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OLIVER MASSMANN - Partner, General Director

DUANE MORRIS VIETNAM LLC

Presentation to the members of the National

Assembly of Vietnam - Implementation and Impact

of the Trans-Pacific Partnership Agreement

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Introduction

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• I have been living in Vietnam for over

20 years.

• I am married to a Vietnamese and have

2 children

• It is my great honour to present in front

of the members of the National Assembly

and distinguished guests on the important

topic of the Trans-Pacific Partnership

Agreement.

• I choose Vietnamese to speak as I

love the language and the people here.

Oliver Massmann

General Director of Duane

Morris Vietnam LLC

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AGENDA:

• OVERVIEW ON THE TPP

• HOW IS THE TPP DIFFERENT?

• HOW WILL TPP IMPACT VIETNAM?

• IMPLEMENTATION OF THE TPP

• CONCLUSION

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How is the TPP Different?

• GDP of 12 TPP Members is nearly $28 trillion, 40% of global GDP and

one-third of world trade.

• The TPP is being touted as a “high-standard agreement” meaning “a

landmark, 21st-century trade agreement, setting a new standard for

global trade and incorporating next-generation issues”.

• So-called "key elements" including the notion of comprehensive

market access, a fully regional agreement, cross-cutting issues

(market for all goods (including agriculture), services, regulatory

coherence, competiveness and business facilitation, small and medium

sized enterprises), new trade challenges (environment, labour and

particularly rules on state owned enterprises); as well as, the notion of a

living agreement.

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How will TPP impact Vietnam?

• Vietnam as the second smallest economy among

TPP members after Brunei will be the major

beneficiary if it fully implements the TPP.

• According to the World Economic Forum,

Vietnam will have the biggest percentage change

in GDP in 2025 (28.2%)

• Vietnam’s income will increase by 10.5%

(according to Peterson Institute for International

Economics)

• Vietnam will become a major manufacturing

hub in the region due to continued strong

growth of traditional manufacturing sectors

(textile & apparel) and rapid expansion of higher

value sectors such as computers, electronics and

electrical equipment led by Samsung and Intel.

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Implementation of the TPP –

Opportunities and Challenges

• Tariff elimination instead of tariff reduction in most tariff

lines is a driving factor for Vietnam’s exports when accessing

other TPP countries’ markets, especially big trading partners

being the U.S and Japan.

• Challenges:

– How to qualify for the duty-free status? (regional value content

for example)

– Strict Technical Barriers to Trade, Sanitary and Phytosanitary

requirements

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• Cheaper goods but with higher quality, variable materials for

domestic production.

• Challenges:

– More competition

– In certain sectors, for example, pharma or

agriculture, high IP protection will result in

expensive products. People will have more

difficulty in purchasing high quality

medicines or Vietnam’s agricultural products will be less competitive.

– In agricultural sector (mostly affected by the TPP), agricultural sustainability and socio-

economic development of these areas can only be improved by collaboration among 4

players - State agencies, scientists, farmers and buyers. The Government should expand

the implementation of this model into many other provinces besides Thanh Hoa and

South East regions of Vietnam. 8

Implementation of the TPP –

Opportunities and Challenges

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Implementation of the TPP –

Opportunities and Challenges • State-owned enterprises (SOEs): During TPP negotiations,

SOE sectors were discussed from the very first rounds when

they negotiate rules of constructing and implementing

competition policies.

• The Chapter on State-owned Enterprises and Designated

Monopolies puts a huge pressure on SOEs performance. As

such, Vietnamese Government will have to accelerate the

equitization of SOEs, to reduce the State control in SOEs

and to push SOEs to operate in line with market principles.

• Government will need to focus its efforts to assist SOEs to

adapt to non-preferential treatment or access to Government

spending, or special access to land and investment capital.

• The equitization of SOEs should focus on change in

ownership structure of SOEs after equitization, not only

relating to the number of SOEs participating in the reform

as the current model reveals.

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Implementation of the TPP –

Opportunities and Challenges

• Sustainable development is repeatedly mentioned in the TPP:

“The Parties also acknowledge that effective domestic coordination of trade, investment and

development policies can contribute to sustainable economic growth.”

“The Parties recognise the potential for joint development activities between the Parties to reinforce

efforts to achieve sustainable development goals.”

(Chapter 23 of the TPP)

• However, there is no standard and test for sustainable development in

Vietnam. The Government should adopt sustainability test in accordance

with the TPP.

• Investment in renewable energy is also needed for sustainable

development. The Government must make sure that EVN is moving on

getting Renewable energy PPAs concluded with foreign investors 10

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Implementation of the TPP

• Proper and timely implementation of the TPP is

the key.

• It will then increase Vietnam’s competitiveness

with other countries in the region.

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Implementation of the TPP

• If Vietnam implements the TPP properly and in time, it

will achieve a higher level of legal certainty in certain

commercial sectors than in highly industrialized countries

like Germany as Germany does not adopt Investor-State

Dispute Settlement principles as Vietnam does in the

TPP.

• The TPP will then create a huge influx of foreign direct

investment

• Vietnam will be one of the Leading countries in South

East Asia for decades to come. 12

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Recommendations – For enterprises

Understanding Rules

Assessing impacts

Developing strategies

Improving competitiveness

Contributing to policy-making

process

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Recommendations – For the Government

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Regulatory

reform

Change in the

mindset:

From “control,

manage” to

“support, service”

development of

private sector

Reform to SOEs

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DUANE MORRIS VIETNAM LLC

Thank you very much!

HANOI OFFICE HO CHI MINH CITY OFFICE

Pacific Place, Unit V1307/08, 13th Floor, Suite 1503/04, Saigon Tower

83B Ly Thuong Kiet, Hoan Kiem District 29 Le Duan Street, District 1

Hanoi, Vietnam Ho Chi Minh City, Vietnam

Tel.: +84 4 39462200 Tel.: +84 8 3824 0240

Fax: +84 4 3946 1311 Fax: +84 8 3824 0241

Contact email:

omassmann@duanemorris.com

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