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)|
|New Zealand||185.8 billion||14.56||27,052,480,000|
|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!
*Should you require any supporting evidence for the statements above, we will provide them immediately.