TPP

Report
The Trans -Pacific Partnership Agreement:
an Opportunity for Viet Nam to reduce its
Economic Dependence of China
Scott H. Murray &Tai H. Pham
Discipline of Mathematics & Statistics
August, 2014
Contents
1. Problem statement
2. Members of AEC, TPP, RCEP &
FTAAP
3. USA’s TPP Vision
4. China’s FTAAP Vision
5. Theories of international trade
6. The Extended Input-Output Table
7. Scenarios
8. Conclusion
1. Problem statement
• The ASEAN Economic Community (AEC) by 2015
• The Trans-Pacific Partnership (TPP) by 2014.
• Quantitative assessment of economic effects of
AEC and TPP on the textile & apparel, footwear and
furniture industries in Vietnam
The flagship FTAs: AEC, TPP,
RCEP & FTAAP?
2. Members of AFTA, TPP, RCEP & FTAAP
FTAAP
Russia
Taiwan
RCEP
China
Korea
India
Cambodia
Indonesia
Laos
Myanmar
Philippines
Thailand
Brunei
Malaysia
SIngapore
Viet Nam
AEC
Australia
Japan
New Zealand
Canada
Chile
Mexico
Peru
United States
TPP
TPP
RCEP
FTAAP
3. USA’s Trans-Pacific Partnership Agreement
vision
• Strengthen ties across three continents: America,
Asia, and Oceania
• Become basis and means to establish the Free Trade
Area of the Asia Pacific (FTAAP)
• The baseline: existing US trade and investment
agreements
• Create mutual benefits among participants
• Ensure third parties do not take advantage of the
agreement
• Apply “yarn-forward” style rules of origin
4. China’s Free Trade Agreement of the
Asia Pacific vision
• Build step by step the ambitious “New Silk Road”
and “New Maritime Silk Road” through bilateral
negotiation, Sanghai Cooperation Organization
(SCO), ASEAN & APEC
• Compete with the USA
China’s New silk road vision
FTA: Beneficial to poor
countries?
5. Theories of international trade
Mercantilism &
Neo-mercantilism
Division of
labor & new
international
division of
labor
The Viner’s model
& Extended InputOutput Model
Comparative
advantage &
complementary
and competing
economies
5.1. China encourages exports and
discourages imports
Billion USD
400
200
256
169
151
141
139
49
0
2006
2007
2008
2009
2010
2011
2012
2013
(134)
-200
(418)
-400
-600
(796)
(731)
(518)
(539)
-800
-1000
China
United States of America
Japan
Viet Nam
Year
5.2. China keeps its exchange rate weak
5.3. China & New International Division of Labor
5.4. China & Viet Nam are competing economies
Trade indicators
Revealed symmetric comparative
advantage index
Intra-industry trade index
Trade specialization index
Bilateral trade intensity index
Trade complementarity index
Revealed symmetric comparative advantage
(RSCA) index
Revealed comparative
advantage (RCA)
RSCA

=
=
(RCA -1)
(RCA +1)
HS code
01-05
06-15
16-24
25-27
28-38
39-40
41-43
44-49
50-63
64-67
68-71
72-83
84-85
86-89
90-97
98-99
Animal & Animal Products
Vegetable Products
Foodstuffs
Mineral Products
Chemicals & Allied Industries
Plastics / Rubbers
Raw Hides, Skins, Leather, & Furs
Wood & Wood Products
Textiles
Footwear / Headgear
Stone / Glass
Metals
Machinery / Electrical
Transportation
Miscellaneous
Commodities not elsewhere specified
RSCA of VIetnam, relative to RSCA of China, relative to
China
0.8
0.8
0.3
0.7
(0.5)
0.2
0.0
0.1
0.1
0.5
(0.1)
(0.4)
(0.4)
(0.5)
(0.2)
0.6
Maximum value
Minimum value
Critical point
Global
Vietnam
0.5
(0.8)
0.5
(0.8)
(0.1)
(0.3)
(0.1)
(0.7)
(0.7)
0.5
0.1
(0.2)
0.4
(0.0)
(0.1)
(0.1)
0.6
(0.1)
0.8
(0.5)
(0.2)
0.1
(0.4)
0.4
(0.1)
0.4
(0.7)
0.5
0.0
0.2
(0.6)
(0.6)
Explanatory notes
Global
(0.4)
(0.5)
(0.4)
(0.8)
(0.3)
(0.1)
0.4
(0.2)
0.5
0.6
(0.1)
0.0
0.3
(0.3)
0.3
(0.9)
1
-1
Comparative advantage = >0
HS code - top ten
RSCA of VIetnam, relative to RSCA of China, relative to
China
Global
Vietnam
Global
'85 Electrical, electronic equipment
(0.2)
0.1
0.2
0.3
'27 Mineral fuels, oils, distillation products, etc
0.8
(0.1)
(0.8)
(0.8)
'64 Footwear, gaiters and the like, parts thereof
0.5
0.8
(0.5)
0.6
'62 Articles of apparel, accessories, not knit or
crochet
0.4
0.7
(0.4)
0.5
'61 Articles of apparel, accessories, knit or
crochet
'84 Machinery, nuclear reactors, boilers, etc
0.2
0.7
(0.2)
0.6
(0.6)
(0.4)
0.6
0.2
'03 Fish, crustaceans, molluscs, aquatic
invertebrates nes
'94 Furniture, lighting, signs, prefabricated
buildings
'09 Coffee, tea, mate and spices
0.8
0.8
(0.8)
(0.0)
0.1
0.6
(0.1)
0.5
0.9
0.9
(0.9)
(0.4)
'10 Cereals
1.0
0.7
(1.0)
Explanatory notes
(0.8)
Maximum value
Minimum value
Critical point
1
-1
Comparative advantage = >0
5.4. TPP & Vietnam are complementary
Trade indicators
Revealed symmetric comparative
advantage index
Intra-industry trade index
Trade specialization index
Bilateral trade intensity index
Trade complementarity index
HS code
RSCA of VIetnam, relative to
TPP
01-05
06-15
16-24
25-27
28-38
39-40
41-43
44-49
50-63
64-67
68-71
72-83
84-85
86-89
90-97
98-99
Animal & Animal Products
Vegetable Products
Foodstuffs
Mineral Products
Chemicals & Allied Industries
Plastics / Rubbers
Raw Hides, Skins, Leather, & Furs
Wood & Wood Products
Textiles
Footwear / Headgear
Stone / Glass
Metals
Machinery / Electrical
Transportation
Miscellaneous
Commodities not elsewhere specified
0.5
0.5
0.1
(0.0)
(0.7)
0.1
0.7
(0.1)
0.8
1.0
(0.2)
(0.3)
(0.2)
(0.8)
0.0
(0.7)
Global
0.5
RSCA of TPP, relative to
Vietnam
Global
(0.5)
(0.0)
0.5
(0.5)
(0.1)
(0.1)
(0.1)
0.0
(0.7)
0.7
0.1
(0.1)
0.4
(0.7)
(0.1)
0.1
0.6
(0.8)
0.8
(1.0)
(0.2)
0.2
(0.4)
0.3
(0.1)
0.2
(0.7)
0.8
0.0
(0.0)
(0.6)
0.7
Explanatory notes
0.1
(0.2)
(0.1)
(0.1)
(0.0)
(0.4)
0.0
(0.5)
(0.8)
0.0
(0.0)
0.1
0.2
0.0
0.3
Maximum value
1
Minimum value
-1
Critical point
Comparative advantage = >0
HS code - top ten
RSCA of VIetnam, relative to
TPP
Global
RSCA of TPP, relative to
Vietnam
Global
'85 Electrical, electronic equipment
0.0
0.1
0.1
0.0
'27 Mineral fuels, oils, distillation products, etc
0.1
(0.1)
(0.2)
0.1
'64 Footwear, gaiters and the like, parts thereof
1.0
0.8
(0.8)
1.0
'62 Articles of apparel, accessories, not knit or
crochet
0.9
0.7
(0.7)
0.9
0.9
0.7
(0.7)
0.9
(0.4)
(0.4)
0.1
(0.4)
0.8
0.8
(0.1)
0.8
0.7
0.6
(0.3)
0.7
1.0
0.9
(0.5)
1.0
0.7
0.2
Explanatory notes
0.6
'61 Articles of apparel, accessories, knit or
crochet
'84 Machinery, nuclear reactors, boilers, etc
'03 Fish, crustaceans, molluscs, aquatic
invertebrates nes
'94 Furniture, lighting, signs, prefabricated
buildings
'09 Coffee, tea, mate and spices
'10 Cereals
0.6
Maximum value
Minimum value
Critical point
1
-1
Comparative advantage = >0
Extended Input-Output Table
for Vietnam
Inaccurate data of value of exports and
imports between Viet Nam and countries
Countries_export > VN_import: 3.3%
Countries_import > VN_export: 5.8%
Billion USD
160
140
120
100
80
60
Viet Nam_imports_Countries
40
Countries_exports_Viet Nam
20
Viet Nam_exports_Countries
0
2007
2008
2009
2010
2011
2012
2013
Countries_imports_Viet Nam
Inaccurate data of value of exports and
imports between Viet Nam and China
Billion USD
35
China_export > VN_import: 8.6%
30
China_import > VN_export: 1.2%
25
20
15
10
Viet Nam_imports_China
5
China_exports_Viet Nam
0
2007
2008
Viet Nam_exports_China
2009
2010
2011
2012
China_imports_Viet Nam
Inaccurate data on exports and imports
between TPP and Viet Nam
Billion USD
60
TPP export > VN_import: 4.6%
50
TPP_import > VN_export: 10.2%
40
30
20
Viet Nam_imports_TPP
10
TPP_exports_Viet Nam
0
2007
2008
2009
Viet Nam_exports_TPP
2010
2011
2012
TPP_imports_Viet Nam
Inaccurate data on exports and imports
between ASEAN* and Viet Nam
Billion USD
VN_imports > ASEAN*_exports: 0.02%
12
VN_exports > Asean*_imports: 27.0%
10
8
6
Viet Nam_imports_Asean*
4
Asean*_exports_Viet Nam
2
Viet Nam_exports_Asean*
0
2007
2008
2009
2010
2011
2012
Asean*_imports_Viet Nam
6. Extended Input-Output Table for Vietnam
Intermediate use
67%
11%
7% 3%
Domestic 67%
TPP 10%
RoW 5%
Asean* 4%
FTAAP* 5%
RCEP* 3%
China 6%
FTAAP 28%
RCEP 23%
ASEAN 9%
6. Extended Input-Output Table for Vietnam
Consumption use
70%
5% 3%
9%
Domestic 70%
TPP 8%
RoW 7%
ASEAN* 3%
FTAAP* 3%
FTAAP 23%
RCEP* 4%
RCEP 20%
China 5%
ASEAN 7%
6. Extended Input-Output Table for Vietnam
Investment use
59%
13%
3%
9%
Domestic 59%
41% = 0
30% < 0
TPP 12%
29% > 0
ASEAN* 3%
RoW 10%
China 8%
FTAAP* 4%
FTAAP 31%
RCEP* 4%
RCEP 27%
ASEAN 8%
6. Extended Input-Output Table of Vietnam
IMPORT
FTAAP 81%
RoW 20%
PRODUCE
55%
FTAAP* 12%
USE TPP 29%
45%
ASEAN 25%
ASEAN* 9%
RCEP* 11%
RCEP 68%
EXPORT
China 19%
TPP 55%
RoW 25%
FTAAP 74%
FTAAP*
3%
RCEP* 3%
RCEP 47%
ASEAN
17%
China 7%
Asean* 7%
6.1. Vietnam's imports from the blocs
TPP
Billion USD
ASEAN*
China
RCEP*
35.0
33.3
34.2
31.4
29.1
30.0
25.1
23.8
25.0
23.1
20.7
20.0
15.0
18.3
15.1
16.3
11.9
10.0
5.0
.0
2007
2008
2009
2010
Year
2011
2012
6.2. Vietnam's exports to the blocs
TPP
ASEAN*
China
RCEP*
Billion USD
60.0
50.5
50.0
40.8
40.0
33.8
30.0
33.4
28.6
26.6
20.0
16.2
11.1
10.0
3.2
4.3
4.7
2007
2008
2009
7
.0
2010
Year
2011
2012
Top ten exporters to Vietnam
Unit: Billion USD
Viet Nam imports from:
2007
2008
2009
2010
2011
2012
2013
11.9
15.1
16.3
23.1
29.0
34.2
48.6
Korea, Republic of
5.8
7.8
7.1
9.7
13.5
15.9
21.1
Singapore
6.5
8.7
7.0
7.4
10.2
10.4
10.9
Japan
5.7
7.8
6.5
8.2
9.6
10.7
10.6
Taipei, Chinese
6.8
7.9
6.0
7.5
9.0
8.4
8.9
Thailand
4.0
5.0
4.7
5.8
7.1
6.7
7.2
India
1.2
1.8
1.8
2.5
5
3.7
6.0
United States of America
1.9
2.8
3.1
3.7
4.3
4.6
5.0
Malaysia
2.3
2.4
2.3
3.5
3.8
3.8
4.2
Germany
1.7
1. 5
1.6
2.0
2.6
2.5
2.5
Indonesia
1.4
1.7
1.5
1.9
2.4
2.3
2.4
Australia
1.2
1.3
1.1
1.4
2.1
1.8
2.0
China
Top ten exporters to Vietnam
Unit: Billion USD
Viet Nam imports from:
2007
2008
2009
2010
2011
2012
2013
19.9%
20.1%
22.9%
25.2%
25.0%
27.0%
33.8%
9.7%
10.4%
10.0%
10.6%
11.6%
12.5%
14.7%
10.9%
11.6%
9.8%
8.1%
8.8%
8.2%
7.6%
9.6%
10.4%
9.1%
8.9%
8.3%
8.4%
7.4%
11.4%
10.5%
8.4%
8.2%
7.8%
6.6%
6.2%
Thailand
6.7%
6.6%
6.6%
6.3%
6.1%
5.3%
5.0%
India
2.0%
2.4%
2.5%
2.7%
4.3%
2.9%
4.2%
United States of America
3.2%
3.7%
4.4%
4.0%
3.7%
3.6%
3.5%
Malaysia
3.9%
3.2%
3.2%
3.8%
3.3%
3.0%
2.9%
Germany
2.8%
2.0%
2.2%
2.2%
2.2%
2.0%
1.7%
Indonesia
2.3%
2.3%
2.1%
2.1%
2.1%
1.8%
1.7%
Australia
2.0%
1.7%
1.5%
1.5%
1.8%
1.4%
1.4%
China
Korea, Republic of
Singapore
Japan
Taipei, Chinese
Top ten importers from Vietnam
Unit: Billion USD
Viet Nam exports to:
2007
2008
2009
2010
2011
2012
2013
11.4
13.9
13.0
15.9
18.5
21.4
26,0
China
3.2
4.3
4.7
7.0
11.1
16.2
16.9
Japan
6.1
9.1
7.0
8.2
11.6
15.1
14.2
Germany
2.9
3.5
3.2
3. 9
5.6
6.6
7.4
Korea, Republic of
1.4
2.0
2.4
3.3
5.1
5.7
7.2
Malaysia
1.8
2.3
2.1
2.6
3.4
5.2
6.0
United Kingdom
1.9
2.2
1.9
2.2
3.0
3.9
4.5
France
1.7
1.8
1.7
1.9
2.7
3.5
3.7
Australia
3.7
4.4
2.5
2.8
2.9
3.3
3.7
Thailand
1.1
1.4
1.4
1.4
2.0
3.0
3.3
Singapore
2.1
2. 4
2.3
1.6
1.7
2.2
3.1
Italy
1.0
1.2
1.0
1.2
1.8
2.33
2.9
United States of America
Top ten importers from Vietnam
Unit: Billion USD
Viet Nam exports to:
2007
2008
2009
2010
2011
2012
2013
21.8%
20.5%
21.1%
20.7%
18.5%
16.8%
18.8%
China
6.1%
6.4%
7.6%
9.1%
11.1%
12.7%
12.2%
Japan
11.7%
13.5%
11.3%
10.7%
11.6%
11.8%
10.3%
Germany
5.6%
5.2%
5.2%
5.1%
5.6%
5.2%
5.4%
Korea, Republic of
2.7%
3.0%
3.9%
4.3%
5.1%
4.5%
5.2%
Malaysia
3.4%
3.4%
3.4%
3.4%
3.4%
4.1%
4.3%
United Kingdom
3.6%
3.3%
3.1%
2.9%
3.0%
3.1%
3.3%
France
3.3%
2.7%
2.8%
2.5%
2.7%
2.7%
2.7%
Australia
7.1%
6.5%
4.1%
3.6%
2.9%
2.6%
2.7%
Thailand
2.1%
2.1%
2.3%
1.8%
2.0%
2.4%
2.4%
Singapore
4.0%
3.5%
3.7%
2.1%
1.7%
1.7%
2.2%
Italy
1.9%
1.8%
1.6%
1.6%
1.8%
1.8%
2.1%
United States of America
( I  Arr )1 Ars
7. Scenarios
The scenarios reduces
economic dependence on China
7.1. The Extended Input-Output Table
Unit: Billion VND
Final use
Intermediate
used
Consumption
HHs.
Domestic
Investment
Govt.
Export
1,171,126
552,607
76,626
294,203
174,174
73,383
724
59,563
307,844
62,671
24,118
239
15,155
102,183
China
114,097
45,628
470
40,394
200,589
RCEP*
57,560
34,727
264
21,433
113,984
FTAAP*
80,441
27,615
297
17,940
126,293
RoW
97,805
57,489
486
52,317
208,097
586,748
262,960
2,480
206,802
1,058,990
815,567
79,106
501,005
TPP
Asean*
Total Import
Total Intermediate
1,757,874
Value added
1,094,242
Total
2,852,116
757,554
Total
2,852,116
Unit: Billion VND
7.2. Scenario 1
Final use
Intermediate
used
Domestic
Consumption
HHs.
Govt.
Investment
Export
1,171,126
552,607
76,626
294,203
174,174
73,383
724
59,563
307,844
62,671
24,118
239
15,155
102,183
119,802
47,909
494
42,414
210,619
RCEP*
57,560
34,727
264
21,433
113,984
FTAAP*
80,441
27,615
297
17,940
126,293
RoW
97,805
57,489
486
52,317
208,097
592,453
265,241
2,504
208,822
1,069,020
817,848
79,130
503,025
TPP
Asean*
TPP + AEC
Total Import
Total Intermediate
1,763,579
Value added
1,038,208
Total
2,801,787
GDP - 5.1%
707,225
Total
2,801,787
7.3. Scenario 2
Unit: Billion VND
Final use
Intermediate
used
Domestic
Consumption
HHs.
Govt.
Investment
Export
1,171,126
552,607
76,626
294,203
174,174
73,383
724
59,563
307,844
62,671
24,118
239
15,155
102,183
131,782
52,700
543
46,655
231,680
RCEP*
57,560
34,727
264
21,433
113,984
FTAAP*
80,441
27,615
297
17,940
126,293
RoW
97,805
57,489
486
52,317
208,097
604,433
270,032
2,553
213,063
1,090,081
822,639
79,179
507,266
TPP
Asean*
TPP + AEC
Total Import
Total Intermediate
1,775,559
Value added
1,026,228
Total
2,801,787
GDP - 6.2%
707,225
Total
2,801,787
( I  Arr )1 Ars
7.4. Scenarios (cont.)
Scenarios reduce economic dependence on China
7.5. Scenario 3
Unit: Billion VND
Final use
Intermediate
used
Consumption
Investment
Export
Total
HHs.
Govt.
1,171,787
552,607
76,626
295,203
China + AEC + TPP
115,705
46,541
479
41,202
203,927
RoW
472,651
217,332
2,010
166,408
858,401
Total Import
588,356
263,873
2,489
207,610
1,062,328
816,480
79,115
501,813
Domestic
Total Intermediate
1,760,143
Value added
1,112,151
Total
2,872,294
GDP + 1.6%
777,071
2,872,294
7.6. Scenario 4
Unit: Billion VND
Final use
Intermediate
used
Consumption
Investment
Export
Total
HHs.
Govt.
1,171,787
555,082
76,626
295,244
China + AEC + TPP
115,705
46,541
479
41,202
203,927
RoW
472,651
217,332
2,010
166,408
858,401
Total Import
588,356
263,873
2,489
207,610
1,062,328
818,955
79,115
502,854
Domestic
Total Intermediate
1,760,143
Value added
1,115,667
Total
2,872,810
GDP + 2.0%
777,071
2,872,810
7.7. Scenario 5
Unit: Billion VND
Final use
Intermediate
used
Consumption
Investment
Export
Total
HHs.
Govt.
1,171,787
559,385
76,626
296,806
China + AEC + TPP
115,705
46,541
479
41,202
203,927
RoW
472,651
217,332
2,010
166,408
858,401
Total Import
588,356
263,873
2,489
207,610
1,062,328
823,258
79,115
504,416
Domestic
Total Intermediate
1,760,143
Value added
1,121,531
Total
2,881,675
GDP + 2.5%
777,071
2,881,675
8. Conclusion
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