Tag Archives: tpp

L’impact de l’initiative “La Nouvelle Route de la Soie” sur le développement de l’infrastructure au Vietnam

Peu abordé au Vietnam, “La Nouvelle Route de la Soie” est le sujet de ma présentation lors d’un colloque sur les PPP organisé par la Chambre de Commerce et d’Industrie France-Vietnam et L’Association des Juristes en Coopération Economique et Affaires Internationales (AJCEAI) le 2 mai 2018 à l’Institut Français de Hanoi. OBOR-Vietnam Infrastructures-AJCEI-2018-05-02-S

VIETNAM – AUTOMOTIVE SECTOR – CURRENT ISSUES AND SOLUTIONS FOR INVESTMENT AND OUTLOOK ON MAJOR TRADE DEALS TPP11 AND EUVNFTA

A. ISSUES AUTOMOBILE SECTOR

1. Small production and competition
2016, the Automobile market in Vietnam reached over 300,000 units (consisting of: 230,000 CKD and 70,000 CBU vehicles). However, the overall production only covers around 50% of the total capacity. Furthermore, investors do not decide to invest in long –term project due to big fluctuations in the past and the lack of a stable market. It is very risky for suppliers to invest in high investment producing parts due to disadvantages of small production. These high prices on parts manufactured locally is affecting the competition between local parts and imported parts. As a result, many suppliers cannot afford and sustain the production in the Vietnamese market.
Moreover, with the lack of local manufactured parts available in Vietnam, CKD vehicle assemblers need to import the most parts and materials which is causing higher costs due to logistics, packaging and import duty. Thus, these conditions are opening a gap between Vietnam CKD vehicles and CBU vehicles from about 10-20%.

2. Critical delivery capability of suppliers
A fully assembled car is consisting of hundreds of parts. As a result, car assemblers need a well-structured supply chain meeting their supply requirements. In Vietnam, many Vietnamese suppliers cannot provide materials in the required QCD standards for being able to take part in the international supply chain. Furthermore, the technology transfer, the right on use of patents, licensing agreements and copywriting permits are still required and not developed enough to ensure supply in global standard. Moreover, the safety standards for 4-wheel parts production is not developed as required yet.
In addition, the government is not developing well-supporting policies or measures to ease the production and trade for suppliers. In the last years, the government issued supporting decrees but they contain complicated procedures. There is no list provided containing information about all relevant suppliers available in Vietnam. As result, it is very difficult for companies to find all needed suppliers to ensure efficient production.
Further policies for stabilizing the market are to be made. Countermeasures and infrastructure development is a very important aspect to improve current issues. Moreover, the production cost cap and the gap between CBU and CKD vehicles need to be narrowed by setting new regulations or enforcing policies. Lastly, the government needs to give incentives to attract investments to support the development of the automobile sector.
Suppliers should try to go in cooperation with foreign suppliers for transferring technology to Vietnam and take part in databases for suppliers. National suppliers have to listen to international companies to develop the understanding of vehicle assemblers and their requirements. If assemblers find supplier companies understanding their needs and they are able to operate in the way of those needs, new investments will be attracted in the future.

3. Issues with Decree 116/2017/n33-CP on requirements for automobile supplier, importer, manufacturer and automobile aftersales guarantee and maintenance
a. Article 6, clause 2 point a rules that CBU importers must submit vehicle type approval certificate (VTA) and COP factory certificate. These have to be issued from the overseas authority. This is a major issue due to every agency is following national regulations and is adjusting their work to domestic requirements. It is unbearable to demand that suppliers must adjust work on regulations to each export country. In addition, there is no VTA authority in some countries (for example: Korea), so that, the VTA certificate cannot be issued to CBU importers in these countries. As result, the requirement of certificates’ issuance is a major reason for slow development of the automobile sector. Thus, Vietnam is limiting market access to some foreign investors in a very critical way. Furthermore, tests on safety and emission will be conducted of every single CBU shipment. This provision will highly increase the production time. However, the requirement of testing each shipment should be amended due to lack of necessity. Moreover, the government should start accepting the UNECE certificate. It is an internationally accepted certificate while it is meeting the Vietnamese requirements as well. In addition, the government needs to act as fast as possible to create transparent and stable environment for investors and their businesses in the automobile sector due to recent production cancellations of some enterprises on import of CBU vehicles.
b. Article 7, clause 1, point a provides the requirement of test roads with 800m length for CKD makers by 17 April 2019. The requirement of owning a test road is a huge financial burden, even renting test roads is very expensive and most producers are not owning test roads or do not have so much land available for that use.

B. ISSUES MOTORCYCLE SECTOR

1. Intellectual property
Intellectual property infringement is not only a small deal in Vietnam. Many Illegal imitations of motorbikes and parts, for example, Honda or Piaggio are manufactured in Vietnam. This is causing bad impacts on business and consumers due to lack of quality of imitated vehicles or parts of it. Furthermore, decreasing prestige and competitiveness are notable consequences of intellectual property infringement. There have to be further regulations on protection of intellectual rights and guidelines on enforcing these rights should be provided soon.

2. Increase of VAT
The increase of VAT from 10 to 12% on purchase of motorcycles is planned. Still, the motorbike is the main transportation vehicle used by Vietnamese in cities and rural areas. The increase of VAT will lead to worse socio-economy growth, thus, the government again should overthink the necessity of this planned measure.
C. OUTLOOK ON MAJOR TRADE AGREEMENTS TPP 11 AND EUVNFTA
In January 2017, US President Donald Trump decided to withdraw from the US’ participation in the TPP. In November 2017, the remaining TPP members met at the APEC meetings and concluded about pushing forward the now called CPTPP (TPP 11) without the USA. The agreement shall be signed by all member states by the first quarter of 2018. After that, it has to be ratified in each member state before taking effect.

The effects of the TPP 11 promising great benefits for the automotive sector in Vietnam. The TPP 11 is targeting to eliminate tariff lines and custom duties among member states on certain goods and commodities to 100%. Due to mostly high tariffs on vehicles, the TPP will impose great impact on production, business and trade flows. For ensuring the better market access under the TPP, suppliers must satisfy the regional value content requirements (RVC), thus, Vietnam will have to adjust regulations to ensure the satisfaction of the requirements of the TPP. As a result, Vietnam will be more competitive, but also be able to offer international standards to foreign investors.

One another notable major trade agreement is the EUVNFTA between the European Union and Vietnam. The EUVNFTA offers great opportunity to access new markets for both the EU and Vietnam. It will help to bring more capital into Vietnam. In addition, the EUVNFTA will boost the most economic sectors in Vietnam. In particular, the agreement will impose new foreign direct investment in Vietnam but there still remain problems regarding lack of infrastructure and low technology. On the other hand, it will also give the chance for better transfer of technology from Europe to Vietnam. Furthermore, the low labor costs in Vietnam are a big advantage for European investors to do business in the automotive sector in Vietnam.

Furthermore, the Investor State Dispute Settlement (ISDS) will ensure highest standards of legal certainty and enforceability and protection for investors. We alert investors to make use of these standards! We can advise how to best do that! It is going to be applied under the TPP 11 and the EUVNFTA. Under that provision, for investment related disputes, the investors have the right to bring claims to the host country by means of international arbitration. The arbitration proceedings shall be made public as a matter of transparency in conflict cases. In relation to the TPP, the scope of the ISDS was reduced by removing references to “investment agreements” and “investment authorization” as result of the discussion about the TPP’s future on the APEC meetings on 10th and 11th November 2017.
Further securities come with the Government Procurement Agreement (GPA) which is going to be part of the TPP 11 and the EUVNFTA.
The GPA in both agreements, mainly deals with the requirement to treat bidders or domestic bidders with investment capital and Vietnamese bidders equally when a government buys goods or requests for a service worth over the specified threshold. Vietnam undertakes to timely publish information on tender, allow sufficient time for bidders to prepare for and submit bids, maintain confidentiality of tenders. The GPA in both agreements also requires its Parties assess bids based on fair and objective principles, evaluate and award bids only based on criteria set out in notices and tender documentation, create an effective regime for complaints and settling disputes, etc.
This instrument will ensure a fair competition and projects of quality and efficient developing processes.

***
If you have any question on the above, please do not hesitate to contact Dr. Oliver Massmann under omassmann@duanemorris.com . Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

Thank you very much!

Vietnam – Agriculture Sector – Current Issues and Solutions for Investment and Outlook on Major Trade Deals TPP 11 and EUVNFTA

A. OVERVIEW AGRICULTURE SECTOR VIETNAM

Since 2016, the exports of many products in the agriculture sector in Vietnam has strongly increased. On the other hand, the agriculture sector is still vulnerable as shown in the past due to its limited development.
The development of the agriculture sector in Vietnam needs to come on track to solve the important issue on shifting from price to quality to ensure sustainable growth as backbone sector of Vietnam’s economy.
However, to ensure high quality products, Vietnam needs to make changes.
Firstly, the use of prohibited chemicals during breeding, preservation, digestion needs to be enforced and controlled by state authorities. The stricter control of raw materials before digestion and the manufacturing standards are further issues that need to be addressed to make the agriculture competitive with international players. Furthermore, the transformation of the domestic Vietnamese agriculture into a self-sufficient sector is another important step that needs to be realized.
In addition, to ensure sustainability, growth and for protection against crisis, farmers need to earn stable income, the farmers’ carbon footprints need to get reduced and the production must be adjusted to the requirements of the consumers and demand in the market.
However, for solving these problems, long term solutions need to be enrolled, those can be (i) increased food safety, (ii) diversification of products, (iii) improvement of regulatory environment, (iv) observing costs and improved finance, (v) the dependence on China in fruits, vegetables and pork meat must be addressed due to caused problems in the past.
On the other hand, Vietnam’s export of dragon fruit to Australia and export of poultry to Japan shows capability of Vietnamese exports meeting high safety requirements.
If the current issues can be addressed in the future, Vietnam’s exports in agriculture sector will show sustainable growth in the future.

B. ISSUES

1. Traceability and safeguarding of products
Vietnamese and international consumers are concerned about quality and safety of the food they are purchasing.
Currently, there are no well-developed traceability systems of the government for agricultural products in force. This is leading to significant consequences for the competitiveness in production. Further, the potential of product improvement is reduced, exports and market access is limited.
In Addition, the safety for consumers is deceased leading to low satisfaction of consumers.
As result of the existing issues, there are almost no financial incentives for improvement of processes.
However, now, it is possible for the Ministry of Agriculture and Rural Development (MARD) to monitor animal movements with the help of the Department of Animal Health for protection against diseases of animals.
Furthermore, the Ministry of Industry and Trade and the Department of Livestock Production improved systems for better protection and regulation of unofficial imports of products from other countries. This monitoring system shall also improve competitiveness and market accessibility in foreign countries.
On the other hand, these issues can only be fully addressed if obtained in regulations. TE Food System is operating a traceability system helping the authorities in HCMC and surrounding provinces on monitoring movements of pigs. This system is embedded in Decision 6079/QD. This year, the system was extended to eggs (Decision 3583/QD), chicken and poultry (Decision 3584/QD). Further extension to fruits, vegetables and beef are planned.
Nevertheless, these systems not only grant possibility on making regulations, it also can lead to reduced corruption due to better possibility to control.
For addressing the issue best, the systems should be improved on including the whole agriculture sector for ensuring sustainable growth, a fair and well-developed competition between national famers and international farmers as well as good market access.

2. Management of Plant Protection Products and its approach to regulation based on science
On 6th August 2015 the Circular No. 21/2015 was released. It is addressing Management of Plant Protection Products.
However, it contains provisions that could turn out as dangerous to the economy, environment and to the farmers as displayed in the following:
The circular contains provision about no registration and the banning of pesticides falling under GHS Category 3 and 4 in area of vegetable, tea and fruit. Further, the banning and no registration of crop protection products for use with vegetables, tea and fruit with having PHI bigger than seven days of use.
There is no scientific approach behind these provisions. As result, they could ban the availability on technologies for farmers in Vietnam operating in vegetable, tea and fruit.
Furthermore, these provisions lead to a significant competitive disadvantage to the agriculture sector. In addition, they contain specific risks to the environment, consumers and domestic economy due to the potential prohibition of the most-developed technologies bringing biggest amount of safety against diseases and climate issues to the consumer and possibility of productivity to farmers.
These provisions should not be adopted due to lack of science-based approach. Vietnam should handle this issue as other countries in southeast-Asia did.

3. Import and Export of Plants and Seeds
The import of plants and seeds can be done online in Vietnam. The purchased seeds have to be registered before the import can be successful. In cases where the online application file does not fit with the registration requirements, the import is delayed until registration is successful.
Enterprises need to be provided with sufficient information or guidelines to accelerate the import processes and for excluding delays in imports. On the other hand, export cannot be done online, thus, exports of plants and seeds need an insufficient amount of time.
The online export should be made possible for more efficiency in Vietnam.

4. Legal environment on banned substances and reduction of Antimicrobial Resistance
The last issue addresses the enforcement of regulations on bans and limitations regarding substances and the reduction of Antimicrobial Resistance. The use of antibiotics in animal nutrition can have various good effects such as prevention of diseases or treatment against them. On the other hand, it has bad impact on the consumer by means of the human body is building resistance against antibiotics leading to significant health risks for consumers.
As result, Vietnamese lawmakers have made big efforts to enforce existing regulations regarding to violations on the use of banned antibiotics and other substances.
Several circulars have been provided containing a list of prohibited chemicals and antibiotics on import, use in livestock and trading. However, the Circular No. 28/2014/TT-BNNPTNT is only addressing a few types of banned antibiotics and substances. After releasing the circular, many farmers concluded about reducing the use of antibiotics in animal nutrition and tried to replace them with alternative substances. Therefore, the government should endeavor research activities on alternative treatments and substances.
Another important measurement for enforcing the regulations were urine test kits for scanning on prohibited substances and uncovering violations against the regulations. Violations can lead to hard penalties up to the obligation on killing all animals on the farm. As result, it was possible to reduce the overuse of prohibited substances.
Moreover, the mass usage of antibiotics is leading to Antimicrobial Resistance (AMR). According to the WTO, AMR is a huge global problem and estimated to be main cause of death by 2050 in Vietnam. Further, the economic costs will be USD 100 trillion!
However, in 2015, the four competent Vietnamese Ministries, Development Partners and a National Steering Committee signed an Aide Memoire as action plan against misuse and control of antibiotics in the livestock production and aquaculture. Vietnam should adopt measurements and strategies from other countries to address these issues in a successful way and to ensure strict enforcement of existing regulations. Further, biosecurity, monitoring, genetics, nutrition and control are other aspects that have to be addressed to grant safe products to the consumer without major health risks and to reduce AMR.

C. OUTLOOK ON MAJOR TRADE AGREEMENTS TPP 11 AND EUVNFTA

In January 2017, US President Donald Trump decided to withdraw from the US’ participation in the TPP. In November 2017, the remaining TPP members met at the APEC meetings and concluded about pushing forward the now called CPTPP (TPP 11) without the USA. The agreement shall be signed by all member states by the first quarter of 2018. After that, it has to be ratified in each member state before taking effect.
The effects of the TPP 11 promising great benefits for the agriculture sector in Vietnam and will support Vietnam’s national agriculture transforming into a self-sufficient and competitive sector. The TPP 11 is targeting to eliminate tariff lines and custom duties among member states on certain goods and commodities to 100%. As a result, international products will arrive at the Vietnamese market, so that, the Vietnamese livestock should use the given time for restructuring but also for becoming competitive and creating efficient environment for international investments.
With the National and Most-Favored Nation Treatment principle, the TPP is ensuring a fair competition which will attract new foreign investments as well as support for the agriculture sector in its restructuring process.
Moreover, national farmers must adopt high-developed technologies in nutrients and animal healthcare to be competitive. This will lead to more safety and trust of the consumer in the agriculture market in Vietnam.

One another notable major trade agreement is the EUVNFTA between the European Union and Vietnam. The EUVNFTA offers great opportunity to access new markets for both, the EU and Vietnam. It will help to bring more capital into Vietnam. In addition, the EUVNFTA will boost the most economic sectors in Vietnam. Moreover, the agreement will eliminate 99% of tariffs on agricultural products leading to huge dynamic in the sector and Vietnam will get the chance on adopting technology from the European Union.
Furthermore, the Investor State Dispute Settlement (ISDS) will ensure highest standards of legal certainty and enforceability and protection for investors. We alert investors to make use of these standards! We can advise how to best do that! It is going to be applied under the TPP 11 and the EUVNFTA. Under that provision, for investment related disputes, the investors have the right to bring claims to the host country by means of international arbitration. The arbitration proceedings shall be made public as a matter of transparency in conflict cases. In relation to the TPP, the scope of the ISDS was reduced by removing references to “investment agreements” and “investment authorization” as result of the discussion about the TPP’s future on the APEC meetings on 10th and 11th November 2017.
Further securities come with the Government Procurement Agreement (GPA), which is going to be part of the TPP 11 and the EUVNFTA.
The GPA in both agreements mainly deals with the requirement to treat bidders or domestic bidders with investment capital and Vietnamese bidders equally when a government buys goods or requests for a service worth over the specified threshold. Vietnam undertakes to timely publish information on tender, allow sufficient time for bidders to prepare for and submit bids, maintain confidentiality of tenders. The GPA in both agreements also requires its Parties assess bids based on fair and objective principles, evaluate and award bids only based on criteria set out in notices and tender documentation, create an effective regime for complaints and settling disputes, etc.
This instrument will ensure a fair competition and projects of quality and efficient developing processes.
***
If you have any question on the above, please do not hesitate to contact Dr. Oliver Massmann under omassmann@duanemorris.com . Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

Thank you very much!

Outcomes of APEC – the TPP is dead, long live the CPTPP

As the dust settles and Vietnam returns to some semblance of normality following this year’s APEC summit, regional business leaders and investors are left to consider the consequences of the forum.

 

This year marks the second time that Vietnam has hosted the APEC summit, and the event was largely considered a success for the country. Vietnam was placed in a difficult position, between the competing interests of the United States and China, requiring a deftness in diplomacy.

 

Most media outlets were more concerned with President Trump and what would be his first appearance at a multilateral forum in the Asia-Pacific region. Widely-expected faux pas did not materialise, but neither did much news on the US’ position towards the region. Trump’s keynote speech was short on surprises, following familiar themes of protectionism, isolationism and criticism of predatory economic policies. Essentially, the speech underlined what we already know – that under the Trump administration the US would be taking a step back from the Asia-Pacific region and trade will need to be conducted on a bilateral basis.

 

In a marked contrast to the American tirade, China’s President Xi Jinping presented himself as a champion of economic openness and globalisation. Xi espoused a vision in support of a multilateral trade regime, and received hearty applause in return from the amassed delegates.

 

Putting his words into practice, Trump’s subsequent stop in Hanoi saw the signing of US$12 billion in commercial deals, including in the natural gas, transport and aviation sectors. In particular, national carrier Vietnam Airlines signed a deal worth US$1.5 billion for engines and support services from US firm Pratt & Whitney.

 

Despite the very different stalls set up by the attendant superpowers, Vietnam managed to balance itself somewhere in between. In a joint statement, Vietnamese President Tran Dai Quang and Trump reaffirmed the importance of the countries’ Comprehensive Partnership, and agreed to promote bilateral trade and investment.

 

Vietnam also stood in support of Xi’s signature policy, the Belt and Road Initiative. Specifically, both sides agreed to enhance economic and trade cooperation, with a particular focus on infrastructure.

 

Regional and international media praised Vietnam’s hosting of the summit and the final Economic Leaders’ Week, highlighting the country’s commitment to economic integration, sustainable growth and support for micro, small and medium enterprises (MSMEs). In the eyes of many, Vietnam has cemented its position at the centre of APEC’s economic structure. The country took advantage of the opportunity to enhance its prestige in the international arena and show others the strides it has made in development since it last hosted APEC.

 

Resurrecting the TPP

 

Trump’s election last year seemed to herald the demise of the Trans-Pacific Partnership (TPP), at least in its current form. Without US support, the trade agreement was surely destined to be forgotten or watered down to the point where it becomes worthless.

 

The US withdrawal failed to dampen enthusiasm for the trade pact, however, with Japan and Australia strongly advocating the continuation of talks, and protecting the gains made in the original TPP negotiations.

 

Following discussions in Danang, the 11 countries still backing the TPP agreed to its resurrection, and renaming, as the Comprehensive Progressive Agreement for the TPP (CPTPP). The move represents a clear rebuke to Trump’s ‘America First’ focus on bilateral deal-making. Despite a last-minute wobble from Canadian Prime Minister Justin Trudeau, the members agreed on keeping core elements of the original deal that would advance open markets, combat protectionism, and strengthen regional economic integration.

 

Vietnamese leaders were certainly sorry to see the US turn its back on the TPP; knowing that access to American markets would have brought significant economic benefits. Although a deal is better than no deal, the CPTPP is expected to have a more modest impact on the nation’s economic future.

 

The National Center for Information and Forecasting predicts that under the CPTPP, Vietnam’s GDP could increase by 1.32 percent, compared to a potential 6.7 percent with the TPP. Similarly, the export growth rate is estimated at 4 percent, instead of the 15 percent previously. If the CPTPP is ratified, Vietnam would also be able to expand its export markets, with opportunities to reach Canada, Mexico and Peru.

 

Nevertheless, there is still room for the CPTPP to be derailed – the pact requires domestic ratification by each member economy. While Japan has already done so, other members, particularly Canada, could require longer to officially validate the pact.

 

There are, however, reasons to be optimistic. Many were certain the US withdrawal would be the death knell for trade pacts like the TPP, only to see America’s Asia-Pacific allies regroup and move forward on their own. There is clear commitment to regional economic integration, with or without America’s blessing.

 

A multilateral trade deal would provide much-needed clarity for businesses, especially smaller ones, in entering new markets. Universal standards would make life a lot easier for the region’s many MSMEs looking to expand their operations across borders. Those working in the digital sector would benefit from a framework on data security, privacy, intellectual property and e-commerce.

 

Even after Trump withdrew the US from the TPP, the original template survived almost wholly intact. The bar remains high, and the remaining members now have the opportunity to hash out a progressive framework for continued economic growth.

 

Although Donald Trump received the most attention in Danang, the main achievement of APEC may be the reanimation of a deal he sought to kill. This time the harsh rhetoric may have had an unintended consequence – pushing the region even further towards economic integration and free trade.

 

For more information about doing business in Vietnam, please contact Giles at GTCooper@duanemorris.com or any of the lawyers in our office listing. Giles is co-General Director of Duane Morris Vietnam LLC and branch director of Duane Morris’ HCMC office.

VIETNAM – BOOM TIME – The Trans Pacific Partnership Agreement now becomes the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership – What is next?

 

Overview on the Trans Pacific Partnership Agreement (TPP) – now the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP)

The TPP was originally known as the Trans- Pacific Strategic Economic Partnership concluded in 2006 among Singapore, New Zealand, Chile and Brunei (P-4 agreement) as a means to promote trade liberalization in the Asia- Pacific Region. As its name indicates, the original purpose of the agreement was only to address economic issues. As the number of participating countries in the P-4 agreement increased, starting with the United States in September 2008 and other countries to follow being Australia, Peru, Vietnam, Malaysia, Canada, Mexico and Japan until July 2013, the agreement is agreed to be “a comprehensive, next-generation regional agreement that liberalizes trade and investment and addresses new and traditional trade issues and 21st-century challenges” by TPP Trade ministers. In June 2015, the United States approved the trade promotion authority for President Obama. The Agreement finally becomes as it is today through tough negotiation rounds, while the last round in Atlanta in September 2015 was considered the most intensive one. The TPP was already concluded on 06 October 2015. However, in January 2017, right after President Trump took his office, the United States formally expressed its withdrawal from the agreement, leaving other 11 parties with the decision to continue the agreement without the United States or not. In November 2017, during APEC meeting in Da Nang, Vietnam, ministers from 11 countries decided to push ahead with the TPP with its new name – CPTPP with only 20 items suspended out of an around 5000-page document, mainly in the Intellectual Property chapter.

CPTTP will help Vietnam make good use of international cooperation opportunities, balance relationships with key markets, approach larger markets including Japan and Canada, boost import-export, reduce import deficit, and attract foreign investment. In addition, CPTTP will also help Vietnam’s economy allocate its resources more effectively, enabling active supports to the processes of restructuring, innovation and improving regulations, and improve administrative reforms.

What makes CPTPP the template for next-generations trade agreements – What are beyond the WTO?

Freer trade zone

Commitments in Trade in goods

Tariff and non-tariff barriers are reduced and removed substantially across all trade in services and goods under the CPTPP. Import tariffs are reduced for 100% goods traded among member states, with more than 90% being eliminated immediately when the Agreement takes effect. The CPTPP also covers issues which have never been addressed in the WTO, including export duties, import duties for re-manufactured goods, market access for re-furbished goods, stricter regulations on import and export licensing, monopolies and goods in transit.

Lower tariff barriers from the CPTPP will give Vietnam greater access to large consumer markets in Japan, Canada and Australia. The potential positive effect on trade could be transformative, with estimates that the CPTPP will boost Vietnam’s exports by over 37% until 2025.

Commitments in Trade in services and Investment

All 11 member states give consent to a liberalized trade in this area. More sectors are opened in the CPTPP compared with the WTO, such as telecommunications, distribution and manufacturing sectors.

In addition, besides incorporating basic WTO principles (national treatment (NT), most-favored nation treatment (MFN), market access, and local presence), the CPTPP takes a negative approach, meaning that their markets are fully open to service suppliers from other CPTPP Parties, except otherwise indicated in their commitments (i.e, non-conforming measures). In order to make such reservations, the member state must prove the necessity of such preservation and negotiate with other member states. If approved, the non-conforming measures are only limited to such list, except for measures in certain sensitive sectors which are included in a separate list. Member states are only allowed to adopt policies that are better than what they commit (ratchet principle). The CPTPP also includes obligations on removal of performance requirements (i.e., no conditions on local content requirements, export conditions, use of certain technology, location of the investment project, etc.) and reasonable requirements on senior management and board of directors. Notably, the CPTPP Chapter on Investment for the first time makes it very clear and transparent concerning the MFN principle, that countries operating in multi-state regime must give foreign investors the best investment conditions of all states, regardless of the state where the investment takes place. Investors are also allowed to petition against the Government from the investment registration stage.

Textiles

Textiles are among Vietnam’s core negotiating sectors. According to suggestions by the United States, negotiations on textiles were conducted separately from negotiations on market access for other goods. To be qualified for CPTPP preferential tariff treatment, the CPTPP applies the yarn-forward principle, meaning textile products must be produced in CPTPP countries from yarn forward. However, the CPTPP includes exceptions that allow (i) certain materials to be sourced from outside CPTPP (“Short supply list”), (ii) certain manufacturing phases (for example, dying, weaving, etc.) to be conducted outside CPTPP; and (iii) one country to be able to use non-CPTPP materials in exchange for its export of certain textile goods to another country.

Government procurement

The CPTPP makes a list of government entities and agencies whose procurement of a particular̉ goods and services at a particular amount must be subject to public tender. This chapter includes NT and MFN principles, removes tender conditions favoring local tenders such as using local goods or local suppliers, conditions on technology transfer or two-way trade and investment, etc. These rules require all parties, especially Vietnam, in the context of China’s bidders predominantly win the bids with cheap offer price but low-quality services, to reform their bidding procedures and protect their own interests by disqualifying tenders with poor performance and low capacity.

Investor-State Dispute Settlement

The CPTPP aims at protecting investors and their investment in the host country by introducing requirements on non-discrimination; fair and equitable treatment; full protection and security; the prohibition of expropriation that is not for public purpose, without due process, or without compensation; the free transfer of funds related to investments; and the freedom to appoint senior management positions regardless of nationality. For the first time investors may sue the Government for its violation of investment-related commitments.

CPTPP also includes procedures for arbitration as means of settling disputes between investors and the host state. It covers new provisions compared with existing agreements such as transparency in arbitral proceedings, disclosure of filings and arbitral awards, and participation of interested non-disputing parties to make amicus curiae submissions to a tribunal. Arbitral awards are final, binding and fully enforceable in CPTPP countries.

Application of the CPTPP and older/ existing agreements

Member states of the CPTPP acknowledge existing rights and obligations of each member under existing international agreements to which all CPTPP member states are parties (for example, the WTO Agreement, NAFTA, or bilateral agreements) or at least two member states are parties. In case there is any consistency between a provision of the CPTPP and a provision of another agreement to which at least two CPTPP member states are parties, these parties will consult with each other to reach a mutually satisfactory solution. Please note that the case where an agreement provides more favourable treatment of goods, services, investments or persons than that provided for under the CPTPP is not considered as an inconsistency.

Implementation deadline of the CPTPP

Brunei, Canada, Malaysia and Vietnam still have some outstanding issues, so further negotiations are necessary. Canada and Japan will also have to agree on auto rules in the CPTPP. However, negotiators have set the goal of signing the CPTPP in the first quarter of 2018. After that, all 11 countries will have to ratify it before it can come into effect.

***

Please do not hesitate to contact Dr. Oliver Massmann under omassmann@duanemorris.com if you have any questions or want to know more details on the above. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

 

THANK YOU !

 

 

Spotlight on APEC and Vietnam

While Vietnam’s central city of Danang is abuzz with preparations for the upcoming APEC Economic Leaders’ Week, and the much-anticipated visit by US President Donald Trump, businesses and investors are waiting for clearer signals on the US approach to the country and the region.

 

Unlike the visit of former president Barack Obama in 2016 and his administration’s ‘Pivot to Asia’ policy, Donald Trump has been less forthcoming about his stance on Southeast Asia. The moves that have been made – scrapping the Trans-Pacific Partnership (TPP) for example, heavily suggest the US is pivoting away again, and have seriously dented Vietnam’s free trade aspirations.

 

Some remain upbeat, saying that President Trump’s attendance at the APEC Economic Leaders’ Meeting in Danang this November is a positive sign, underscoring the US’s commitment to the partnership between the two nations and the region as a whole.

 

Trump’s speech at the summit will likely be the first articulation of his administration’s strategy towards the Asia-Pacific region. The White House has indicated a United States’ “vision for a free and open Indo-Pacific region.” The details of this vision will no doubt have a big impact on the way international businesses view the region in the years to come.

 

Planned meetings between Trump and Vietnamese leaders in Hanoi are hoped to continue the thawing of relations that was accelerated under the Obama administration. During Obama’s visit in 2016, the arms sanctions that had been in place for over five decades were lifted, effectively transforming Vietnam into one of the United States’ leading comprehensive strategic partners in the region. Companies from the two countries inked new commercial deals involving planes, engines and wind energy, worth more than US$16 billion. Now, Vietnam is a major trading partner and free-trade advocate.

 

Politically, it is hoped that some more flesh will be put on the bones of the US foreign policy towards Southeast Asia, particularly on subjects like the South China Sea.

 

Focus on free trade

 

Setting aside predictions on US behaviour, the summit in Danang will gather economic leaders of 21 APEC members to discuss issues of shared concern, including the future of trade in the region – an issue of heightened importance considering the demise of the TPP. APEC is a key trading bloc, comprising 39% of the world’s population, 59% of its GDP and 48% of its trade. It is also a proponent of free trade, and since its inception in 1989 average tariff rates among members have fallen by nearly two-thirds – from 13.3 per cent in 1989 to 5.1 per cent in 2015, while intra-regional trade has risen more than seven-fold. Vietnam’s average most-favoured-nations (MFN) tariffs declined from 18.5 per cent in 2007 to 9.5 per cent in 2015.

 

All APEC member economies have set trade and investment liberalisation as a priority, through reduced trade barriers and the promotion of the free flow of goods, services and capital among APEC economies.

 

The region as a whole has enjoyed strong economic growth, and Vietnam is considered an attractive investment location, with opportunities bolstered by an emerging middle class, a young population, a skilled labour force, competitive labour costs, strong GDP growth and a stable political climate.

 

Indeed, the trade liberalisation process encouraged by APEC is having a positive effect on FDI inflows into Vietnam. Japan in particular is showing a healthy interest, currently positioned as Vietnam’s second-biggest foreign investor, with 3,523 valid investment projects, registered at US$46.15 billion. Even without the TPP, Vietnam’s involvement in a number of other free trade agreements helps improve the country’s attractiveness to foreign investment.

 

If Vietnam continues adopting APEC-promoted institutional reforms, and thus reduces the fees and risks associated with doing business in the country, this attractiveness can only improve. Currently, more needs to be done to create a business-friendly investment environment and reassure businesses that trade and investment disputes can be resolved with little fuss. Reassuring investors is a key priority for Vietnam to maintain its growth trajectory. The successful involvement of the country in forums like APEC helps to present an image of economic stability and strong leadership underscores its commitment to issues raised at the summit.

 

All eyes on Danang

 

Through hosting the 2017 summit, Vietnam has the opportunity to showcase itself as a business tourism and conference destination. Discussions in Danang will seek to establish new drivers for economic growth and cement the role of APEC in tackling common challenges in the region. Vietnam’s position of leadership will enhance its stature on the world stage and initiatives raised could attract global interest.

 

Large-scale FDI projects from APEC members have already made significant contributions to Vietnam’s socio-economic development. Giants like Samsung, Intel and Honda have established a presence in the country and could consider increasing their investments. Smaller players may also see similar potential.

 

For local businesses, the APEC meeting presents a golden opportunity to promote trade and investment with foreign partners. Representatives from thousands of international enterprises are expected to descend on the beachside resort, allowing for prime networking and the establishment of partnerships. Vietnam’s investment climate has improved markedly since it last hosted the summit in 2006, so observers can expect even more deals to come out of Danang.

 

For more information about Vietnam and APEC, please contact Giles at GTCooper@duanemorris.com or any of the lawyers in our office listing. Giles is co-General Director of Duane Morris Vietnam LLC and branch director of Duane Morris’ HCMC office.

Rechtsanwalt in Vietnam Dr. Oliver Massmann DAS TRANSPAZIFISCHE PARTNERSCHAFTSABKOMMEN VERPFLICHTUNGEN ÜBER DEM LEVEL DER WTO – EINE ANALYSE

Überblick über das Transpazifische Partnerschaftsabkommen (TPP)

Das TPP wurde ursprünglich bekannt als „Trans-Pacific Strategic Economic Partnership“, das 2006 zwischen Singapur, Neuseeland, Chile und Brunei als „P-4-Abkommen“ abgeschlossen wurde als Mittel zur Förderung der Handelsliberalisierung im asiatisch-pazifischen Raum. Wie der Name schon sagt, war der ursprüngliche Zweck der Vereinbarung nur, ökonomische Fragen zu betreffen. Da die Zahl der teilnehmenden Länder in der P-4-Vereinbarung gestiegen ist, beginnend mit den Vereinigten Staaten im September 2008 (welche aber 2017 wieder terminiert haben) und anderen Ländern, wie Australien, Peru, Vietnam, Malaysia, Kanada, Mexiko und Japan bis Juli 2013 zu folgen, wird die Vereinbarung vereinbart “Eine umfassende, regionale Vereinbarung der nächsten Generation, die Handel und Investitionen liberalisiert und neue und traditionelle Handelsfragen und Herausforderungen des 21. Jahrhunderts anspricht” von den TPP-Handelsministern. Im Juni 2015 genehmigten die Vereinigten Staaten die Handelsförderungsbehörde für Präsident Obama. Die Vereinbarung endlich wird so, wie es heute durch harte Verhandlungsrunden ist, während die letzte Runde in Atlanta im September 2015 als die intensivste war. Die Verhandlungen zum TPP wurden bereits am 06. Oktober 2015 abgeschlossen. Im Februar kuendigten die USA das TPP worauf alle anderen Staaten sich einigten, das Schicksal des TPP im November 2017 endlich zu beschließen, wobei jetzt schon klar ist, dass die Mehrheit der Unterzeichnerstaaten das abkommen ratifizieren will (TPP11).

Der erfolgreiche Abschluss der TPP-Verhandlungen fügt Vietnam einer Gemeinschaft von 11 Nationen hinzu, die 28% des weltweiten Handels ausmacht.

Vietnam wäre der größte Profiteur dieses Handelspaktes. Das BIP in Vietnam würde eine sich zusätzlich um 13,6% steigern. Nach dem Weltwirtschaftsforum wird Vietnam voraussichtlich im Vergleich zu anderen TPP-Volkswirtschaften, RECP-Volkswirtschaften und RCEP-Volkswirtschaften die bedeutendste Veränderung des BIP im Jahr 2025 (d.h. 28,2%) aufweisen. Die Reallöhne von Vietnam werden bis 2025 ebenfalls voraussichtlich um 10,5% ansteigen, so dass Malaysias als zweithöchstes Einkommensaufsteigerland aus den TPP-Mitgliedern weit hinter sich gelassen werden wird.

Das TTP wird Vietnam dabei helfen, internationale Kooperationsmöglichkeiten zu nutzen, die Beziehungen zu den wichtigsten Märkten auszugleichen, sich größeren Märkten zu nähern, darunter Japan, Kanada, den Im- und Export zu steigern, das Import-Defizit zu reduzieren und ausländische Investitionen zu vergrößern. Darüber hinaus wird TTP auch dazu beitragen, dass die Wirtschaft Vietnams ihre Ressourcen effektiver nutzt und aktive Unterstützung der Prozesse der Umstrukturierung, der Innovation und der Verbesserung der Vorschriften ermöglicht und die Verwaltungsreformen verbessert.

Was macht das TPP zur Vorlage für kommende Vereinbarungen – Welche Verpflichtungen liegen außerhalb des WTO-Niveaus?

Die freiere Handelszone

Verpflichtungen im Handel mit Waren

Tarif- und nichttarifgebundene Handelshemmnisse werden im gesamten Handel mit Dienstleistungen und Waren im Rahmen des TPP erheblich reduziert und entfernt. Einfuhrzölle werden zu 100% für Waren reduziert, die zwischen den Mitgliedsstaaten gehandelt werden, wobei mehr als 90% sofort bei Abschluss des Abkommens beseitigt werden. Das TPP umfasst auch Fragen, die in Abkommen der WTO noch nicht angesprochen wurden, einschließlich der Ausfuhrabgaben, der Einfuhrzölle für Wiederverkäufe, des Marktzugangs für neu gestaltete Waren, strengere Vorschriften für Einfuhr- und Ausfuhrlizenzen, Monopole und Waren im Transit. Niedrigere Tarifbarrieren aus dem TPP geben Vietnam einen größeren Zugang zu großen Verbrauchermärkten in den USA, Japan, Kanada und Australien. Die potenziellen positiven Auswirkungen auf den Handel könnten transformativ sein, mit Schätzungen, dass das TPP die Ausfuhren Vietnams um über 37% bis 2025 steigern wird. Bemerkenswerterweise schloss Vietnam im August auch das Freihandelsabkommen mit der EU ab und ist somit dabei, Freihandelsabkommen mit drei seiner vier größten Exportziele – der EU, Japan und den USA – abzuschließen.

Verpflichtungen im Handel mit Dienstleistungen und Investitionen

Alle 12 Mitgliedsstaaten eröffnen die Möglichkeit eines liberalisierten Handels in diesem Bereich. Mehrere Sektoren werden im TPP im Vergleich zur WTO eröffnet, wie z.B. Telekommunikation, Vertrieb und Fertigung.

Darüber hinaus nimmt das TPP neben der Einbeziehung von grundlegenden WTO-Grundsätzen (nationale Behandlung (NT), Meistbegünstigung (MFN), Marktzugang und lokaler Präsenz) einen negativen Ansatz ein, so dass ihre Märkte für Dienstleister voll offen sind. Andere TPP-Parteien, soweit diese in ihren Verpflichtungen nichts anderes eingegangen sind (d.h. nicht- konforme Maßnahmen). Um solche Vorbehalte zu erheben, muss der Mitgliedsstaat die Notwendigkeit einer solchen Erhaltung und Verhandlung mit anderen Mitgliedsstaaten nachweisen. Bei der Genehmigung sind die nicht-konformen Maßnahmen nur auf solche Listen beschränkt, mit Ausnahme von Maßnahmen in bestimmten sensiblen Sektoren, die in einer separaten Liste enthalten sind. Die Mitgliedstaaten sind nur berechtigt, Maßnahmen zu ergreifen, die bereits besser sind als das bestehende (Ratchet-Prinzip). Das TPP schließt auch Verpflichtungen zur Beseitigung von Leistungsanforderungen ein (d.h. keine Bedingungen für lokale Anforderungen an Inhalte, Exportbedingungen, Nutzungen bestimmter Technologien, Standort des Investitionsprojekts usw.) und angemessene Anforderungen an die Geschäftsleitung und den Vorstand. Bemerkenswert ist, dass das TPP-Kapitel über Investitionen erstmals sehr klar und transparent im Hinblick auf das MFN-Prinzip ist, dass die Länder, die im Mehrstaatsregime tätig sind, den ausländischen Investoren die besten Investitionsbedingungen aller Staaten geben müssen, unabhängig von dem Staat, in dem die Investition findet statt. Investoren sind auch berechtigt, gegen die Regierung von der Investitionsregistrierung Anträge zu stellen.

Textilien

Textilien gehören zu den wichtigsten Handelswaren Vietnams. Nach Vorschlägen der Vereinigten Staaten wurden die Verhandlungen über Textilien getrennt von Verhandlungen über den Marktzugang für andere Güter geführt. Um für die TPP-Präferenzzollbehandlung qualifiziert zu sein, wendet das TPP das Stoff-Verarbeitungs-Prinzip an, d.h. Textilprodukte müssen in TPP-Ländern aus Stoffen vorbereitet werden. Allerdings enthält das TPP Ausnahmen, die es erlauben, dass (i) bestimmte Materialien von außerhalb TPP bezogen werden (“Short supply list”), (ii) bestimmte Fertigungsphasen (z.B. Färben, Weben usw.), die außerhalb von TPP durchgeführt werden sollen; Und (iii) ein Land, um Nicht-TPP-Materialien im Austausch für die Ausfuhr bestimmter Textilwaren in ein anderes Land verwenden zu können.

Staatliche Logistik

Das TPP macht eine Liste von Regierungsstellen und Agenturen, deren Logistik von bestimmten Waren und Dienstleistungen in einem bestimmten Betrag der öffentlichen Ausschreibung unterliegen muss. Dieses Kapitel enthält NT- und MFN-Prinzipien, entfernt bevorzugte Bedingungen, die lokale Ausschreibungen wie die Verwendung lokaler Güter oder lokaler Lieferanten, Bedingungen für den Technologietransfer oder den Zwei-Wege-Handel und die Investition usw. begünstigen. Diese Regelungen erfordern die Mitarbeit aller Parteien, insbesondere Vietnams, in Bezug auf Chinas Vorreiterstellung durch die vielen Angebote mit niedrigem Angebotspreis, aber qualitativ minderwertigen Dienstleistungen, ihre Gebotsverfahren zu reformieren und ihre eigenen Interessen zu schützen, indem sie die Angebote mit schlechter Leistung und geringer Kapazität disqualifizieren.

Streitbeilegung zwischen Investoren und Staaten

Das TPP zielt darauf ab, Investoren und ihre Investitionen in das Gastland zu schützen, indem sie Anforderungen an die Nichtdiskriminierung einführt; eine gerechte Behandlung einfordert; einen vollen Schutz und Sicherheit wahrt; das Verbot der Enteignung, das nicht für den öffentlichen Zweck, ohne ordnungsgemäßen Prozess oder ohne Entschädigung ist; die freie Übertragung von Mitteln im Zusammenhang mit Investitionen; und die Freiheit, Führungspositionen unabhängig von der Nationalität zu ernennen.

Das TPP enthält auch Verfahren für die Schiedsgerichtsbarkeit als Mittel zur Beilegung von Streitigkeiten zwischen Investoren und dem Aufnahmestaat. Es deckt neue Bestimmungen im Vergleich zu bestehenden Vereinbarungen wie Transparenz in Schiedsverfahren, Offenlegung von Einreichungen und Schiedssprüchen und die Beteiligung interessierter nicht streitender Parteien, um amicus curiae (lat. für: unabhängige Sachverständige) Entscheidungen zu erhalten.

Vereinbarkeit des TPP und älterer / bestehender Vereinbarungen

Die Mitgliedsstaaten des TPP erkennen die bestehenden Rechte und Pflichten jedes Mitglieds im Rahmen bestehender internationaler Vereinbarungen an, zu denen alle TPP-Mitgliedsstaaten Parteien sind (z.B. WTO-Abkommen, NAFTA oder weitere bilaterale Abkommen) oder von den mindestens zwei Mitgliedsstaaten Parteien sind. Im Falle einer Kollision zwischen einer Bestimmung des TPP und einer Bestimmung einer anderen Vereinbarung, auf die mindestens zwei TPP-Mitgliedsstaaten Parteien sind, werden diese Parteien miteinander eine gemeinsame zufriedenstellende Lösung erreichen. Bitte beachten Sie, dass der Fall in dem eine andere Vereinbarung eine günstigere Behandlung von Waren, Dienstleistungen, Investitionen oder Personen als die Behandlung des TPP vorsieht, nicht als Inkonsistenz angesehen wird.

Frist der Umsetzung des TPP

Am 04. Februar 2016 trafen sich die Handelsminister in Neuseeland, um das Abkommen zu unterzeichnen, damit es in den einzelnen Mitgliedstaaten im nächsten Schritt vor dem Inkrafttreten des Abkommens ratifiziert wird. Die TPP wird nicht wirksam, wenn nicht mindestens sechs Länder, die 85% des BIP des Blocks ausmachen, es ratifizieren. Laut dem Vietnamesischen Minister für Industrie und Handel, Herrn Vu Huy Hoang, wird erwartet, dass das TPP im Jahr 2018 in Kraft tritt auch ohne die USA! Dies wird auf dem APEC Treffen im November 2017 entschieden.

***

Bitte zögern Sie nicht, Herrn Rechtsanwalt Dr. Oliver Massmann unter omassmann@duanemorris.com zu kontaktieren, sofern Sie Fragen haben oder mehr darüber erfahren möchten. Dr. Oliver Massmann ist der Geschäftsführer von Duane Morris Vietnam LLC.

Vielen Dank!

 

 

 

 

 

ドナルド・トランプ氏への手紙 環太平洋経済連携協定 – 絶好のチャンスを逃す危機 オリバー・マスマン  ドウェイン・モリス・ベトナム法律事務所 代表

 

米国トランプ大統領

環太平洋経済連携協定(TPP)から離脱するという就任初日に出した声明に関して、TPP批准の可能性を再考して頂きたくお願い申し上げます。

TPPから離脱するということは即ち、米国は他のTPP諸国の政府調達へのアクセスを失うことになり、その額は1兆4,920億米ドルに上ります。TPPのように高い基準の政府調達規制は既存の国際協定にはどこにも見当たりません。その上、米国がTPPと同等の高い政府調達基準で二国間協定を締結するには、さらに10年を要する可能性があります。新たに交渉をする代わりにこのTPPを批准することで、米国は時間、労力そしてもちろん何十億米ドルを節約することができる為、非常に重要になるはずです。

以下の事実が今後の決断に役立ち、TPPがどのように米国を再び偉大な国にするのに役立つか明確に示してくれると我々は確信しています。興味をお持ちだと思うことは、米国が利益を得ることができるTPP加盟国の政府調達額が非常に高い点でしょう。

既にご存知のように、TPP諸国の人口は2015年7月時点で4億9,400万人を超えています。TPP諸国は2014年に米国の総輸出額の44.8%、また一般輸入額の37.6%を占めています。TPPに関する18,000品目以上の関税を削減することで、新しい市場に参入することが可能になれば米国の輸出入業者にとって大きなメリットになるでしょう。

米国の国際貿易委員会が推定したように、TPPにより米国の商品・サービスの世界への輸出は2032年までに272億米ドル増加し、米国の輸入は489億米ドル増加すると見込まれています。

次の表には各TPP諸国のデータが記載されており、米国の投資家が利用できる調達市場を示しています。

  GDP(米ドル) 政府調達のGDPのパーセンテージ(%) 政府調達の総額(米ドル)
オーストラリア 1兆5,600億 12.44 194,064,000,000
ブルネイ 114億7,000万 4.1 470,270,000
カナダ 1兆8,270億 13.34 243,721,800,000
チリ 1799億 2.9 5,217,100,000
マレーシア 3053億 25 76,325,000,000
メキシコ 1兆2,610億 5.16 65,067,600,000
ニュージーランド 1858億 14.56 27,052,480,000
ペルー 1926億 17.6 33,897,600,000
シンガポール 2741億 9.74 26,697,340,000
ベトナム 1714億 12.84 21,000,000,000 -22,000,000,000
日本 TPP批准済) 4兆9,200億 16.22 798,024,000,000

注釈、上記は2006年~2017年の期間のデータです。

上記に示したように、TPP諸国の政府調達額は総額1兆4,920億米ドルにもなります!

またそれらは古い数字です。多くの国は経済成長が著しい国となっています。現在の総額はさらに高いでしょう。

米国はこの絶好の機会を逃すつもりですか?

TPPの大きな進展は、これまで政府調達に同意せず、また既存の米国自由貿易協定(FTA)やWTOの政府調達協定(GPA)に同意していないベトナム、マレーシア及びブルネイの3カ国でさえも同意すると約束したことでしょう。これは米国の商品生産者やサービス企業にとって重要な輸出機会となります。現在、中国企業が最も利益を上げています。ベトナムの国営企業の電力、鉱業、製造、鉄鋼そして化学プロジェクトの90%を中国企業が請け負っているのです。中国国家建設エンジニアリング社(CSCEC)は業績が芳しくなく、贈賄罪により世界銀行のブラックリストに載ってはいますが、それでも重要な契約を獲得し続けています。TPPにより市場が米国企業に対し開かれ、おそらく歓迎されるでしょう。

一部のアジア太平洋諸国及びその他の国々では、外国の入札者に不利益をもたらす政策を実施しています。TPPでは初めてベトナムやマレーシアなどの国がアメリカの協力を求めることが可能になります。政府調達に関する手続き及び法改正は米国の輸出業者に対し以前閉ざされていた市場への介入、そしてより効果的に競争することを可能にします。

その上、カナダはNAFTA(北米自由協定)の公約をTPPの基準まで引き上げることに同意しました。新たなGPAの水準は2014年度のWTOガイダンスに基づきNAFTAよりも強力な公約となっています。

米国は二国間協定が締結するまで待てないはずです!

最初にTPPの交渉が始まってから既に12年が経過しています。NAFTA(4年)、COMESA(16年)、そしてSAFTA(9年)などの国際条約が締結までに膨大な時間を要したように、二国間協定も同様に時間を要します。また成功するという保証などありません。実際はむしろ上手くいかないでしょう。マレーシア、ブルネイ及びベトナムのような国々は政府調達の規制に合意するという大きな措置をとりました。二国間協定がどのくらいの期間を要するかは、4年前に締結された欧州連合とベトナム自由貿易協定(EVFTA)に示された通りです。しかしながら、EVFTAは政府調達の規則に関するTPPの基準に達していません。公正で透明性が高く予想可能で被差別的な市場の創設を延期すべきではありません。GPAの水準がこれまで以上に高くなる可能性があるからです。これ以上良い協定を交渉する可能性は極めて低いですし、中国やロシアが米国に取って代わる可能性は非常に高いです。日本の安倍晋三首相は既に中国に中心が移る可能性があると述べています。しかし、中国に目を向けているのは日本だけではありません。オーストラリア、ニュージーランド、ベトナム、マレーシア、シンガポールそしてブルネイが既に中国とのFTAの交渉を進めています。

この協定を見送ることで米国は何十億もの経費がかかり、多くの労力を失うことになります。二国間協定の交渉は多大な時間及び費用がかかり、またTPPに近いGPA基準に達することは非常に難しいでしょう。

それでも米国は待つことができますか?

答えはNOのはずです!

敬具

オリバー・マスマン

*上記に関し更なる情報をご希望の場合は、直ぐにご提供致します。

 

 

Letter to Mr. Donald Trump – Trans-Pacific Partnership – Don’t drop your Slice of the Pie

 

From Oliver Massmann – General Director of Duane Morris Vietnam LLC

Dear Mr. Trump,

With respect to your recent statement that you will withdraw from the Trans-Pacific Partnership (TPP) right on day one of your office, we kindly request you to reconsider the possibility of your ratification of the TPP.

Dropping the TPP means that the U.S will lose access to government procurement of other TPP countries which amounts to USD1.492 trillion. The high standard of the government procurement chapter in the TPP can nowhere be found in existing international agreements. Moreover, it could take the U.S another decade to reach a bilateral agreement with government procurement standard as high as in the TPP. It is of utmost importance for the U.S to save time, jobs, and of course, billions of dollars by ratifying the TPP instead of negotiating a new one.

We believe the following facts will help with your decision and clearly show how TPP would help you to make America great again. What may interest you is the extremely high number of government procurement in the TPP country members from which America could benefit.

As you may already know, the population of the TPP countries exceeds 494 million people as of July 2015. The TPP countries account for 44.8 percent of U.S. total exports and 37.6 percent of U.S. general imports in 2014. By cutting over 18,000 taxes in regards to TPP, there would be a great benefit for American im- and exporters by enabling them to enter new markets.

As the U.S. international trade commission estimates, the U.S. exports of goods and services to the world would expand by USD27.2 billion by 2032 due to the TPP, while U.S. imports would expand by USD48.9 billion.

In the following table the data of each TPP country is listed to show you the procurement market American investors may get access:

  GDP (USD) Government procurement’s percentage of GDP (%) Total value of Government procurement (USD)
Australia 1.56 trillion 12.44 194,064,000,000
Brunei 11.47 billion 4.1 470,270,000
Canada 1.827 trillion 13.34 243,721,800,000
Chile 179.9 billion 2.9 5,217,100,000
Malaysia 305.3 billion 25 76,325,000,000
Mexico 1.261 trillion 5.16 65,067,600,000
New Zealand 185.8 billion 14.56 27,052,480,000
Peru 192.6 billion 17.6 33,897,600,000
Singapore 274.1 billion 9.74 26,697,340,000
Vietnam 171.4 billion 12.84 21,000,000,000 -22,000,000,000
Japan (ratified TPP) 4.92 trillion 16.22 798,024,000,000

Note: Data taken during the period of 2006-2017

As shown above government procurement of the TPP states is $1.492 trillion in total!

And those are old numbers. Most of the countries are states with strong economic growth. The sum may be much higher now.

How could America not want to get a slice of this fat pie?

The great advance of the TPP will be that even the three countries Vietnam, Malaysia and Brunei which have not agreed to coverage of their government procurement ever before and are currently not covered by an existing U.S. Free Trade Agreement or the Government Procurement Agreement of the WTO (GPA), have undertaken to do so. This is a key export opportunity for U.S. goods producers and services companies. Currently Chinese companies profit the most. 90% of power, mining, manufacturing, ferrous and chemical projects of state-owned companies in Vietnam are awarded to Chinese contractors. China State Construction Engineering Corp. (CSCEC) keeps winning important contracts although it has a poor track record and has even been blacklisted by the World Bank due to bribery charges. With TPP that market would be open to US companies which probably would be welcomed.

Some Asian-Pacific and other countries have formal policies in place disadvantaging foreign tenderers. TPP will make it possible for the first time that an American cooperation could sue for example the Republic of Vietnam or Malaysia. The procedural and legal changes regarding government procurement will enable U.S. exporters to reach markets that were closed before and compete more effectively.

In addition Canada has agreed to replace the commitments in NAFTA and update them to the level of TPP. The new level of GPA is based upon the WTO 2014 guidance and provides stronger commitments than the NAFTA.

America cannot wait until bilateral agreements might be settled!

12 years have already passed since the first negotiations on TPP started. As international agreements like NAFTA (4 years), COMESA (16 years) or SAFTA (9 year) require a lot of time to be settled, bilateral agreements will do so as well. And there is no guarantee of success. In fact it is rather unlikely. Countries like Malaysia, Brunei and Vietnam took huge steps by agreeing to a regulation of government procurement. How long a bilateral agreement would take, may be shown by the European Union – Vietnam Free Trade Agreement (EVFTA) which took 4 years before it was concluded. However, the EVFTA does not reach the standard of the TPP regarding the Chapter on Government Procurement. The creation of a fair, transparent, predictable and non-discriminatory market should not be postponed. The level of GPA might be as high as never before. It is extremely unlikely that a better agreement could be negotiated but more likely that the U.S. will be replaced by China or Russia. Japan’s Prime Minister Shinzō Abe already stated that China would be a possible replacement. But not only Japan would turn towards China. Negotiations of Australia, New Zealand, Vietnam, Malaysia, Singapore, Brunei regarding an FTA with China already began.

Skipping this agreement would cost America billions of money and would cut off American jobs. Negotiating bilateral agreements would cost America many years, billions of Dollars and it is highly unlikely that it would reach a GPA standard  that would be even close to TPP.

Is America’s interest able to wait?

The answer is NO!

Sincerely,

Oliver Massmann

 

*Should you require any supporting evidence for the statements above, we will provide them immediately.

 

 

Lawyer in Vietnam Oliver Massmann Why it is best to start preparing for transactions now in Vietnam ?

 

Vietnam has concluded the Trans-Pacific Partnership (“TPP”) and the EU- Vietnam Free Trade Agreement (“EVFTA”). Meanwhile, the ASEAN Economic Community (“AEC”), which Vietnam became a full member in 1995, has been established since the end of 2015. With such deep integration into the multilateral and regional economy, Vietnam is expected to be an attractive investment environment for investors and witness a significant growth in the upcoming years.

Vietnam has made progress over 3 continuous years to reach 56th position in 2015 on the Global Competitiveness Index list, a jump of 12 positions compared to 2014. It is noteworthy that Vietnam is more competitive than 6 European Union countries on this list. Even more notably, 4 out of these 6 countries, namely Slovenia, Cyprus, Slovakia and Greece, are considered as advanced global economies, and have the GDP per capita of at least USD17,700, eight times more than Vietnam.

Samsung Electronics Company has decided to choose Vietnam as the Number 1 country to put their world largest mobile and tablet production and invested more than 6 Billion USD after a researching worldwide. Also major Japanese companies are convinced Vietnam is a top investment destination and become the largest investors in Vietnam.

The Vietnamese Government has made great attempts to develop itself by opening its economy to international trade, investments and free movement of people. The following section provides an overview of these free trade agreements and the AEC to help investors understand what is awaiting them ahead and decide their investment in Vietnam.

TPP

The TPP was originally known as the Trans- Pacific Strategic Economic Partnership concluded in 2006 among Singapore, New Zealand, Chile and Brunei (P-4 agreement) as a means to promote trade liberalization in the Asia- Pacific Region. As its name indicates, the original purpose of the agreement was only to address economic issues. As the number of participating countries in the P-4 agreement increased, starting with the United States in September 2008 and other countries to follow being Australia, Peru, Vietnam, Malaysia, Canada, Mexico and Japan until July 2013, the agreement is agreed to be “a comprehensive, next-generation regional agreement that liberalizes trade and investment and addresses new and traditional trade issues and 21st-century challenges” by TPP Trade ministers. In June 2015, the United States approved the trade promotion authority for President Obama. The Agreement finally becomes as it is today through tough negotiation rounds, while the last round in Atlanta in September 2015 was considered the most intensive one. The TPP was already concluded on 06 October 2015.

TPP Market Snapshot
·         GDP: US$28,136.0 billion (2012)

·         GDP per capita: US$35,488 (2012)

·         Population: 792.8 million (2012)

·         TPP % of world GDP: 39.0% (2012)

·         TPP % of world population: 11.3% (2012)

·         TPP % of world trade: 25.8% (2012)

The TPP includes thirty chapters with deep focus on comprehensive market access, a fully regional agreement, cross-cutting issues (regulatory coherence, competiveness and business facilitation, small and medium sized enterprises, and development), and new trade challenges (particularly rules on state owned enterprises and government procurement).

The TPP would expand market access in goods and services among its signatories. The market access issues include liberalization of trade barriers protecting dairy, sugar, and rice; tariffs and origin rules affecting textiles, clothing, and footwear; and services trade reforms, especially financial services, insurance, and labor services.

Vietnam would be the largest beneficiary of this trade pact, resulting from its strong trade ties with the United States, high level of protection against its main exports (i.e., apparel and footwear), and its highly competitive positions in industries such as manufacturing where China is gradually losing its competitive advantage. Statistics shows that by participating in the TPP, Vietnam’s GDP would add an additional increase of 13.6% to the baseline scenario.

TTP will help Vietnam make good use of international cooperation opportunities, balance relationships with key markets, approach larger markets including the U.S, Japan, Canada, boost import-export, reduce import deficit, and attract foreign investment. In addition, TTP will also help Vietnam’s economy allocate its resources more effectively, enabling active supports to the processes of restructuring, innovation and improving regulations, and improve administrative reforms.

Higher income will help Vietnam to invest more and grow more

Vietnam is among the largest income gains in TPP

The TPP is now being submitted for ratification in each country before it officially takes effect. Despite all political concerns, we strongly believe that the TPP will finally be implemented in 2018.

AEC

The AEC originates from the ASEAN Vision 2020, which was adopted in 1997 on the 30th anniversary of the Association of Southeast Asian Nations, made up of Brunei Darussalam, Myanmar, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand and Vietnam (ASEAN). With a population of more than 600 million and a nominal GDP of about $2.31 trillion, ASEAN is a strong economic community in Asia and also a driver of global growth.

The AEC encompass the following characteristics: (i) a single market and production base, (ii) a highly competitive economic region, (iii) a region of equitable economic development, and (iv) a region fully integrated into the global economy.

The AEC is expected to be an area where goods can circulate freely and in which custom duties on goods will be gradually reduced to 0%. It will establish ASEAN as a single market and production base, making ASEAN more dynamic and competitive with new mechanisms and measures to strengthen the implementation of its existing economic initiatives; accelerating regional integration in the prioritized sectors; facilitating movement of business persons, skilled labor and talents; and strengthening the institutional mechanisms of ASEAN.

The free flow of investment will also offer enhanced investment protection to all ASEAN investors and their investments in other ASEAN member countries, including the settlement mechanism of an investor state dispute based on a non-discrimination principle when investing in other ASEAN countries. Those principles play a very important role in providing investor confidence when making cross-border investment.

Once the AEC is completed, it will be a unified market, a common manufacturing area seeking for more dynamic and competitive development and to create new opportunities for tariff reductions as well as other trade incentives.

AEC Market Snapshot
·         GDP: US$2311.3 billion (2012)

·         GDP per capita: US$3748.4 (2012)

·         Population: 620 million, 60% under the age of 35

·         AEC % of world GDP: ~3.3%

·         AEC % of world population: 9%

·         AEC’s merchandise exports: US$1.2 trillion – ~54% of total ASEAN GDP and 7% of global exports

·         If ASEAN were one economy, it would be the 7th largest in the world – 4th largest by 2050 if growth trends continue

EVFTA

On 02 December 2015, after nearly 3 years with 14 rounds of negotiations, the Minister of Industry and Trade of Vietnam, H.E. Vu Huy Hoang and the European Commissioner for Trade, H.E. Cecilia Malmström have signed the EVFTA. Both parties will finalize the ratification process as soon as possible for the EVFTA to take effect from the beginning of 2018.

The EVFTA is considered one of the most comprehensive and ambitious trade and investment agreements. It is the second agreement in the ASEAN region after Singapore and it will intensify the bilateral relations between Vietnam and the EU.

The agreement has separate chapters on Trade of Goods, Rules of Origin, Customs and Trade Facilitation, Sanitary and Phytosanitary measures and Technical Barriers to Trade, Trade in Services, Investment, Trade Remedies, competition, State-Owned Enterprises, Government Procurement, Intellectual Property, sustainable Development, Cooperation and Capacity Building, Legal and Institutional Issues.

Nearly all customs duties – over 99% of the tariffs will be eliminated. The small remaining number is mainly due to the transition period. Vietnam will liberalize 65% of import duties on EU exports to Vietnam at entry into force and the remaining duties will be eliminated due to the next ten years; EU duties will be eliminated over a seven year period. The market will be opened for most of EU food products, i.e. wine, spirits and frozen pork meat will be liberalized after seven years and dairy products after a maximum of five years. The EU will eliminate duties for some sensitive products in the textile and footwear sector. The EU has offered access to Vietnamese exports via tariff rate quotas (TRQs), because some sensitive agricultural products will not be fully liberalized. Furthermore, the agreement will contain an annex with provisions to address non-tariff barriers in the automotive sector. Vietnamese exports of textile, clothing and footwear to the EU are expected to more than double in 2020 as a result of  the EVFTA.

The EVFTA will help to increase quality of investment flows from EU, accelerate the process of sharing expertise and transfer of green technology and the creation of more employment activities.

The real wages of skilled laborers may increase by up to 12% while real salary of common workers may rise by 13%. The macro economy will be stable and inflation rate is controlled. Vietnam’s business activities will be booming in the next few years once the EVFTA officially comes into force and Government’s policies as well as institutional reforms start showing their positive effects.

Vietnam’s GDP is expected to increase by 0.5% annually, increase in exports is 4-6% per year. If this trend continues until 2020, Vietnam’s exports to EU will increase by USD 16 billion. Until 2025, the EVFTA is estimated to generate an additional 7-8% of GDP above the trend growth rate.

In 2013, the EU was Vietnam’s second biggest trade partner with a total value of trade in goods of EUR 24.2 billion. In the same the EU was also Vietnam’s biggest export market with EUR 21 billion, representing 19% of Vietnam’s total export. Vietnam’s export to EU increased by 28% from 2012 to 2013. In addition, the EU is among the biggest investors in Vietnam, with 1,810 FDI projects in 2013. The EU committed to continuing to support with the foreseen assistance amount of EUR 400 million in the coming six years. EU exports to Vietnam are dominated by high-tech products including electrical machinery and equipment, aircraft, vehicles, and pharmaceutical products. Vietnam’s key export items to the EU include telephone sets, electronic products, footwear, textiles and clothing, coffee, rice, aqua products, and furniture.

Conclusion: Why investment in Vietnam now?

  • Vietnam ties in first place with Singapore, thus it provides highest possible protection for investment
Country Limitation of market access* Country Limitation of market access*
Malaysia medium Myanmar high
Indonesia medium Cambodia medium
Philippines medium Laos medium
Singapore low India high
Thailand medium China medium
Brunei high Vietnam low

*Typical restrictions: number of opened sectors, JV requirement, limits on foreign-owned shares, permission requirement

  • Vietnam has the fastest growing middle class with a very good demographic situation: about 90 Million people of which about 50 percent are under 30 years old.
  • Expectations of Vietnam parties might get unreasonable, the same as after Vietnam acceded to the WTO in 2007 and no projects could be done.
  • Market opening in certain sectors, for example, media, and there could be more competing companies from the AEC with better market access to Vietnam. Thus, it is vital that investors start working on their projects now to position themselves as early as possible before the coming into effect of the trade pacts.

***

Please do not hesitate to contact Oliver Massmann under omassmann@duanemorris.com if you have any questions or want to know more details on the above. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.