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Economy

Vietnam keen on salvaging Pacific trade deal minus US

Raw materials imports, labor rights remain sticking points for 'TPP 11'

Vietnamese President Tran Dai Quang, right, with Japanese TPP point man Toshimitsu Motegi in Hanoi on Tuesday.   © Kyodo

HANOI -- Vietnam seeks a preliminary deal this week on moving forward with the Trans-Pacific Partnership trade pact without U.S. participation, President Tran Dai Quang told Japan's TPP point man here Tuesday, even though the smaller group would not include the Southeast Asian nation's biggest export market.

Quang voiced Vietnam's commitment, reciprocated by Japan, ahead of a high-level meeting of the TPP 11 -- the remaining members after President Donald Trump pulled the U.S. out.

"There is no doubt that momentum toward a deal is gathering," Japan's Toshimitsu Motegi told reporters afterward.  "The question is how much flexibility member states are willing to exercise."

Since the U.S. quit the original 12-member TPP, remaining parties have sought to freeze certain provisions championed by Washington. Tokyo seeks to limit the scope of the freezes as much as possible.

Vietnam has pursued a number of free trade deals in recent years, including the TPP. 

Rules that would generally disqualify raw materials from non-TPP countries from reduced tariffs will be one area of contention for the country. Vietnam is a major exporter of clothing, with most of the materials coming from China.

Had the U.S. stayed in the TPP, Vietnamese companies could have simply procured from America instead and exported more clothing there. Now, many Vietnamese garment companies worry about having to adapt production to changes in suppliers. Because those that still import materials from China may be put at a serious disadvantage, opinion on the TPP remains divided.

Cabinet ministers and national leaders from the TPP 11 gather for negotiations in Danang starting Wednesday. Having Vietnam as the host country also brings the issue of labor rights to the fore. Organized labor in Vietnam is under the control of a ruling Communist Party that does not allow independent unions. But the current TPP calls for expanded worker rights.

The prospect of a TPP 11 deal appears to have brightened now that the government of New Zealand Prime Minister Jacinda Ardern, who took office last month, is moving to clear potential legislative obstacles to negotiations. Ardern had been seen as disinclined toward an agreement, so proponents see her new stance as a welcome sign of flexibility.

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