So Long Saigon? Vietnam and the TPP

Growing out of the 2004 meetings of the Asia-Pacific Economic Cooperation forum, the development of the Trans-Pacific Partnership (TPP) went largely unnoticed by most policymakers until the entry of the United States in 2008. With the recent announcement of Japan’s entry into the agreement, the members involved in the negotiation of the TPP would be responsible for roughly a third of global trade and control over 39 percent of the world’s total GDP. With the stakes so high, disagreements among members should come as no surprise, and indeed the latest round of negotiations have reignited simmering trade disputes. Recently, the American negotiators have been haranguing their Japanese counterparts over autoworker unions and Canadian representatives have been defending their nation’s beleaguered dairy industry from all sides. What is, however, surprising has been the unusual amount of derision and vitriol piled on an otherwise relatively junior party to the negotiations: Vietnam.

Witnesses before Subcommittee on Terrorism, Nonproliferation, and Trade
Witnesses before Subcommittee on Terrorism, Nonproliferation, and Trade

At a recent hearing of the House’s Subcommittee on Terrorism, Nonproliferation, and Trade to discuss the impact of the TPP on the United States, members of both parties took time to criticize Vietnam, with Congressman Sherman (D-CA) decrying its “state-controlled economy” and Congressman Poe (R-TX) their inability to “treat their own people right”. While Vietnam endured less frequent criticism than Japan,  what it did suffer was arguably more damning, which leads to a simple question: Why is Vietnam, whose contribution to total TPP GDP is less than half of one percent, receiving so much attention? Although a number of explanations abound, they seem to fall into one of two categories; legitimate Vietnam-specific concerns and proximate issues to which Vietnam is only tangentially related.

Although it is the intention of this piece to suggest that many of the arguments against Vietnam’s inclusion in the TPP are unduly harsh, there are legitimate grievances that should be addressed before negotiations are concluded. As intimated by several members of the subcommittee, the Socialist Republic of Vietnam does retain some of the features of its communist past, including a single party government and a socialist-oriented market economy. While the adoption of liberalization and privatization reforms—most notably the Đổi Mới policies—has helped move the country towards greater productive capacity and higher standards of living, Vietnam’s economic freedoms still lag behind much of the world, with Vietnam placing an abysmal 144 out of 177 on the 2013 Index of Economic Freedom. Worse still, the government of Vietnam has continued to stifle civil liberties and human rights through its grotesque suppression of political dissent, its targeting of religious activists, and the unchecked advance of government censorship.

While these issues represent legitimate concerns, there also exists a number of issues that are less legitimate. These issues are not directly based on Vietnam’s policies. Rather, legislators are using Vietnam as a scapegoat for nations that are not a party to the negotiations. It is at this point that the elephant out of the room needs to be addressed: the absence of China in the TPP. China’s absence can mostly be explained by two factors: the hesitancy expressed by the Asian nations that initiated the TPP regarding  China’s rise, and China’s hesitancy to join agreements which emphasize protections for intellectual property and the harmonization of financial regulations. Even with China’s absence, many legislators see the TPP as embodying what they view as the evils of globalization, evils which in turn are commonly associated with trade between the United States and China.

While the validity and degree of these evils is hotly contested, what is important is that without an immediate Chinese presence with which to pin their arguments, critics are forced to find an alternative target. Unfortunately for Vietnam, it shares enough superficial qualities with China to fit the bill. Technically communist? Check. Reliance on cheap labor? Check. Use of state owned industries (SOEs)? Check. What is lost during this process, however, is reality. While Vietnam is indeed a single-party state, the country has shown an increasing preference for market systems. And while Vietnam’s SOEs do account for over 27% of GDP, this pales in comparison to the 60% share of GDP dominated by their Chinese counterparts. Thus, while they may share some cursory similarities, the gravity of many of the sins laid at Vietnam’s feet are hardly proportionate to the nation’s actual faults.

It is hard to view many of the proceedings and hearings without feeling that some of the animus against Vietnam is politically motivated. That being said, the logic behind using Vietnam politically is easy to understand, if ultimately short sighted. For instance, when policymakers and negotiators chastise Vietnam for currency manipulation—a practice which it discontinued roughly a decade ago—their true target isn’t Vietnam, but rather nations that are either absent, such as China, or nations that politicians are wary of confronting directly, such as Japan. What makes this practice short-sighted is that it risks contaminating the spirit of the negotiations. Indeed, the entire point of these negotiations is to divorce trade—and by extension people’s well being—from political fluctuations. While it may be worth engaging in a bit of political posturing to move the negotiations along, political actors of all stripes should be careful to ensure that they don’t compromise that which they are working to save.


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