Vietnam Takes the Lead on Indo-Pacific Economic Integration

A farmer in Vietnam’s Mekong Delta. Credit: UN Photo/Kibae
Park

By Kyle Springer
PERTH, Australia, Nov 12 2020 (IPS)

This was the year that Vietnam was poised to make progress on
its rise as a regional leader. Under the auspices of Vietnam’s
ASEAN chairmanship, a breakthrough in global trade has been
achieved despite rising protectionism and a global
pandemic.

Assuming the chair of ASEAN in January, Vietnam’s diplomacy
has proven adaptable amid the constraints of COVID-19. The
successful completion of the Regional Comprehensive Economic
Partnership (RCEP) trade agreement under Vietnam’s watch this
year will cement its claim to middle power leadership in the
Indo-Pacific region.

The 2020 ASEAN Summit would have been easy to write off, but we
have learned to expect a lot from a Vietnam-chaired year. Consider
what Vietnam’s leadership has delivered in the past. When Vietnam
chaired ASEAN in 2010, it
inaugurated the ASEAN Defence Ministers’ Meeting (ADMM) Plus
,
a defence dialogue of all ten ASEAN members and its eight dialogue
partners, which includes the US and China.

When Vietnam convened the East Asia Summit (EAS) that same year,
the US and Russia attended as Vietnam’s guests, paving the way
for their official
membership in the summit the following year
. The ADMM Plus and
the EAS are now key institutions in the political architecture of
the Indo-Pacific.

And in the crisis year of 2020, Vietnam’s skillful diplomacy
once again comes to the rescue. When Vietnam delivers RCEP during
this November’s adjusted Summit process, it will be the most
significant development in the global trade system since the
establishment of the WTO in 1994.

Eight years in the making and spanning over thirty rounds of
negotiations, RCEP promises to buttress the post-COVID-19 economic
recovery of its fifteen members. Covering 29 percent of global GDP,
its provisions spur the further
development of regional value chains
and greatly lower
regulatory barriers to investment.

Vietnam’s leadership of RCEP marks its transformation to
become one of the region’s fastest-growing and most
internationally-engaged economies. Thirty years ago, Vietnam
emerged from a period of war during which it had fought every
permanent member of the UN Security Council except the then-Soviet
Union. Vietnam had isolated itself from its Southeast Asian
neighbours when it invaded Cambodia in 1978, and it suffered a
bloody clash with China at its northern border in 1979.

On the economic front, matters were equally dim. Post-war
reconstruction did nothing to boost Vietnam’s inflation-stricken
economy. Five-year economic plans failed to stimulate growth and
production in its agriculture-based economy. Trade and aid
sanctions were placed against it by the US, Australia, and many of
its other neighbours. With this context, no one could have foreseen
the transformation that would later take place.

RCEP perhaps represents the apex of Vietnam’s efforts to
integrate into the global economy starting in the mid-1990s. Coming
on the back of its domestically-focused Doi Moi (renovation)
economic reforms that began in 1986, Vietnam joined ASEAN in 1995
and acceded to the World Trade Organization in 2007. It eschewed
protectionism and began pursuing a number of free trade agreements
starting in 2005.

Today, it has signed a number of deals with advanced economies.
Vietnam has emerged not only as a participant in multilateral trade
efforts, but as a leading proponent of regional trade integration.
It is a member of the Comprehensive and Progressive Agreement for
Trans-Pacific Partnership (CPTPP) with Australia, New Zealand, and
Japan. The CPTPP’s predecessor, the Trans-Pacific Partnership
(TPP), earned fame with US President Donald Trump’s decision to
pull the US from the deal after long being promoted as a
cornerstone of former President Barack Obama’s “rebalance” to
the Asia-Pacific region
.

A few months after the US left the agreement, the remaining TPP
members met on the sidelines of the 2017 APEC trade ministers’
meeting, hosted by Vietnam. There the ministers
reaffirmed the value of the TPP
and discussed how to finalise
it with the eleven of the original signatories.

Here Vietnam made the decision to stay in the agreement, despite
losing market access to its most important trade partner – the
US. Vietnam’s participation in the CPTPP makes Vietnam’s stance
clear: it is committed to trade liberalisation even though the
spirit of the time is decidedly protectionist.

RCEP continues Vietnam’s efforts, and Vietnam once again
delivers an important new institution while it presides in its
moment as ASEAN chair. RCEP is timely as well. It will put Vietnam
and its Indo-Pacific partners in a good place to solve the
economic problems pressuring the region
, not the least the
fallout from the COVID-19 pandemic, which has hit Southeast Asia
particularly hard.

Here again, Vietnam looks like it will come out on top. With its
domestic outbreak under control, Vietnam’s standing in the
forecasts for economic growth are promising. Even under the most
pessimistic modelling,
Vietnam’s economy should maintain positive growth in
2020
.

By the time Vietnam next takes the reins as ASEAN chair,
presumably in 2030, its economy will be well on its way to becoming

one of the world’s largest
. RCEP will get a lot of credit for
that progress.

Along with catalysing post-COVID-19 economic growth in the
broader Indo-Pacific region, RCEP will further enhance Vietnam’s
ability to attract the investment it needs to propel its economy in
this promising direction.

The challenge for Vietnam’s leadership will be matching its
regional ambitions with continued domestic economic reforms.

This article is published under a Creative Commons Licence and
may be republished with attribution.
Source:
Australian Institute of International Affairs

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Vietnam Takes the Lead on Indo-Pacific Economic Integration

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Excerpt:


Kyle Springer
is the Senior Analyst at the Perth US
Asia Centre.

The post
Vietnam Takes the Lead on Indo-Pacific Economic Integration

appeared first on Inter Press
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Vietnam Takes the Lead on Indo-Pacific Economic
Integration