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Vietnam to keep coal, crude export taxes under TPP
[HANOI] Vietnam will exempt some state firms from a Pacific trade pact agreed this week and has negotiated to keep export taxes on its crude oil and coal to support an overstretched state budget, its chief negotiator said on Friday.
The communist nation is seen as one of the biggest winners from the Trans-Pacific Partnership, with a surge of investment expected into its US$186-billion economy, especially in low-cost manufacturing. Vietnam has kept secret until now the details of what it negotiated.
In areas touching national security, Vietnam can exclude unspecified state-owned enterprises (SOEs) from the TPP, and does not have to reveal those sectors, said Tran Quoc Khanh, vice minister of industry and trade.
Export taxes on coal, crude and some ores would stay, and other countries had negotiated similar exemptions, Mr Khanh said. Vietnam earned US$7.2 billion from exports of crude oil, and US$554.5 million from coal last year. "The impact on the state budget will be minimal," Mr Khanh told a news conference.
He said certain materials of specialist nature, or in short supply, would be permitted from outside the TPP area while still qualifying for "yarn forward" rules of origin on garments, one of Vietnam's top sectors.
Vietnam's textiles and footwear would gain strongly from the TPP, after exports of US$31 billion last year for brands such as Nike, Adidas, H&M, Gap, Zara , Armani and Lacoste.
The country makes a tenth of the world's shoes and is the United States' second-largest source of footwear after China.
Vietnam anticipates record foreign investment this year, the majority in manufacturing, as firms capitalise on its cheap labour and the prospect of the TPP slashing tariffs in a region covering 40 per cent of global GDP.
Although Vietnam's TPP gains would outweigh losses, experts say requirements for independent labour unions and fair competition and transparency with state firms have been concerns.
Mr Khanh said Vietnam had got some latitude.
It would follow International Labor Organization principles on unions "on the basis of respecting its political institutions", he said, and would use its right to have carve-outs for state firms in areas of national security.
Vietnam has been accused of giving state firms preferential treatment and of using vague legal clauses on national security to justify state actions, such as in land disputes and arrests of government critics. "We reserve the right to not commit state-owned enterprises in the national security and defence sectors," Mr Khanh said. "Allow me not to give a definition here, as TPP does not define what are essential security needs."