The rising tide of protectionism threatens to disrupt economic growth in Asia, Vietnam’s deputy prime minister warned on Monday, calling for a renewed global commitment to the tried-and-true principle of free trade.
Economic cooperation, Truong Hoa Binh told the Future of Asia conference in Tokyo, has been instrumental in helping Asia overcome crises and become the world’s growth engine. In contrast, he said, “The return of protectionism leads to tension in trade relations between the world’s leading economies.”
Binh’s speech emphasized how Vietnam is moving on after U.S. President Donald Trump withdrew from the Trans-Pacific Partnership. He said Vietnam is committed to frameworks including the revived TPP 11 — a Japan-backed agreement formally known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP.
“We also highly value the Japanese government’s effort in accelerating the conclusion of the negotiation and the signing of the CPTPP,” he said. “We hope that Japan, as a leading economic partner of many Asian economies, will serve as a locomotive for enhancing regional economic integration and connectivity.”
Vietnamese Prime Minister Nguyen Xuan Phuc had said in March that he hoped to expand a revived TPP to include the U.S. and other countries, to drive growth and curb protectionism. But for the time being, Vietnam is focused not only on the CPTPP but also the proposed Regional Comprehensive Economic Partnership, a China-led framework.
Binh stressed that Asia should adhere to international law-based frameworks like the World Trade Organization.
“Even without the U.S., the Trans-Pacific Partnership is very important as it covers a population of 500 million across the 11 member nations, with total GDP of over $10 trillion,” Binh said in a separate interview. “Coupled with the economic growth in Asia, the participating countries will reap a lot of benefits.”
Along with Vietnam and Japan, the CPTPP spans Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru and Singapore. Together, they account for around 13.5% of global economic output — a significant figure, though far smaller than the 40% the TPP would have covered with the U.S.
“Asia’s GDP growth accounts for 45% of global GDP and is expected to reach 50% by 2025,” Binh said. Asian countries have also become bigger players in global trade and investment, accounting for around one-third of international foreign direct investment, import and export values.
Aside from free trade, Binh said in the interview that agreeing on international standards through pacts like the CPTPP will help Vietnam accelerate domestic reform.
“It will be easier for foreign companies to enter Vietnam, which will connect the country with the global supply chain,” he said. “We will work more closely together with Japan, which has worked so hard toward signing the treaty, and push forward with the ratification process.”
Binh emphasized that Vietnam has been pushing hard to “eradicate” corruption. “Vietnam’s corruption index has improved a lot, and the world is taking note of [the country’s] progress.”
Asked about public debt, which is close to 65% of GDP, Binh said the government would “review infrastructure programs and suppress unnecessary investments.” He added that public-private partnerships would be used to tap private-sector funds for developing infrastructure.
By Nikkei Asia