aviding psitins that are increasingly at dds with reginal and glbal realities. Fr example, 2
surcing pattern rules such as yarn-frward fr textiles & apparel trade ften d nt accurately reflect the needs f glbal supply chains and will clse ff millins f dllars in pprtunities fr American apparel cmpanies. Further, behind-the-brder nn-tariff barriers in the frm f dmestic regulatin have becme increasingly detrimental t the ability f U.S. services cmpanies t perate effectively verseas. In Vietnam, we have seen a spate f Vietnamese imprt restrictins such as imprt licensing, tariff increases, prt-f-entry restrictins, and burdensme and duplicative dcumentatin requirements, with the aim f cutting imprts. Setting clear standards fr necessity and dcumentatin fr TPP members wuld be useful. Achieve A Better Balance between Trade Security and Trade Facilitatin: Internatinal trade is witnessing a strng shift t brder prtectin at the expense f trade facilitatin. Althugh custms administratins have cntinued t becme mre efficient thrugh the adptin f technlgy, security measures have added t the cmplexity f the crss-brder mvement f gds and have becme a majr chkepint fr supply chains. T supprt nimble and cmpetitive supply chains, in additin t strng custms prvisins, we urge TPP parties t cnsider the mutual recgnitin f trusted trader prgrams, establish best practices fr advanced regulatry infrmatin in advance f vessel departure, streamline prcedures fr exprt cntrl licensing including the harmnizatin f ECCN, and generally adhere t WCO SAFE Framewrk Principles. On a related matter, the U.S. shuld mve t enact legislatin authrizing the prvisin f the APEC Business Travel Card t U.S. natinals, a mve that wuld facilitate U.S. access t Asia-Pacific markets and bst U.S. exprts. Prmte U.S. Services: AmCham Vietnam applauds TPP members fr undertaking a negative list apprach t services. We hpe that the U.S. Gvernment will invlve U.S. cmpanies in the frmulatin f the negative list t ensure accurate accunting f regulatry barriers. We encurage the U.S. t als cnsider prvisins fr crss- brder mvement f prfessinals and their emplyment in services. The wrkfrce is increasingly glbal, and cmpanies must leverage bth lcal and freign wrkfrces t perate mst effectively. Further pening key service sectrs such as health, educatin, turism and thers is imprtant in relatin t Vietnam. We urge the TPP t include reciprcity in prfessinal licensing fr fields like medicine, law, and architecture. The TPP shuld als include greater flexibility t bring in freign talent and freign wrkers, including fr shrt-term assignments. Prmte U.S. Manufactured Gds: TPP can play a critical rle in reducing bth tariff and nn-tariff barriers t U.S. manufactured gds. It is ntewrthy that in the current 17 FTAs that the U.S. has negtiated [and that are in frce], the U.S. runs a trade surplus in manufactured gds. The TPP prcess, like the FTA prcess, can wrk, and will prduce mre U.S. jbs by facilitating exprts. Distributin Refrms: Despite WTO cmmitments t pen distributin services t freign participatin, implementatin by Vietnam has been weak. There is little penetratin by freign distributin services prviders right thrugh the supply chain t date, due t nn-tariff barriers such as the Ecnmic Needs Test fr the retail stage. This test is unnecessary and shuld be ablished by Vietnam fr ther TPP members. Market access barriers impsed n ther stages in the supply chain shuld be similarly refrmed. A transparent and streamlined apprval prcess fr distributin service prviders wuld assist cnsiderably. 3
Ensure Transparency and a Level Playing Field: AmCham Vietnam encurages the TPP t eliminate as far as pssible gvernment assistance t lcal cmpanies and cmpanies with gvernment ties, and t stipulate free and pen cmpetitin fr any gvernment prcurement prcess. T imprve transparency and pen cmpetitin, the TPP shuld address the gvernment cmmdity price setting that cmpanies face in certain markets, require regulatrs f industry sectrs t be independent f gvernment entities that cmpete in (r wn) thse industries, and require ntice and cmment pprtunities fr all future laws and regulatins affecting business in all TPP cuntries. Ensuring a level playing field between public-sectr and private-sectr prviders f cmpetitive gds and services is especially imprtant in sectrs that are enablers f trade and investment ffering multiplier benefits t the ecnmy, such as ICT, financial, and lgistics services. Ease Restrictins n Freign Direct Investment: The TPP shuld address the investment restrictins that many U.S. cmpanies face in Asia-Pacific. We encurage the TPP t ease impediments t business, such as the abve-mentined restrictins n retail distributin, and t eliminate investment and natinal treatment restrictins in TPP member cuntries. Further, the TPP shuld liberalize r eliminate freign wnership caps acrss all sectrs, including thse applicable t the services sectr, with exceptins limited t areas f true natinal security needs. Prtect Intellectual Prperty Rights (IPR): IPR prtectin is essential fr cmpanies acrss all industries ding business in the Asia-Pacific regin, and particularly fr knwledge-based industries such as ICT, media/entertainment, envirnmental gds, and pharmaceuticals. With the future f trade fr the United States driving mre tward technlgy and the need t share technlgies t address grwing glbal cncerns, IPR rises t even greater significance. AmCham Vietnam encurages prvisins in the TPP t ensure that IPR is prtected in all TPP member cuntries and that enfrcement in cases f IPR infringement is sufficiently rigrus t discurage future infringement. With an eye twards ptential future members f the TPP, assurance f IPR prtectin wuld significantly imprve U.S. cmpanies ability t cmpete effectively in thse markets. At the same time, penalties fr vilatin shuld be fair and prprtinal, and shuld be designed s as t avid vexatius litigatin and any chilling f innvatin. Prmte Regulatry Cherence: Streamlining and encuraging mutual recgnitin f standards acrss TPP cuntries culd greatly increase efficiency fr U.S. cmpanies perating in the regin. Where pssible, AmCham Vietnam urges that standards, registratins, and safety and quality requirements be crdinated with ther reginal grupings, such as ASEAN. In additin t efficiency gains, regulatry cherence culd help cmbat parallel imprtatin, which can negatively affect bth cmpanies and cnsumers. In relatin t Vietnam s current imprt restrictins using regulatry means as a guise fr prtectin, it shuld be made clear that, if a prduct is already subject t regulatry apprval like dmestic prducts, there is n need fr duplicative regulatry verificatin upn imprtatin. Fster Inclusive Grwth: AmCham Vietnam urges the TPP partners t include elements such as SME develpment and capacity building in the agreement framewrk. Initiatives t integrate thrugh a reginal trade agreement will be especially beneficial t SMEs, wh ften d nt have the resurces t navigate the web f agreements in rder t benefit frm FTAs in the Asia Pacific regin. T fster inclusive grwth, the TPP shuld prmte access t financing and infrmatin t assist with SME grwth. 4
Regulatry refrm t prmte asset-based lending and ther innvative financing slutins is an imprtant cmpnent, which must be addressed t supprt SMEs. State-Owned Enterprises: U.S. businesses in Vietnam face cmpetitin with statewned r state-influenced entities that have created significant distrtins in the terms f cmpetitin in the glbal marketplace. Rather than perating n nrmal cmmercial terms, these cmpanies are accuntable primarily t their gvernments. Far t ften, gvernments and these state-influenced entities chse t discriminate against imprted gds in dergatin f their cre trade bligatin t prvide treatment n less favrable than that accrded t dmestic like prducts. They als ften have related cmpanies in their crprate grup fr prcurement f essential gds and services, and unclear rules fr determining prfitability. Cmpeting with these cmpanies places an asymmetrical burden n U.S. cmpanies and wrkers. The TPP negtiatins are an pprtunity t stem this prblem by establishing the principle that gvernments may nt accmplish thrugh their cntrl f state-influenced entities trade-distrting plicies that the TPP wuld prhibit them frm impsing by gvernmental actin. There is n single fix fr this cmplex issue, and we recmmend that it be addressed thrugh a variety f measures: First, the basic natinal treatment bligatin in the TPP shuld explicitly capture state influenced entities and bind them in a similar manner as it binds a gvernment s laws, taxes, and regulatins. The natinal treatment bligatin is the principal discipline fr fighting trade discriminatin, and it shuld be clear t TPP Members that the actins f state-wned r influenced entities will be held t the same standard as ther state actin. Secnd, the TPP shuld cntain a general discipline n the use f state-wned r influenced entities t circumvent Parties general bligatins under the TPP r therwise t distrt trade, including nt nly natinal treatment f gds, but als nn-discriminatin in regulatry plicy, access t markets, etc. Gvernment Prcurement : The inclusin f a nine-cuntry equivalent t the GATT Gvernment Prcurement Agreement (GPA), cvering gds, services, and cnstructin services, shuld be a TPP gal. It is ne f the mre cmplex negtiatins, and the precedent f the GPA is that a GPA-type chapter and schedules in the TPP wuld becme a series f bilateral negtiatins between the nine cuntries. As between the U.S. and Vietnam, pening sme key Vietnamese prcurement sectrs t U.S. cmpanies represents a critical part f the TPP negtiatin. It shuld cver central gvernment and prvincial and municipal entities, including public utilities. Infrastructure lms as Vietnam s key need in this area, but it is by n means the nly area; amng the sectrs that U.S. cmpanies have identified as imprtant t their invlvement are: rads, railways, seaprts and airprts, hspitals and majr medical facilities, majr public wrks such as water, electricity and thers. TPP criteria shuld require that cntracts shuld be awarded n the basis f bjective criteria that ensure cmpliance with the principles f transparency, nndiscriminatin and equal treatment and which guarantee that tenders are assessed in cnditins f effective cmpetitin. As a result, it is apprpriate t allw the applicatin f tw award criteria nly: the lwest price and the mst ecnmically advantageus tender. Address Envirnmental Issues: In supprt f addressing climate change, gvernments shuld encurage mre efficient generatin, transmissin, distributin and use f electricity, and shuld enact plicies t prmte the installatin f high efficiency pwer 5
generatin including waste heat recvery, cmbined heat and pwer, intelligent grids, smart meters, lw energy use buildings and efficient appliances t achieve this bjective. Such plicies shuld take int cnsideratin ways and means by which private sectr financing can be facilitated in rder t supprt energy efficiency. TPP shuld incrprate strng prvisins t eliminate barriers t trade in Envirnmental Gds and Services, require transparency in prcurement prcesses fr energy prjects, and prmte market access fr remanufactured gds. A successful TPP endrsement in Hnlulu, incrprating these measures, will be a win-win fr U.S. cmpanies, cnsumers thrughut Asia-Pacific, and the brader stability, integratin and prsperity f the entire regin. 6