New hope for Trans-Pacific Partnership
Commonly known as the TPP, the trade agreement was a key policy for the Obama administration. Until Trump pulled the country out, the United States had been a signatory along with 11 other countries including Japan, Vietnam and Australia, said CNN. On the third day of his presidency, Trump signs an executive order withdrawing the United States from the Trans-Pacific Partnership, which would have put around 40 percent of the world economy on the side of the U.S.compared to China’s 18-20 percent.
Dang Hoang Hai Anh, a visiting professor at Indiana University in the U.S., said Biden, unlike Donald Trump, supports global trade and wants to reduce protectionism, which would likely benefit Vietnam, for whom exports are vital.
Biden last year expressed a willingness to lead the U.S. back into the Trans-Pacific Partnership, which is now the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Less harsh economic policies
Michael Piro, COO of Ho Chi Minh City-based consultancy Indochina Capital, said though Biden has concerns about the U.S.’s trade deficit with many countries, including Vietnam, he is unlikely to put pressure as Trump has done.
The U.S. Treasury Department determined that in 2019 Vietnam’s currency was undervalued by about 4.7 percent against the dollar due in part to government intervention, and the Commerce Department last week slapped preliminary countervailing duties on Vietnamese vehicle tires, alleging they were subsidized by an “undervalued currency.”
With Joe Biden is about to take over the office, Nguyen Xuan Thanh, a lecturer at Fulbright University Vietnam, said less pressure in the matter of currency manipulation would lower the risks for the country next year, quoted by VN Express.
Tougher toward China
Some analysts said Biden would maintain the tariffs that Trump imposed on China and the ongoing bilateral trade tension would likely continue, meaning more companies would seek out Vietnam as a safe haven. “In terms of the policy, Washington will continue to be tough with Beijing regardless of whether the U.S. president is a Democrat or a Republican,” Thanh said.
If so, the shift by manufacturers from China to Vietnam will continue as they seek to diversify their supply chain, a trend that began last year.
But Vietnam is not their only destination since other Southeast Asian countries are also taking initiatives to attract foreign direct investment and many companies are also considering returning to their base in North America and Europe.
Analysts expect a Biden-led administration to have a less dramatic effect on stock markets than Trump’s.
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