Vietnam is on a path this year to approve its biggest trade expansion since the country joined the World Trade Organization (WTO).
The country's National Assembly in Hanoi approved the Comprehensive and Progressive Agreement for Trans Pacific Partnership in December. The trade deal became effective on January 14.
The Pacific trade deal would open the markets of Japan and Canada to Vietnam's products. In addition, the deal will permit Vietnamese to enter 10 countries easily for work-related business.
Vietnam also is seeking to reach a trade agreement with the European Union soon. The two trade agreements together would sharply reduce trade barriers with countries that account for 45 percent of the world's economy.
Lawmakers of other countries in the Pacific partnership are in the process of approving the deal. Six countries have already approved it meaning that it is likely to legally go into effect.
Vietnam hopes that the EU approves this year the free trade deal which the two sides negotiated in 2015.
Experts say that the two major trade deals will speed growth of the country's growing middle class. They also help Vietnam compete with China as a place where international companies want to build factories.
Frederick Burke is with the international law group Baker McKenzie in Ho Chi Minh City. He said, "Vietnam will enjoy a comparatively lower duty rate in some export markets where it competes."
Burke added that foreign direct investment already has increased as much as it did when Vietnam joined the WTO. When foreign companies build factories and gain interest in a country's companies, it is called foreign direct investment.
Vietnam hopes for trade gains
Vietnam may be one of the nations that gain the most from the Comprehensive and Progressive Agreement for Trans Pacific Partnership. That is because exports are such an important part of the country's growth. Exports are estimated to have reached $200 billion in 2017. Other countries in the Pacific deal are expected to have trade deficits with Vietnam.
Since 1986, Vietnam has sought foreign direct investment in factories that make clothing and electronic devices. It entered the WTO in 2007.
Adam McCarty is chief economist with Mekong Economics in Hanoi. He said, with the new agreement, low-cost manufactured goods like shoes will be less costly to export to countries like Australia.
European and Pacific countries hope trade deals with Vietnam will let them sell products to that country's growing middle class. The Boston Consulting Group predicts that will mean more than 30 million people by next year.
However, as a member of the trade partnership, Vietnam must permit independent labor unions. Vietnam also must have rules so that companies from partnership countries can make bids for business. And Vietnam will have to protect partners' intellectual property rights.
McCarty said if Vietnam closely observes the Pacific trade agreement it will further show that it is different from China. Vietnam already stands out for its lower labor costs.
Trung Nguyen heads international relations at Ho Chi Minh University of Social Sciences and Humanities. He said Vietnam wants to follow the deal's rules. "They want (to) get some new momentum for Vietnam's economy, and TPP is one of the solutions," he said.
I'm Mario Ritter Jr.
Ralph Jennings reported this story for VOA News. Mario Ritter Jr. adapted it for VOA Learning English. Caty Weaver was the editor.
Words in This Story
class –n. a group of people in a society who are at the same economic and social level
bid –v. to make an offer to pay a certain amount or to do work for a certain amount of money
intellectual property –n. something such as an idea, invention or process that comes from a person's mind
momentum –n. the force that something has when it is moving
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