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Likely-dead trans-pacific partnership agreement and Vietnam's apparel

By Nguyen Thi Tuong Vy (VNP 21)

Supervisor: Dr. Le Thanh Loan

Abstract

The thesis aims to investigate the impact of the proposed Trans-Pacific Partnership (TPP) agreement on Vietnam’s apparel industry. The TPP is a not-yet-in-force agreement and is stiffly opposed by the new president of the United States (US), however it has still received supports from remaining members. Hence, the research first constructs four possible scenarios that the TPP may result in; it then analyzes the impact of the agreement on Vietnam’s apparel in each scenario through two main policies, namely tariff elimination and rule of origin.
The main methodology of this study is the ex-ante partial equilibrium analysis with the global simulation model “Global Simulation Analysis of Industry-Level Trade Policy” (GISM). The research uses the 2014 trade and tariff database of Vietnam and other ten key partners in the backward and forward linkages of Vietnam’s apparel industry. The data is accessed through the World Integrated Trade Solutions (WITS).
The research result shows that Vietnam apparel industry seems to benefit most from the fully implemented TPP with tariff elimination by increasing exports to the other members; yet, the origin regulation would be a huge restriction for Vietnam’s benefit optimization from the agreement. Furthermore, if the US withdraws from the TPP, export value and trade welfare of Vietnam’s apparel would also reduce as the US is the main importer of Vietnam’s apparel product. However, if the TPP is totally failed and Vietnam shifts to join in a new free trade area namely Regional Comprehensive Economic Partnership (RCEP) with such leading apparel’s input suppliers, for example China, Korea, India, the ability for Vietnam to comply this regulation of yarn-forward is quite feasible, which in turn can promote Vietnam garment export into the new free trade area.

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