In a video message released on Nov. 21, outlining what he plans to do first when he takes office on Jan. 20, Donald Trump, America’s president-elect, said he will pull his country out of the Trans-Pacific Partnership.
By this, he effectively pronounced the trade deal dead and will bury it on his first day in the White House. The announcement also extinguished any faint hope that the Pacific Rim pact, which had been in life support for months, would be resurrected.
During the APEC summit in Lima, Peru on Nov. 19-20, some leaders of the 12 TPP signatories, such as Japan, New Zealand, which already ratified the deal on Nov. 10 and 15, respectively, and Singapore vowed to save it. For these committed members, it remained too premature to call the trade agreement dead. For this reason, they pledged to push ahead with the ratification process, hoping that Mr Trump, who promised to kill off the deal during the presidential campaign, might eventually recognize its economic and strategic significance and embrace it.
By contrast, following Donald Trump’s shock victory in Nov. 8 election and President Barack Obama’s consequent announcement that he would suspend his efforts to win congressional approval before leaving office, Vietnam backed off from the multinational trade deal.
During a question and answer session at Vietnam’s National Assembly, the communist country’s parliament, on Nov. 17, Prime Minister Nguyen Xuan Phuc said though “Vietnam has prepared adequate conditions to join the TPP,” there were now “not sufficient conditions” for it to ratify the deal.
Mr Phuc’s comment attracted, and to some extent surprised, international media and observers not only because it was made at a time when other signatories were still fighting to salvage the pact but also because Vietnam was widely seen as the biggest winner from this massive and far-reaching trade pact.
However, a deeper look at its posture during the last few months will reveal there is nothing surprising in Hanoi’s lack of explicit commitment to the US-led trade pact after Nov. 8.
As the TPP pact would hugely benefit Vietnam – economically, politically and strategically, the Vietnamese government enthusiastically took part in its negotiations, signed the deal, carried out required reforms to implement it and was certain to approve it.
Just two days before the US election, the Central Committee of the Communist Party of Vietnam (CPV) released a resolution on global economic integration, in which the ruling party’s powerful executive body still reaffirmed that Vietnam would ratify the agreement at an “appropriate time”.
Yet, despite all of this, Hanoi was always cautious about ratifying it. Technically, it was ready to approve the deal at its 14th National Assembly’s first session in July and its second gathering that started on Oct. 20 and ended today (Nov. 23). But it decided not to do so.
In September when explaining why the legislature did not include the TPP approval in the agenda of its recently concluded session, its chairwoman Nguyen Thi Kim Ngan said Vietnam’s ratification would depend on developments in other countries, including the outcome of the American election.
Trump’s triumph and political developments in the US afterward forced the leadership in Hanoi to cool on the deal. From Hanoi’s perspective, vocally advocating for a trade pact, which excluded China and was perceived as an attempt by the outgoing Obama administration to contain Beijing’s rising influence in the region, while knowing that America’s incoming administration would dump the deal, is strategically unwise.
Any overt effort by Vietnam to push ahead with the ratification process and to revive the TPP may not be well received in Beijing. Its caution is also understandable given the fact that its giant northern neighbor is stepping up to fill the void left by the new American government.
Recent positive developments in Vietnam-China relations could also be a factor behind Vietnam’s lack of enthusiasm toward the TPP.
Following Nguyen Xuan Phuc’s six-day trip to China in September where he was warmly received by China’s top leaders – including President Xi Jinping and Premier Li Keqiang – Dinh The Huynh, the CPV’s second highest-ranking official and a leading candidate to succeed General Secretary Nguyen Phu Trong, visited Beijing in October.
Zhang Dejiang, China’s Permanent Politburo Member and Chairman of the Standing Committee of the National People’s Congress, was in Hanoi on America’s election day. He was China’s highest ranking official to travel to its southern communist neighbor this year.
During these high-level visits, both sides emphasized – and pledged to enhance – their friendship, comradeship and cooperation.
Another factor might influence Hanoi’s recent posture toward the TPP and China is President Rodrigo Duterte’s decision to shift the Philippines’ allegiance away from America, its longstanding treaty ally, toward China, with which, like Vietnam, it is still locked in disputes over the South China Sea.
Independent foreign policy
In fact, the Philippine leader’s dramatic about-face already led some international relations experts, notably China-friendly ones, to contend that Vietnam and America’s other Asian partners may follow suit.
After Trump’s election, especially after his announcement to abolish the TPP, on his first day in office, those observers may now have more reason to believe that Vietnam will pursue a Duterte-like pivot to China.
Under the Obama presidency, Hanoi’s ties with Washington have greatly advanced, especially after China’s placement of its huge oil rig, HS-981, in Vietnam’s exclusive economic zone in May 2014.
Vietnam was also very receptive to the Obama administration’s rebalance to Asia policy. It would have preferred a Hillary Clinton victory because under a Clinton presidency, America’s Asia pivot would be continued, even enhanced.
With his “America first” policy that is very isolationist and protectionist in outlook, it is very likely that Donald Trump will abandon not only the TPP but also America’s Asia pivot policy. As a result, like America’s other key Asian allies and partners, Vietnam will not enjoy good relations with the US under the Trump administration as it has had under the Obama presidency.
Coupled with the Philippines’ overt overture toward China, the Trump administration’s potential withdrawal from Asia may make Vietnam lean toward China. Nonetheless, a Duterte-like shift to Beijing is very unlikely.
In his remark, Nguyen Xuan Phuc also stated that Vietnam will stick by its longstanding independent foreign policy.
Though similar in name, Vietnam’s “independent foreign policy” is completely different from the Duterte government’s “independent foreign policy,” both in rhetoric and content.
Instead of worsening or cutting ties with the US, United Nations and the European Union, or proposing to form a triumvirate alliance with China and Russia in “against the world,” Vietnam has sought – and continues to seek – to diversify and multilateralize ties, “considering all countries as friends.”
There is no doubt that the leadership in Hanoi will show itself more open to Beijing at both bilateral and multilateral levels. For instance, with the demise of the TPP, like other regional countries, it will be willing to participate in China-led free trade initiatives, e.g. the Regional Comprehensive Economic Partnership.
However, this does not mean it will tilt heavily toward Beijing and neglect its relations with Washington. In fact, economically and strategically, balancing its relations between these two superpowers is central to Vietnam’s development, prosperity and security.
For instance, for several years, China has been Vietnam’s top trading partner, but the US has been its biggest export market. In 2015, its export to America was worth US$ 33.5 billion whereas its export to its giant neighbor valued only $17 billion. Without a huge market, such as the US, Vietnam would suffer a massive trade deficit, which is mainly caused by enormous amount of imports from China.
Under the Trump presidency, it is likely harder for Vietnamese businesses and Vietnam-based companies to export their products to the US. So, it is vital for Hanoi to seek to establish and maintain good relations with America’s new government.
Besides the US, Vietnam have already enjoyed good ties with other main TPP signatories, notably Japan, Singapore and Australia, as well as other key international partners, e.g. the EU, ASEAN, India and South Korea.
In addressing the concern of Vietnam’s lawmakers and public over the future of the TPP, the Vietnamese Prime Minister also stated that: “We already have signed 12 free trade agreements, so joining the TPP is good, but without joining TPP we will still continue to further the economic integration under programs we have joined.” These can be other key reasons why Hanoi was not so overtly committed to reviving the TPP.
However, faced with the Trump administration’s isolationist and protectionist posture, besides carrying necessary forms to improve its economic growth and competitiveness, it is now even more essential for Hanoi to boost its ties with key partners.
Overall, Trump’s rise and with it, the fall of the TPP and America’s potential disengagement with Asia will undoubtedly be a big blow for Vietnam, economically and strategically. Given all of these, Vietnam may need to rethink its foreign policy to adapt to a new geopolitical environment in the Asia Pacific region.
Yet, if such a rethink occurs, it will – or should – not be a shift in direction, but a rather a change in intensity. The country should continue and strengthen its independent foreign policy by further diversifying and multilateralizing its external relations.
Recent developments in Manila and Washington are a good lesson for Vietnam to pursue such an independent foreign policy. A leadership change in a country can result in major changes in policies in that country. A proactive and autonomous policy will be always a better way for dealing with such changes.