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The Trans -Pacific Partnership Agreement: an Opportunity for Viet Nam to reduce its Economic Dependence of China Scott H. Murray &Tai H. Pham Discipline.

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Presentation on theme: "The Trans -Pacific Partnership Agreement: an Opportunity for Viet Nam to reduce its Economic Dependence of China Scott H. Murray &Tai H. Pham Discipline."— Presentation transcript:

1 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

2 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

3 1. Problem statement The ASEAN Economic Community (AEC) by 2015 The Trans-Pacific Partnership (TPP) by Quantitative assessment of economic effects of AEC and TPP on the textile & apparel, footwear and furniture industries in Vietnam

4 The flagship FTAs: AEC, TPP, RCEP & FTAAP?

5 2. Members of AFTA, TPP, RCEP & FTAAP Cambodia Indonesia Laos Myanmar Philippines Thailand Brunei Malaysia SIngapore Viet Nam AEC Australia Japan New Zealand Canada Chile Mexico Peru United States TPP Russia Taiwan FTAAP China Korea RCEP India

6 TPP

7 RCEP

8 FTAAP

9 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

10 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

11 China’s New silk road vision

12 FTA: Beneficial to poor countries?

13 5. Theories of international trade

14 5.1. China encourages exports and discourages imports

15 5.2. China keeps its exchange rate weak

16 5.3. China & New International Division of Labor

17 Trade indicators 5.4. China & Viet Nam are competing economies Revealed symmetric comparative advantage index Intra-industry trade indexTrade specialization indexBilateral trade intensity indexTrade complementarity index

18 Revealed symmetric comparative advantage (RSCA) index  = Revealed comparative advantage (RCA) RSCA = (RCA -1) (RCA +1)

19 HS code RSCA of VIetnam, relative toRSCA of China, relative to ChinaGlobalVietnamGlobal Animal & Animal Products (0.8) (0.4) Vegetable Products (0.8) (0.5) Foodstuffs 0.3 (0.1) (0.3) (0.4) Mineral Products 0.7 (0.1) (0.7) (0.8) Chemicals & Allied Industries (0.5) (0.7) 0.5 (0.3) Plastics / Rubbers (0.2) (0.1) Raw Hides, Skins, Leather, & Furs (0.0) Wood & Wood Products 0.1 (0.1) (0.2) Textiles (0.1) Footwear / Headgear (0.5) Stone / Glass (0.1) (0.2) 0.1 (0.1) Metals (0.4) Machinery / Electrical (0.4) (0.1) Transportation (0.5) (0.7) 0.5 (0.3) Miscellaneous (0.2) Commodities not elsewhere specified 0.6 (0.6) (0.9) Explanatory notes Maximum value1 Minimum value Critical pointComparative advantage = >0

20 HS code - top ten RSCA of VIetnam, relative toRSCA of China, relative to ChinaGlobalVietnamGlobal '85Electrical, electronic equipment (0.2) '27Mineral fuels, oils, distillation products, etc 0.8 (0.1) (0.8) '64Footwear, gaiters and the like, parts thereof (0.5) 0.6 '62Articles of apparel, accessories, not knit or crochet (0.4) 0.5 '61Articles of apparel, accessories, knit or crochet (0.2) 0.6 '84Machinery, nuclear reactors, boilers, etc (0.6) (0.4) '03Fish, crustaceans, molluscs, aquatic invertebrates nes 0.8 (0.8) (0.0) '94Furniture, lighting, signs, prefabricated buildings (0.1) 0.5 '09Coffee, tea, mate and spices 0.9 (0.9) (0.4) '10Cereals (1.0) (0.8) Explanatory notes Maximum value1 Minimum value Critical pointComparative advantage = >0

21 Trade indicators 5.4. TPP & Vietnam are complementary Revealed symmetric comparative advantage index Intra-industry trade indexTrade specialization indexBilateral trade intensity indexTrade complementarity index

22 HS code RSCA of VIetnam, relative toRSCA of TPP, relative to TPPGlobalVietnamGlobal Animal & Animal Products 0.5 (0.5) (0.0) Vegetable Products 0.5 (0.5) Foodstuffs 0.1 (0.1) (0.2) Mineral Products (0.0) (0.1) 0.0 (0.1) Chemicals & Allied Industries (0.7) 0.7 (0.1) Plastics / Rubbers 0.1 (0.1) (0.0) Raw Hides, Skins, Leather, & Furs (0.7) (0.4) Wood & Wood Products (0.1) Textiles (0.8) (0.5) Footwear / Headgear (1.0) (0.8) Stone / Glass (0.2) Metals (0.3) (0.4) 0.3 (0.0) Machinery / Electrical (0.2) (0.1) Transportation (0.8) (0.7) Miscellaneous 0.0 (0.0) Commodities not elsewhere specified (0.7) (0.6) Explanatory notes Maximum value1 Minimum value Critical pointComparative advantage = >0

23 HS code - top ten RSCA of VIetnam, relative toRSCA of TPP, relative to TPPGlobalVietnamGlobal '85Electrical, electronic equipment '27Mineral fuels, oils, distillation products, etc 0.1 (0.1) (0.2) 0.1 '64Footwear, gaiters and the like, parts thereof (0.8) 1.0 '62Articles of apparel, accessories, not knit or crochet (0.7) 0.9 '61Articles of apparel, accessories, knit or crochet (0.7) 0.9 '84Machinery, nuclear reactors, boilers, etc (0.4) 0.1 (0.4) '03Fish, crustaceans, molluscs, aquatic invertebrates nes 0.8 (0.1) 0.8 '94Furniture, lighting, signs, prefabricated buildings (0.3) 0.7 '09Coffee, tea, mate and spices (0.5) 1.0 '10Cereals Explanatory notes Maximum value1 Minimum value Critical pointComparative advantage = >0

24 Extended Input-Output Table for Vietnam

25 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%

26 Inaccurate data of value of exports and imports between Viet Nam and China China_export > VN_import: 8.6% China_import > VN_export: 1.2%

27 Inaccurate data on exports and imports between TPP and Viet Nam TPP export > VN_import: 4.6% TPP_import > VN_export: 10.2%

28 Inaccurate data on exports and imports between ASEAN* and Viet Nam VN_imports > ASEAN*_exports: 0.02% VN_exports > Asean*_imports: 27.0%

29 6. Extended Input-Output Table for Vietnam ASEAN 9% RCEP 23% FTAAP 28%

30 6. Extended Input-Output Table for Vietnam RCEP 20% FTAAP 23% ASEAN 7%

31 6. Extended Input-Output Table for Vietnam 29% > 0 41% = 0 30% < 0 RCEP 27% FTAAP 31% ASEAN 8%

32 ASEAN 25% RCEP 68% FTAAP 81% ASEAN 17% RCEP 47% FTAAP 74% 6. Extended Input-Output Table of Vietnam

33 6.1. Vietnam's imports from the blocs

34 6.2. Vietnam's exports to the blocs

35 Top ten exporters to Vietnam Viet Nam imports from: China Korea, Republic of Singapore Japan Taipei, Chinese Thailand India United States of America Malaysia Germany Indonesia Australia Unit: Billion USD

36 Top ten exporters to Vietnam Viet Nam imports from: China19.9%20.1%22.9%25.2%25.0%27.0%33.8% Korea, Republic of9.7%10.4%10.0%10.6%11.6%12.5%14.7% Singapore10.9%11.6%9.8%8.1%8.8%8.2%7.6% Japan9.6%10.4%9.1%8.9%8.3%8.4%7.4% Taipei, Chinese11.4%10.5%8.4%8.2%7.8%6.6%6.2% Thailand6.7%6.6% 6.3%6.1%5.3%5.0% India2.0%2.4%2.5%2.7%4.3%2.9%4.2% United States of America3.2%3.7%4.4%4.0%3.7%3.6%3.5% Malaysia3.9%3.2% 3.8%3.3%3.0%2.9% Germany2.8%2.0%2.2% 2.0%1.7% Indonesia2.3% 2.1% 1.8%1.7% Australia2.0%1.7%1.5% 1.8%1.4% Unit: Billion USD

37 Top ten importers from Vietnam Viet Nam exports to: United States of America ,0 China Japan Germany Korea, Republic of Malaysia United Kingdom France Australia Thailand Singapore Italy Unit: Billion USD

38 Top ten importers from Vietnam Viet Nam exports to: United States of America21.8%20.5%21.1%20.7%18.5%16.8%18.8% China6.1%6.4%7.6%9.1%11.1%12.7%12.2% Japan11.7%13.5%11.3%10.7%11.6%11.8%10.3% Germany5.6%5.2% 5.1%5.6%5.2%5.4% Korea, Republic of2.7%3.0%3.9%4.3%5.1%4.5%5.2% Malaysia3.4% 4.1%4.3% United Kingdom3.6%3.3%3.1%2.9%3.0%3.1%3.3% France3.3%2.7%2.8%2.5%2.7% Australia7.1%6.5%4.1%3.6%2.9%2.6%2.7% Thailand2.1% 2.3%1.8%2.0%2.4% Singapore4.0%3.5%3.7%2.1%1.7% 2.2% Italy1.9%1.8%1.6% 1.8% 2.1% Unit: Billion USD

39 The scenarios reduces economic dependence on China 7. Scenarios

40 7.1. The Extended Input-Output Table Intermediate used Final use Total Consumption Investment Export HHs.Govt. Domestic 1,171, ,607 76, , ,554 2,852,116 TPP174,17473, ,563307,844 Asean*62,67124, ,155102,183 China114,09745, ,394200,589 RCEP*57,56034, ,433113,984 FTAAP*80,44127, ,940126,293 RoW97,80557, ,317208,097 Total Import 586, ,960 2, ,802 1,058,990 Total Intermediate 1,757,874 Value added 1,094,242 Total 2,852, ,567 79, ,005 Unit: Billion VND

41 7.2. Scenario 1 Intermediate used Final use Total Consumption Investment Export HHs.Govt. Domestic 1,171, ,607 76, , ,225 2,801,787 TPP174,17473, ,563307,844 Asean*62,67124, ,155102,183 TPP + AEC119,80247, , ,619 RCEP*57,56034, ,433113,984 FTAAP*80,44127, ,940126,293 RoW97,80557, ,317208,097 Total Import592,453265,2412,504208,822 1,069,020 Total Intermediate1,763,579 Value added1,038,208 Total2,801,787817,84879,130503,025 Unit: Billion VND GDP - 5.1%

42 7.3. Scenario 2 Intermediate used Final use Total Consumption Investment Export HHs.Govt. Domestic 1,171, ,607 76, , ,225 2,801,787 TPP174,17473, ,563307,844 Asean*62,67124, ,155102,183 TPP + AEC 131,78252, , ,680 RCEP*57,56034, ,433113,984 FTAAP*80,44127, ,940126,293 RoW97,80557, ,317208,097 Total Import604,433270,0322,553213,063 1,090,081 Total Intermediate1,775,559 Value added1,026,228 Total2,801,787822,63979,179507,266 Unit: Billion VND GDP - 6.2%

43 Scenarios reduce economic dependence on China 7.4. Scenarios (cont.)

44 7.5. Scenario 3 Unit: Billion VND Intermediate used Final use Total Consumption Investment Export HHs.Govt. Domestic 1,171, ,607 76, , ,071 2,872,294 China + AEC + TPP 115,705 46, , ,927 RoW 472, ,332 2, , ,401 Total Import 588, ,873 2, ,610 1,062,328 Total Intermediate 1,760,143 Value added 1,112,151 Total 2,872, ,480 79, ,813 GDP + 1.6%

45 7.6. Scenario 4 Unit: Billion VND Intermediate used Final use Total Consumption Investment Export HHs.Govt. Domestic 1,171, ,082 76, , ,071 2,872,810 China + AEC + TPP 115,705 46, , ,927 RoW 472, ,332 2, , ,401 Total Import 588, ,873 2, ,610 1,062,328 Total Intermediate 1,760,143 Value added 1,115,667 Total 2,872, ,955 79, ,854 GDP + 2.0%

46 7.7. Scenario 5 Unit: Billion VND Intermediate used Final use Total Consumption Investment Export HHs.Govt. Domestic 1,171, ,385 76, , ,071 2,881,675 China + AEC + TPP 115,705 46, , ,927 RoW 472, ,332 2, , ,401 Total Import 588, ,873 2, ,610 1,062,328 Total Intermediate 1,760,143 Value added 1,121,531 Total 2,881, ,258 79, ,416 GDP + 2.5%

47 8. Conclusion Thanks for listening!


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