In January 2016, I traveled with a group from Cornell’s faculty of Industrial and Labor Relations for research in Vietnam hosted by Ton Duc Thang University (TDT). Our interests ranged from Corporate Social Responsibility to Organized Labor; however, nearly all of these subjects were impacted by one incoming factor: the Trans-Pacific Partnership (TPP). I knew from the onset that I wanted to address the TPP in writing, but my personal experiences in Saigon certainly influenced an additional aspect of this piece.
It wasn’t until this trip that I began to understand how much it meant for North Vietnam to have won their war in 1975: the one-party system, one-union system, stylized propaganda and hammers and sickles strewn across the streets — but most of all, the images of Ho Chi Minh, Lenin, and Marx. Growing up, these figures were evil in some way. Bad by American standards, but even worse by South Korean. It was like Pyongyang, Kim Jong-il or Jong-un.
On our second day with the TDT students, we passed a statue of Ho Chi Minh, and a student pointed to it, asking if I knew who that was. I looked up at Uncle Ho waving much like Walt Disney, and I said that I did. “We’re very proud,” she replied, and she smiled. That day, I borrowed a biography on Ho Chi Minh, but I think I learned more from a novel I borrowed as well. It was a satire written during the French-colonial era: Dumb Luck by Vu Trong Phung. It was good — funny and surprisingly raunchy. Vu read like Vonnegut; but most all, he granted me insight into an era I knew nothing about. His work clarified how much the French colonial experience influenced modern-day Vietnam.
Unsurprisingly, our group paid a disproportionate amount of attention to the mechanisms of Vietnamese labor — dispute resolution, union structures, etc. — but I wanted to take a different approach: still grounded in the TPP, but with a closer look at Vietnam’s political organs and history. What actions have Vietnamese legislators taken in regards to the TPP? Ultimately, what is the guiding philosophy of Vietnam’s current leadership? The communist nature of Vietnam’s government has long been a roadblock for freer trade with the western world. Some have even interpreted the TPP’s labor side-agreement as a gateway to reform for the country — albeit a small step in that direction.
It was over ice cream, alone, with three TDT students that we finally spoke on the matter. “Secret,” one said, repeating the word. I didn’t fully understand what she meant, gesturing with a lime green spoon. “It’s politically difficult,” she elaborated. The students had heard plenty of remarks from their faculty about the TPP, and they admitted we wouldn’t glean much information on the agreement over formal lecture or conversation. We could learn as much from their silence, however — observing what implicit lines were drawn in our discussions.
The Trans-Pacific Partnership (TPP) signals a major shift in Vietnam’s development and overall engagement with the international community. Vietnamese political and historical realities affect how stakeholders perceive the partnership as well as informing plans to implement changes prescribed by the TPP. I will begin this dispatch with an introduction to Vietnamese political systems. Once understood, these mechanisms can better place the TPP within a Vietnamese framework. I will run through a detailed explanation of the TPP itself, touching on its projected impact on Vietnam. Crucially, Vietnam’s 12th Congress convened in January 2016, and from it, we have a clearer idea of the Vietnamese government’s stance on the partnership.
Party, Politburo, and Assembly
The Socialist Republic of Việt Nam is a single-party state ruled under the Communist Party of Vietnam (CPV). The Party’s supremacy is guaranteed by the National Constitution and Assembly. Vietnam’s National Assembly wields power to amend the constitution, create and amend legislation, define governmental positions and councils, and elect and remove government officials. In practice, the National Assembly has been tightly controlled by the political bureau (politburo) of the CPV. As prescribed by Leninist thought, the party is organized upon principles of Democratic Centralism: this organizational structure implies that political party members are free to discuss and debate matters of policy and national direction, but once a stance is chosen within the party through majority vote, all party members are expected to support and uphold the decision. Thus, the National Assembly has historically converted politburo resolutions into legislation with little open debate on the Assembly floor. Assembly members are expected to vote along party lines, and the same goes for ministerial elections. In contemporary Vietnam, however, infighting and factional politics do occur.
Since Vietnam’s shift into a mixed economy, allowing capitalist enterprise and privatization, the CPV broadened its national vision beyond class-based ideology — its current platform much better supports the interests of the entire Vietnamese population. In 1986, Vietnam’s political culture monumentally shifted during the 6th National Congress. Reformist politicians usurped old leadership, calling for new economic direction for Vietnam. Nguyễn Văn Linh, the CPV’s new general secretary, implemented free-market reforms known as the Đổi Mới reforms. The government strived to transition away from the wreckage of its planned economy to a “socialist-oriented market economic” system. As the government privatized enterprises, farms and factories, the authority of the CPV-backed government remained intact. Vietnam was successfully able to deregulate its economy and welcome foreign investment. The Đổi Mới reforms also brought public freedom of expression, relaxation of censorship, and general liberalization of civil rights. The CPV continued to move away from its historical role as a homogenous entity with a single political perspective.
Despite the weakened ideological legitimacy of earlier purist Marxism-Leninism in Vietnam’s mixed economy, the CPV’s official interpretation of the current economic structure describes a “period of transition to socialism.” Under communist theory, a mixed “socialist-oriented market economy” adheres with national aspirations for a purely communist state — the transition from capitalism to communism moves through gradual stages.
In 1991 and 1996, with the 7th and 8th Congresses and the apparent early success of the Đổi Mới reforms, inter-party debate and factionalism grew between reformers and conservatives. The 10th Congress in 2006 marked further democratization in political power within the CPV. Power was balanced more evenly within the CPV central committee as the strength of high-ranking individuals within party leadership was diminished. This is the current climate of Vietnamese politics. The 12th Congress of Vietnam convened in January 2016 with promises of continued democratization and economic liberalization. Vitally, key figures of reform politics denounced Chinese activities in the South China Sea. The promises of the TPP are at the crux of this movement. With knowledge of the CPV’s history, its conflicts and ideologies, we can better understand Vietnam’s political trajectory.
According to the US Trade Representative, the TPP “promotes economic growth; supports the creation and retention of jobs; enhances innovation, productivity and competitiveness; raises living standards; reduces poverty in our countries; and promotes transparency, good governance, and enhanced labor and environmental protections.” To date, twelve countries have signed the agreement. The TPP facilitates free trade by lowering tariffs and influencing policy in member states – the 30-chapter agreement protects investors and ensures fair competitive conditions of trade, creating and enforcing uniform labor and financial services, as well as environmental and intellectual property policies. Controversially, the agreement also establishes investor-state dispute settlement (ISDS) mechanisms as an additional enforcement mechanism. ISDS grants investors the right to engage in dispute settlement and arbitration proceedings against foreign governments. If a country were to breach a provision of the TPP, an investor from a foreign country could sue that country’s government in a tribunal organized through the United Nations or World Bank. Transnational corporations could sue governments for lost profits due to a perceived or actual breach – a government’s actions would be judged by its effects on profits, regardless of public interest.
The TPP requires commitments from member nations, and the agreement would enforce such commitments through punitive trade sanctions. The agreement hopes to actively “level the playing field” for participating nations, preventing a “race to the bottom” particularly in regards to labor rights: The TPP require all parties to adopt “fundamental labor rights as recognized by the International Labor Organization (ILO), including freedom of association and the right to collective bargaining; elimination of forced labor; abolition of child labor; and the elimination of employment discrimination.”
For Vietnam, there is a labor side-agreement that addresses the unique nature of Vietnam’s current organized labor systems: The Vietnam General Confederation of Labor (VGCL) is the sole labor union of Vietnam – founded as the Red Workers’ General Union in 1929, before expanding representation to the whole country in 1975. All Vietnamese trade unions must affiliate with the VGCL, a naturally political organization directly overseen by the CPV. The VGCL’s official roles include a direct “responsibility to implement the Party’s directions and policies and to contribute to the Party’s development.” Likewise, the VGCL leadership largely consists of high-ranking members of the CPV. The Union interacts with the Vietnamese Central Government via the Ministry of Labour – Invalids and Social Affairs (MOLISA). MOLISA works closely with organized labor, and is responsible for state implementation of policy on “labour, employment, occupational safety, social insurances and vocational training; policies for war invalids, martyrs and people with special contribution to the country; social protection and prevention of social evils; child care and gender equality.”
With the TPP’s labor side-agreement on the horizon, the two organizations will be instrumental in the process of reforming Vietnam’s organized labor systems. Under the agreement, Vietnamese workers will be allowed freedom of association: workers may “establish and join an independent union, with full autonomy to elect their leaders, adopt a constitution and rules, manage their affairs, bargain collectively, and strike.” The labor side-agreement also contains an implementation plan with formulated legal and regulatory suggestions along with a review mechanism implementing independent committees to monitor and guide the transition within Vietnam. The review mechanism of the labor side-agreement contains provisions by which the United States may “withhold or suspend tariff reductions” for Vietnam if compliance is not deemed satisfactory within five years.
The Trans-Pacific Partnership can be traced back to 2005 when it served as an extension to the already standing Trans-Pacific Strategic Economic Partnership agreement signed between Brunei, Chile, New Zealand, and Singapore. In 2008, however, the current agreement began to take shape as additional member countries entered discussion of a larger agreement. The negotiations were projected to be completed by 2012 at the time, but contentious provisions regarding agriculture, intellectual property, and investments prolonged talks until a final agreement was reached in October 2015 between all twelve participating nations. All parties signed the agreement on February of 2016 in New Zealand after nearly seven years of negotiations.
The TPP will not enter into force until the ratification of its provision by all signatories within two years – with ratification meaning the domestic approval of the TPP by each member nation’s respective legislatures through each member nation’s respective ratification processes. In the United States, that means approval by Congress: Senate and House. As of now, Congress is expected to vote on the TPP following the 2016 presidential elections. If not ratified by all nations within two years, the agreement will still enter into force if at least six states, with a combined GDP of more than 85% of the combined GDP of all signatory nations, ratify the agreement. The United States is instrumental for this threshold as, together, the United States and Japan account for a little under 80% of the combined GDP of all signatory nations.
As such, the United States was a major player in shaping the TPP. It has been said that “if you want to be in a trade agreement with the U.S., you have to start out with labor laws and practices that are consistent with international standards.” Economically, the TPP will improve the “commercial infrastructures” of countries like Vietnam, allowing them to be more reliable partners for trade. Furthermore, the United States has little to lose from the TPP in its current form. In regards to job loss, the US will not be greatly impacted by increased trade with Vietnam — its key industries compete with China, Bangladesh, and Pakistan. The United States has “lost” those jobs already. Through the TPP, Vietnam will have to play on American and international terms, but perhaps that is what Vietnam wants.
Twelve Congresses Later
Vietnamese analysts look to the TPP as a sign of “Đổi Mới 2.0” — a logical extension of the historic reforms launched in 1986. Key Vietnamese policy makers continue to emphasize the Đổi Mới as an “interconnected process of politics and economics.” Just as the initial steps of the Đổi Mới led to a liberalized government, Vietnam’s participation in the TPP will enable “more competent, transparent governance and pressure to overhaul domestic corporations to be more competitive.” The TPP is key in these larger steps towards more comprehensive economic and democratic reforms. Recent political rhetoric in Vietnam has been inundated with uncharacteristically direct language against corruption and for the expansion of democratic spaces in Vietnam — although, not in ways that undermine the Party’s monopolistic control of national power.
The events of the 12th Congress in January 2016 only reaffirmed Vietnam’s strategy and outlook to the TPP. Although the Congress’s results included the election of a conservative and historically pro-China CPV General Secretary, Nguyen Phu Trong, instead of pro-business reformer, Nguyen Tan Dung, Vietnam’s leadership remains undivided in its opinion of the TPP. In regards to economic ideology and development, Vietnam’s senior leadership holds little visible dissent. The CPV will only gain power by delivering on its promises of economic growth and general prosperity. By accepting an open and competitive economy replete with diverse international engagement, Vietnam can forestall domestic discontent. The 12th Congress’s economic resolutions were clear and consistent: for 2016-2020, plans were outlined for the direct support of private sector growth, “including creation of a level playing field with equal access to credit, land, and other resources.” Leadership publicly espoused the private sector as “an important engine of the economy,” urging national movement for supportive policies. The 2020 economic targets strive for an “average annual 6.7 percent GDP growth and a rise of GDP per capita to $3,750 by 2020, an increase of 83 percent from 2014 levels.” The TPP is instrumental for these optimistic numbers. Vietnam’s largest industries — seafood, garments, and textiles — are expected to greatly benefit from the elimination of import taxes in member nations. Vietnamese apparel and footwear exports are projected to increase 50% within a decade. Furthermore, the TPP will certainly contribute to increased foreign direct investment in Vietnam: “Companies such as Texhong Textile Group Ltd., Shenzhou International Group Holdings Ltd. and Pacific Textiles Holdings Ltd. are relocating operations to Vietnam to take advantage of the trade agreement.” Investors have already moved on Vietnam, granting a short-term boost to Vietnamese markets. With Vietnam projected to benefit the most out of all twelve signatories of the TPP, there is near universal governmental support for the agreement — including the CPV Central Committee’s endorsement for TPP ratification in preparation of the 12th Congress. Vietnam’s economy has performed well over recent years, but the slowing of the Chinese economy has left the Vietnamese leadership anxiously searching for quicker systemic reforms.
Not all Vietnamese markets will benefit, however. Vietnam’s domestic agriculture is projected to struggle against multinational corporations, along with local pharmaceutical manufacturers limited by increased patent protections. The price of medicine will rise as domestic production decreases. Vietnam’s leadership is closely examining necessary transitions, restructuring domestic agricultural industries in order to aid against international competition.
State-owned enterprises and the VGCL’s role in the new multi-union system are also being reexamined. Thus far, the Vietnamese Government publicly supports proposed institutional changes. The VGCL openly acknowledges freedom of association as an inevitability in Vietnam. Easing this realization, the Union understands that the transition would not weaken the VGCL’s power outright: the TPP does not recommend dismantling the VGCL, and the union would maintain close ties with the CPV.
On the other hand, state-owned enterprises are already targeted for reform, their rampant inefficiencies coming to public light. Calls for privatization, however, have been met with pushback as state-enterprise leaders cite “state capital preservation” as a constitutional mechanism for economic stability. In this fight, the TPP provides further leverage for governmental reform. Privatization procedures are required of member states, which would affect nearly 500 enterprises, including major players such as “Vinamotor, the Vietnam Posts and Telecommunications Group (VNPT), and Vietnam Airlines.”
More than just an economic boon for Vietnam, the TPP also serves as a political and highly strategic agreement capable of undermining Chinese influence in Southeast Asia. The Vietnamese leadership recognizes the TPP as a balancing strategy against Chinese authority. It is no secret that Vietnam hopes to rely less upon China, and anti-Chinese sentiment has blossomed into a serious force in Vietnamese politics with recent confrontations between the two nations. In 2014, Chinese movement into the South China Sea spurred riots across Vietnam. Violent demonstrations largely targeted foreign-owned factories, including the Taiwanese Far Eastern Group manufacturing plant we visited on our GSL. The looting and destruction of capital was well-documented, and measures were taken to distance the facility from Chinese influence – the motto of the corporation, for example, was replaced with Vietnamese words as opposed to the Chinese characters that were torn down in the riots. Recently, Vietnam once again observed Chinese movement to deploy oil rigs in the South China Sea.
The 12th Congress conveyed further consensus that Vietnam needs to stand against China to maintain its own sovereignty. Although the statements of Congress will have little actual impact on Chinese actions, the message is clear: Vietnam is ready to engage with the trade agreements in order to maintain regional political agency. In 2015, Vietnam actively and successfully negotiated trade agreements with South Korea and the European Union. Even as Vietnam dedicates itself to a “non-alignment” approach to foreign policy when it comes to “great powers” such as China and the United States, the multilateral nature of the TPP leaves Vietnam free to strengthen its ties to the United States without directly aligning the two nations. Crucially, the TPP represents a large step for US-Vietnamese relations as Vietnam hopes to distance itself from Chinese support.
Vietnam’s Place at the Table
Contrary to my initial perceptions, the Vietnamese government supports the TPP rather transparently. Through the 12th Congress, the CPV has crafted a tangible economic blueprint for Vietnam’s development over the next few years with calls for “growing the GDP by 7% every year through international integration, meaning trade deals, and the pursuit of foreign investment in export manufacturing.” The CPV holds near absolute authority in Vietnam, and few internal checks-and-balances can affect this national direction.
Vietnam’s stance on the TPP should not come as a surprise. Historically, Vietnamese economic policy has certainly built toward the TPP’s adoption through the Đổi Mới reforms. Vietnam’s economy is expected to rise to 17th largest in the world by 2025, due in large part to its participation in the TPP — the agreement’s signatories account for a whopping 40% of the world’s GDP. Foreign Direct Investment (FDI) increased last year with news of the impending agreement, and further enthusiasm for Vietnam’s economic future is expected after the results of the 12th Congress. Vietnam’s leadership is openly committed to “proactive international economic integration” in line with the tenets of the Đổi Mới reforms. Vietnam’s major partners in the TPP, including the United States and Japan, are consumerist complements to Vietnam’s producerist capacities. Vietnam’s strengths will be highlighted as demand for its primary exports and manufacturing capacities increase. Vietnam’s primary economic competitors (China, India, and Thailand) remain outside of the TPP. The agreement’s economic benefits for Vietnam are certain.
Critics of the TPP raise questions of enforcement within Vietnam, particularly on labor standards; however, Vietnam truly has enough to lose from sanctions and trade barriers that significant non-compliance is unlikely. With the TPP, Vietnam has negotiated itself into a strong position, and the nation should be expected to fight to maintain that.
The United States has made a point of crafting stronger labor rights enforcement mechanisms into recent trade agreements: for example, labor inspectors have grown in number for Latin American countries who signed trade deals with the US as far back as the 1990s. Quick action and improvement was observed in Bangladesh after the United States revoked trade privileges in response to a deadly factory collapse two years ago. It is generally understood what economic power the United States wields, but its effectiveness as a policy instrument for positive change should not be underestimated. It is the responsibility of “great powers” to facilitate development, and in the realm of international development, it should be understood that unless a developing country discovers a miraculously valuable natural resource within its borders, there is little hope for development in our contemporary age of global markets beyond freer economic participation. The Trans-Pacific Partnership is unprecedented in this regard, serving as a necessary step for the development of Vietnam — a reality the CPV, despite its long and tumultuous history, seems to have embraced.
Andy Kim is a first-year J.D. candidate at NYU School of Law. His research interests include geoeconomic strategy, securities regulation, and labor & employment policy in Southeast Asia.