Vietnamese exit from TPP a chance for China to push regional trade pact

By Andy Brennan Source:Global Times Published: 2016/11/27 18:48:39

Vietnam's parliament has further twisted the already contorted US "ring of steel" isolating China by shelving the ratification of the economic net of the Asia-Pacific rebalancing strategy, the Trans-Pacific Partnership (TPP).

The TPP, the signature economic component of outgoing US President Barack Obama's Asia rebalancing strategy, was sold to ASEAN countries as a net of gold. It would interlock economies, lower tariffs and bolster trade. It was "free" of nasty little taxes, regulations, and custom duties. It was heralded, as all neoliberal doctrines are, for its benefit to all.

The US neoliberal "establishment" are watching their golden net, woven together to exclude China, break apart as the taut links have been stretched beyond their original form because of the protectionist perspectives of US President-elect Donald Trump.

Vietnam believed the TPP would have dissolved tariffs on some of their key exports, bringing a bountiful surplus to its exports and manufacturing economy, which is enjoying record foreign investment due to its numerous trade accords, cheap labor and relative political stability. Seeing that hope fade, Vietnam is simply bailing before the fat orange man sings and following other Asian countries such as the Philippines, Laos, Cambodia, and Malaysia.

Only Japan is remaining rigid and trying to stick with the TPP and push ratification, but Abe is cultivating regional relations for his own benefits beyond the TPP. Excluding China was never really going to work considering it's industrious and infrastructural foreign policy tastes more succulent than a US foreign policy offering military bases.

Vietnam's Communist Party has carefully managed its relations with China to expand its economy, while also enhancing its military cooperation with the US for security. Regardless of the TPP, Vietnam is opening its economy to the world, and as its annual export growth this year is expected to be 8 percent, the loss of the TPP won't stunt the country's textiles, seafood and footwear sectors.

The US and Vietnam, the two long-time war foes, in recent years have witnessed a rapid rapprochement because of growing fissures between Hanoi and Beijing over the  South China Sea disputes. Just because the TPP is going to be torn apart doesn't mean Vietnam's new dynamic with the US is going to falter.

Vietnamese Prime Minister Nguyen Xuan Phuc said, "We are ready to cooperate with the US for co-development on the principles of respecting independence, territorial sovereignty and causing no harm to each other." Does that sound unforthcoming?

Vietnam actually stands to benefit from the game among big powers in the South China Sea. Vietnam is already enhancing its cooperation with many countries simultaneously, such as Russia, Japan, India, and Australia.

For Washington, the Vietnam War was seen as the key to prevent the "domino effect" of the spread of the ideology of communism, preventing the communist takeover of Southeast Asian countries. The US saw its heinous lost war as a Cold War containment policy. Today's Asia-Pacific rebalancing isn't an ideological containment, but rather a hegemonic policy trying to smother a new hegemon and economic pole, and Vietnam is the most strategic asset in its containment policy.

Vietnam was economically included in the original TTP plan, and diplomatically able to support the Philippines' arbitration case against China, although this is moot now because the Philippines will bilaterally negotiate with China. Vietnam is still militarily valuable.

The US has rescinded its arms embargo on Vietnam, and increased financial support for Hanoi's maritime self-development. Vietnam could have fully aligned with the US like Japan, but without unbridled access to the US market through the TPP, why bother?

Vietnam's flexibility enables it to evade a direct confrontation with China and remain aloof regarding South China Sea arbitration. And thanks to that flexibility, Vietnam isn't in Japan's position of detachment from China, and has increased its strategic importance and ability to haggle with the US.

China needs to promote its Regional Comprehensive Economic Partnership (RCEP), as it's going to cover around 50 percent the world's population and 30 percent of global GDP. Most Asian countries already have preferential access to China's markets under the China-ASEAN free trade agreement of 2010, but the reach of the RCEP could entice Vietnam as long as China respects Vietnam's desire for flexibility and cultural resistance to all powers near and far.

The author is a freelance journalist living in Beijing. Follow us on Twitter @GTopinion


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