Phân tích so sánh các hiệp định thương mại tự do song phương của Việt Nam: Độ rộng và độ sâu của hội nhập

Nội dung text: Phân tích so sánh các hiệp định thương mại tự do song phương của Việt Nam: Độ rộng và độ sâu của hội nhập

1. COMPARATIVE ANALYSIS OF VIETNAM’S BILATERAL FREE TRADE AGREEMENTS: COVERAGE AND DEPTH OF INTEGRATION PHÂN TÍCH SO SÁNH CÁC HIỆP ĐỊNH THƯƠNG MẠI TỰ DO SONG PHƯƠNG CỦA VIỆT NAM: ĐỘ RỘNG VÀ ĐỘ SÂU CỦA HỘI NHẬP Joonheon Song118 Tokyo International University, Japan Abstract Since late 2010, Vietnam’s free trade agreement (FTA) policy has changed from mainly ASEAN+1 FTAs to the aggressive conclusion of bilateral agreements with major trading and investment partners. This paper examinesthe content of Vietnam’s bilateral FTAs with the United States, Japan, Chile, South Korea, Eurasian Economic Union, and the European Union. In order to compare the coverage and depth of integration, this paper focuses on the ‘WTO-plus’ and ‘WTO-extra’ provisions of the FTAs, which are policy areas already covered by the WTO agreements and issues falling outside the current WTO mandate, respectively. The findings of this paper could be useful for better understanding of the features of Vietnam’s bilateral FTA beyond tariff reduction. Keywords: Vietnam, Free trade agreement, WTO-plus, WTO-extra JEL Classifications: F13, F15, F16 Tóm tắt Từ cuối năm 2010, chính sách hiệp định thương mại tự do (FTA) của Việt Nam đã có nhiều thay đổi, từ ASEAN+1 FTAs sang các hiệp định song phương mạnh mẽ hơn với các đối tác thương mại và đầu tư chính. Bài báo này nghiên cứu nội dung của các FTA song phương giữa Việt Nam với Hoa Kỳ, Nhật Bản, Chile, Hàn Quốc, Liên minh kinh tế Á - Âu và Liên minh châu Âu. Nhằm so sánh độ rộng và độ sâu của hội nhập, bài báo tập trung vào các nội dung “WTO cộng” và “WTO bổ trợ” trong các FTA, đây là các khu vực chính sách đã được bàn đến trong các hiệp định WTO và các vấn đề bên ngoài phạm vi điều chỉnh hiện nay của WTO. Kết quả của nghiên cứu này rất hữu ích trong việc giúp hiểu rõ hơn các đặc điểm của hiệp định thương mại tự do song phương của Việt Nam bên cạnh việc cắt giảm thuế quan. Từ khoá: Việt Nam, Hiệp định thương mại tự do, WTO cộng, WTO bổ trợ Introduction With the proliferation of free trade agreements(FTAs) worldwide since the 1990s, the East Asian countries have also aggressively concluded FTAs for the purpose of promoting trade and economic cooperation. According to the World Trade Organization (WTO), since the creation of the WTO in 1995, over 400 regional trade agreements(RTAs) covering trade in goods or services have been notified. As of 1 September 2016, a total of 267 RTAs(FTAs 118Address: 1-13-1 Matoba-Kita, Kawagoe-shi, Saitama, 350-1197, Japan; Tel.: +81-49-232-1111; E-mail address: jsong@tiu.ac.jp. 332
2. and customs unions)were in force (WTO, 2017). While the European region (20% of all RTAs in force) continues to be most active in RTAformation in the process of enlargement of the European Union (EU), East Asian region (17%)records the second largest number of RTAs in force (WTO, 2016). Recently, the member countries of Association of South East Asian Nations (ASEAN) have individuallypromotedthe expansion of bilateral FTAs beyond ASEAN Free Trade Area (AFTA) and ASEAN+1 FTA. According to the Article 24 of the General Agreement on Tariffs and Trade (GATT), FTA “shall be understood to mean a group of two or more customs territories in which the duties and other restrictive regulations of commerceare eliminated on substantially all the trade between the constituent territories in products originating in such territories.” WTO members may conclude FTA with one another concerning trade in goods and services. However, as mentioned by Baker (2005), FTA is no longer simply about trade in goods and tariff reduction. Currently, most FTAs contain various commitments such as investment protection, competition policy, intellectual property rights, labor and environmental regulation, energy, regional cooperation and safety, among a host of other issues. In particular, since the establishment of the WTO, relatively new FTAs tend to cover several policy issues that are not currently covered by the WTO agreements (Horn et al., 2010). Based on the above discussion, this paperanalyze a content of Vietnam’s bilateral FTAs. Vietnam, like other member countries ofASEAN, has actively promoted the conclusion of FTAs with major trading and investment partners.Despite potential risks of trade liberalizationsuch as expansion of the trade deficit due to the surge of imports, Vietnamese government considered that the expansion of FTA is indispensablein order to improve international competitiveness of domestic industries (Sato, 2012). Hence, Vietnam not only has established the FTA network with the world’s major economies, but also has pursueda comprehensive FTA covering a wide range of policy issues. This paper seeks to enhance the understanding of Vietnam’s bilateral FTAs in context of the recent deep and broad integrationbeyond the reduction of tariffs. The remainder of this paper is organized as follows. The next section examines briefly the background and rationale of Vietnam’s FTA policy. Section 3deals with the methodologyadopted for the analysis. Section 4 presents the findings concerning both the coverage and depth of Vietnam’s bilateral FTAs. The final section discusses policy implications of the results. 1. Overview of Vietnam’s FTA Policy Following the commencement of doi moi, which is commonly referred to in English asrenovation, the Vietnamese trade policy regime has experienced significant changes (Athukorala, 2006).Until the end of the 1980s, Vietnam wasthoroughly isolated fromthe capitalist market economybecause of the Vietnam War and then the US sanctions (Jenkins, 2004). The country became a member of various trading arrangements with Socialist countries. However, with the collapse of the Berlin Wall and the dismantling of the Soviet Union, Vietnam became increasingly incorporated into the global economy during the 1990s (Toohey, 2008). As a result of numerous market-oriented legal and 333
3. economic reforms began with the adoption of doi moi in 1986, the Vietnamese economy underwent changes from a centrally planned and a relatively closed economy to a much more market oriented and a global economy increasingly integrated with the world markets (Jenkins, 2004). With the continuous legal and economicreforms undertaken in 1990s, the Vietnamese government has promoted open-door policy in order to further increase exports and foreign direct investment (FDI)which are inevitable for economic growth. Vietnam also has actively expanded a series of trade arrangementsfor the purpose of increasing exports and investment (Thanh and Duong, 2011). To begin with,Vietnam concluded a bilateraltrade agreement with the US in 2001.The bilateral agreement not only referred to the WTO Agreements in the fields of the customs administrations, intellectual property rights, services in trade, and investment, but also includesWTO-plus provisions, particularly in the area of intellectual property rights and investment (Toohey, 2008). In July 2005, Vietnam also became a member of the ASEAN. Until the late 2000s, the Vietnamese government has concluded various FTAs under the ASEAN umbrella, including with China, South Korea, Japan, Australia, New Zealand, and India (Thanh and Duong, 2011; Sato, 2012). Besides, Vietnam officially became the 150th member on 11 January 2007 as results of significant additional legal reforms with the US and other WTO member countries as well as continuous efforts formarket opening(Abbottet al., 2009). Vietnam’s WTO accession was expected to improve competitiveness of domestic industries, particularly in the services sector.As a matter of fact, like Japan and South Korea, Vietnam also has supported multilateralism of the WTO rather than FTAs (Toohey, 2008).Therefore, as mentioned above, the Vietnamese government tended towards the ASEAN-centered FTA, so-called ASEAN+1 FTA, rather than bilateral agreements. There is very little doubt that Vietnam’s efforts for integration with global economy has contributed to changes in economic structure as well as economic growth. For example,Vietnam’s exports to the US have rapidly increasedafter the conclusion of the bilateral agreement in 2001 (Abbott et al., 2009; Cuong et al., 2015). As shown in Table 1, the US is now Vietnam’s largest export market, followed by the EU, ASEAN, China, Japan, and South Korea. By contrast, Vietnam’s bilateral agreement with China has contributed to the increase of imports from the country (Cuong et al., 2015). In 2015,Chinawas Vietnam’s the largest import partner,with approximately 30% of the total import value. Table 1. Major Trade Partners of Vietnam in 2015 (Unit: Million US dollars, %) Export Import Partners Values Ratio Partners Values Ratio United States 33,465 21.7 China 49,499 29.9 European Union 30,937 19.1 South Korea 27,631 16.7 ASEAN 18,254 11.3 ASEAN 23,808 14.4 334
4. China 17,109 10.6 Japan 14,360 8.7 Japan 14,132 8.7 Taiwan 10,992 6.6 South Korea 8,921 5.5 European Union 10,426 6.3 Others 13,198 24.2 Others 28,855 17.4 Total 162,017 100.0 Total 165,570 100.0 Source: General Statistics Office of Vietnam. Cuong et al. (2015) also estimated that the ASEAN-Korea FTA concluded in 2007 hassignificantly induced FDI to Vietnam.According to the statistics of Vietnamese government, South Korea is the biggest foreign investor in Vietnam in terms of both the number of projects and the total registered capital, followed by Japan and Singapore. Thanh and Duong (2011) found that expansion of exports and investmentwasgenerally accelerated in times ofdeepening economic integration through FTAs. Table 2. Cumulative Foreign Direct Investment in Vietnam as of 2015 (Unit: Million US dollars, %) Number of Projects Total Registered Capital Country and Region No. Ratio Values Ratio South Korea 4,970 24.8 45,191 16.0 Japan 2,914 14.5 38,974 13.8 Singapore 1,544 7.7 35,149 12.5 Taiwan 2,478 12.3 30,997 11.0 British Virgin Islands 623 3.1 19,275 6.8 Hong Kong 975 4.9 15,547 5.5 Malaysia 523 2.6 13,420 4.8 United States 781 3.9 11,302 4.0 China 1,296 6.5 10,174 3.6 Netherlands 255 1.3 8,265 2.9 Total (including others) 20,069 100.0 281,883 100.0 Source: General Statistics Office of Vietnam. As a result of market-oriented economic reforms over the past decades, Vietnam’s main trading productshave alsochangeddramatically. In the 1980s, Vietnam’s the main exports overwhelmingly wereagricultural and fishery products. However, the main export products have shiftedfrom agriculture to relatively unskilled labor intensive sectors, such as apparel and footwear, during the 1990s (Toohey, 2008). Since the 2000s, Vietnam’s export growth has been accompanied by a shift toward a larger share of products with higher processing content (Thanh and Duong, 2011). In recent years, Vietnam’s major export sectors have changed to relatively high value-added products, such as smart phone, electronic parts, and computer. 335
5. Table 3. Changes in Major Export Products of Vietnam (Unit: Million US dollars, %) 2005 2015 Products Values Ratio Products Values Ratio Textile, sewing products Phones all of kinds and 4772 14.7 30,166 18.6 parts Footwear 3039 9.4 Textile, sewing product 22,802 14.1 Fishery products Electronic parts and 2733 8.4 15,608 9.6 computer Wood and wooden 1561 4.8 Footwear 12,007 7.4 products Electronic parts and Wood and wooden 1427 4.4 6,892 4.3 computer products Frozen shrimps 1266 3.9 Fishery products 6,596 4.1 Frozen fish 609 1.9 Crude oil 3,710 2.3 Total (including others) 32,447 100.0 Total (including others) 162,017 100.0 Source: General Statistics Office of Vietnam. Since the late 2000s, Vietnam’s FTA policy has changed from mainly ASEAN+1 FTAs to the aggressive conclusion of bilateral agreements with major trading and investment partners.Under the circumstances that Northeast Asian countries such as China, Japan and Korea actively promote FTAs, Vietnam was also forced to follow the trend to avoid being comparatively disadvantaged. According to the analysis by Heng and Gayathi (2004), Vietnam’s further participation in the expansion of FTAs could bring greater economic advantage and lower adjustment costs for efforts in industrialization and economic structural reform. 2. Framework of Analysis Although a tariff reduction is still essential in FTA negotiations, a variety of policy issues related to non-economic as well as economic areas are currently being committed in these agreements (WTO, 2011). The recent trend of regionalism not only encompasses countries at different levels of economic developments, but also focuses on the so-called ‘WTO-plus’ (WTO+) type issues, such as investment, services, trade remedy measures, standards, intellectual property rights, harmonization of regulations. Furthermore, relatively new FTAs are also including various so-called ‘WTO-extra’ (WTO-X) type issues that has not previously been regulated by the WTO (Horn et al., 2010; WTO, 2011; Kleimann, 2013; Słok-Wódkowska and Śledziewska, 2015). Above two categories of FTA provisions - that is, WTO+ and WTO-X areas - were suggested by Horn et al. (2010) for the purpose of analysis of FTAs concluded by the EU and US with third countries. The first category, called WTO+ provisions, refers to policy areas that fall under the current mandate of the WTO and are already subject to some form 336
6. of commitment in WTO agreements. In addition to the reduction in tariffs, the archetypal examples of WTO+ areas includecustoms administration,trade remedy measures, sanitary and phyto-sanitary (SPS) measures, technical barriers to trade (TBT) measures, state aid covered by the General Agreement on Trade in Services (GATS), trade-related intellectual property rights (TRIPs), trade-related investment measures (TRIMs),and export taxes. For instance, Tehet al. (2009) examined WTO+ provisions relating to anti- dumping, countervailing and safeguard measures adopted in 74 RTAs worldwide. In the case of anti-dumping, a number of RTAs have some specific provisions on the determination of dumping and injury, procedure for investigation, imposition and duration of anti-dumping duties, among others. Similarly, Crawford et al. (2013) surveyed 232 RTAs notified to the GATT/WTO, and analyzed global and bilateral safeguard provisions through the comparison of the GATT Article XIX and the WTO Safeguard Agreement. In the case of global safeguard for example, 62 RTAs permit the exclusion of RTA partner, with or without conditions. By contrast, the second category of policy areas, called WTO-X provisions, is meant to deal with issues lying outside the current WTO mandate. For example, Horn et al. (2010) classified environmental obligation as WTO-X area because there are no rules with regard to environmental protection in the WTO. Likewise, a total of 38 policy areas are included in WTO-X provisions, such as competition policy, movement of capital, labor market regulations, economic cooperation, and among others. As shown in Table4, WTO- X areas contain non-economic and trade-related issues, such as cooperation in safety and criminal matters (Słok-Wódkowska and Śledziewska, 2015). According to the analysis of WTO (2011), there are some patterns of WTO-X provisions covered in FTAs. First, while the average number of WTO+ areas covered by FTAs has been graduallyincreasing from 1958 to 2010, WTO-X areas, in contrast, are more included in FTAs coming into force since 2000. Second, the main policy areas covered by WTO-X provisions are competition policy, intellectual property rights not covered by TRIPS, investment, movement of capital, and environmental laws. Third, FTAs between developed and developing countries tend to show a higher average number of WTO-X provisions than FTAs between two developed countries or between two developing countries. Finally, unlike WTO+ areas, most of WTO-X provisions are not legally enforceable, and therefore substantive commitments in FTAs are relatively few. Table4. WTO+ and WTO-X Policy Areas in FTAs WTO+ areas (14) WTO-X areas (38) Industrial goods Anti-corruption Health Agricultural goods Competition policy Human rights Customs administration Environmental laws Illegal immigration Export taxes Intellectual property rights Illicit drugs SPS measures Investment measures Industrial cooperation Technical barriers to trade Labor market regulation Information society State trading enterprise Movement of capital Mining 337
7. Countervailing measures Consumer protection Money laundering Anti-dumping Data protection Nuclear safety State aid Agriculture Political dialogue Public procurement Approximation of legislation Public administration TRIMs Audio visual Regional cooperation GATS Civil protection Research and technology TRIPs Innovation policies Small &medium-sized enterprises Cultural cooperation Social matters Economic policy dialogue Statistics Education and training Taxation Energy Terrorism Financial assistance Visa and asylum Source: Horn et al. (2010). 3. Anatomy of Vietnam’s Bilateral FTAs 3.1. Overview Since the doi moi (renovation)program was adopted in 1986, the Vietnamese government hasconsistently promoted free trade and open-market policies (Toohey, 2008).As mentioned above, the Vietnamese governmentadhered closely to the ASEAN- centered FTA policy after becoming a member of the ASEAN in 1995. As a result, Vietnamhas established the regional FTA network with China, South Korea, Japan, Australia, New Zealand, and India, using the ASEAN platform. However, since late 2010, the government has solely pursuedbilateral FTA as well as the regional and plurilateral agreements, such as the Regional Comprehensive Economic Partnership (RCEP) and Trans-Pacific Partnership Agreement (TPP). In addition to the ASEAN+1 FTAs, Vietnamhas concluded bilateral FTAs with the US, Japan, Chile, South Korea, Eurasian Economic Union (EEU), and the European Union (EU). Currently, Vietnam is also in FTA negotiations withIsrael and European Free Trade Association (EFTA). Table5. Vietnam’s FTAswith Other Partners FTAs Status AFTA and ASEAN+1 FTAs Entered into force in January 1993 ASEAN Free Trade Area (AFTA) Entered into force in July 2005 ASEAN-China FTA Entered into force in June 2007 ASEAN-Korea FTA Entered into force in December 2008 ASEAN-Japan FTA Entered into force in January 2010 ASEAN-Australia-New Zealand FTA Entered into force in January 2010 ASEAN-India FTA 338
8. Bilateral and Plurilateral FTAs Vietnam-US FTA Entered into force in December 2001 Vietnam-Japan FTA Entered into force in October 2009 Vietnam-Chile FTA Entered into force in January 2014 Vietnam-Korea FTA Entered into force in December 2015 Vietnam-Eurasian Economic Union (EEU) FTA Entered into force in October 2016 Vietnam-European Union (EU) FTA Concluded in December 2015 Trans-Pacific Partnership Agreement (TPP) Signed in February 2016 A basic aim of this paper is to identify Vietnam’s bilateral FTAs through the methodology suggested by Horn et al. (2010). While Vietnam has several ASEAN+1 FTAs including AFTA, this paper only scrutinizes the six bilateral agreements as follows: (1) Agreement between the United States of America and the Socialist Republic of Vietnam on Trade Relations (VUSFTA), (2) Agreement between Japan and the Socialist Republic of Vietnam for an Economic Partnership (JVFTA),(3) Free Trade Agreement between the Government of the Republic of Chile and the Government of the Socialist Republic of Vietnam (CVFTA), (4) Free Trade Agreement between the Republic of Korea and the Socialist Republic of Vietnam (KVFTA), (5) Free Trade Agreement between the Socialist Republic of Vietnam, of the One Part, and the Eurasian Economic Union and Its Member States (VEEUFTA), and (6) Free Trade Agreement between the European Union and the Socialist Republic of Vietnam (EVFTA). While there is no question about the importance of TPP in terms of the impacts on the Vietnamese economy, this paper excludes analysisof the big trade agreement signed by 12 countriesin the light of the current situation following the US’s decision towithdraw from the TPP. Of the six bilateralFTAs, the VUSFTA, which entered into force in December 2001, was not only a milestone for fully normalizing US-Vietnam economic relations (Manyin, 2001), but also the touchstone ofVietnam’s WTO accession in 2007 (Abbott et al., 2009). It granted reciprocal most-favored-nation treatment between the two countries.The VUSFTA consists of four parts: market access, trade in services, intellectual property rights, and investment. Next, in October 2009, Vietnam concluded the first comprehensive bilateral FTA with Japan. With the bilateral investment treaty (BIT)between Japan and Vietnam, which entered into force in December 2004, the JVFTA has contributed to the expansion of economic exchange between the two countries. As the first FTA with a Latin American country, the CVFTA was signed in November 2011 and came into effect in January 2014. Most notably, the CVFTA contains only commitment on goods, excluding commitments onservices and investment. Like the case of Japan, Vietnam also launcheda bilateral agreement with South Korea, even though the ASEAN- Korea FTA has already entered into force. The KVFTA, which came into effect in December 2015, includes a comprehensivemarket access commitments ongoods, services and investment. 339
9. Besides, Vietnam recently has promoted FTAs with themajor regional integrations. The first is the agreement with the EEU, which includes Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia. The VEEUFTA was formally signed in May 2015 and entered into force in October 2016 following the ratification by all countries participating in the treaty. The second is the FTA with the EU, which concluded in December 2015. However, the EVFTA is pending signature and ratification, expected to enter intoforce in early 2018. This paper includes the analysis of the EVFTA based on the text of the agreement, which released in February 2016. 3.2. WTO-plus areas This sub-section discusses the extent to which the various WTO+ areas are covered in the six bilateral FTAs of Vietnam. The coverage of WTO+ areas in the agreements is displayed in Table6, where a dark box means that a particular FTA includes an obligation in a particular area. As can be seen, generally speaking, relatively recent agreementshave a high degree of coverage. In particular, the EVFTA includes all obligations of WTO+ areas including export duties. The bilateral FTAs with South Korea and EEA also contain relatively large number of WTO+ provisions. Table 6. Classification of WTO+ Areas in Vietnam’sBilateral FTAs Areas Vietnam-US Vietnam-Japan Vietnam-Chile Vietnam- Korea Vietnam- EAEU Vietnam-EU Industrial products Agricultural products Customs administrations Export duties Sanitary &phyto-sanitary measures Technical barriers to trade State trading enterprises Anti-dumping Countervailing measures State aid Public procurement Trade-related investment measures General agreement on trade in services Trade-related aspects of intellectual property rights As expected, all of the bilateral FTAs include a commitment on reduction of tariff and non-tariff barriers for industrial and agricultural products. For example, in case of the VUSFTA, Vietnam reduced tariffs on approximately 250 goodswhich four-fifths of agricultural products,and eliminated quotas on all imports over a period of three to seven 340
10. years (Manyin, 2001). According to the JVFTA, Vietnam committed to eliminating about 93% of tariffs on the imports from Japan within 16 years, while Japanplanned to eliminate 95% of tariffs on Vietnam’s exports within 10 years. Meanwhile, in case of the KVFTA, Vietnameseand South Korean governments pledged to eliminatetariffs on 89.9% and 95.4% of tariff lines, respectively, within 15 years. The EVFTA is unique in that it includes the provisions on elimination of export as well as import duties. According to the EVFTA (Annex 2-d of Chapter 2), Vietnam will eliminate all export duties, except for afew tariff lines. Out of the 603 tariff lines subject to exportduties, Vietnam will not only freeze the existing rate at 0% on 134 tariff lines, but also eliminate export duties on 412tariff lineswithin fixed period of time (Delegation of the European Union to Vietnam, 2016). Horn et al. (2010) show that the EU tends to cover a reduction of export duties in its FTAs. Moreover, all bilateral FTAs of Vietnam include obligation concerning customs administration issues. With trade reduction and market opening, trade facilitation is a critical element for increasing bilateral trade because it improvesa transparency of customs procedures and removes potential non-tariff barriers. With the exception of the VUSFTA, the agreements contain a separate chapter concerning the customs procedures and trade facilitation. Usually,these chapters include provisions related to the exchange of information concerning customsrequirements, commitment to further simplification andstandardization of documentation requiredby customs, enhancing transparency of customs procedures, and cooperation of customs authorities. As a prominent example of WTO+ areas, TBT and SPS undertakings appear in all agreements except for the FTA with the US.In the case of the VUSFTA, two governments only re-affirmed the provisions of GATT 1994. Typically, TBT and SPS chapters contain commitments on the establishment of committee aimed at the effective implementation and operation of the agreement, technical cooperation relating to TBT and SPS issues, and enhancement of transparency, including the affirmation of the WTO TBT and SPS Agreements.Uniquely, the EVFTA includes a provision for enhancing the cooperation on animal welfare inthe SPS chapter. Trade remedy such as antidumping and countervailing measuresis also prominent case of the WTO+ areas. There are various provisions beyond the WTO rules, which are substantial and procedural requirements for theimposition of antidumping and countervailing duties, in the Vietnam’s bilateral FTAs with South Korea, the EEU, and the EU. For example, Article 7.6.3 of the KVFTA clearly prohibits the practice of ‘zeroing’ in calculation of dumping margin, and explicitly allows the application of the ‘lesser duty’ rulewhen determining the level of antidumping duties.On the other hand, the relevant provisions of the FTAs with the US, Japan, and Chile belong to so-called WTO- equivalentwhich maintains WTO rules with no or onlyminor modifications. State trading enterprise or state-owned enterprise(SOE) is very important issue for Vietnam’s FTA partners. According to the US International Trade Administration (2017), the wholly SOEsaccounted for approximately 30% of GDP and control the majority of natural resources, despite they accounted for just 0.2% of the total number of enterprises in 341
11. Vietnam at the end of 2014. Therefore, the EVFTA contains separate chapter regarding SOEs in order to ensure non-discrimination and commercial considerations,corporate governance, and transparency. Though there is no separate chapter, Article 2.11 (State Trading Enterprises) of the VEEUFTA re-confirms the Article 18 of GATT 1944 and its WTO obligations and commitments. Even though Vietnam is not yet member of the WTO Government Procurement Agreement (GPA), FTAs with Japan, the EEU and EU include provisions or separate chapters relating to thegovernment procurement. In particular, Vietnam opened up a number of public procurement markets in the FTA with the EU. In case of the JVFTA, Japan and Vietnam agreed toonly improving transparency and effectiveness of the measures regarding government procurement, in terms of the improvement of business environment. Similarly, theCVFTA mainly confirmed the importance of cooperation in the field of government procurement. Except for the JVFTA and CVFTA, the bilateral FTAs of Vietnam contain WTO+ provisions in the area of TRIMs. For example, these agreements call for ‘fair and equitable’ treatment in relation to investments, along with the standard principles of non- discrimination and most-favored-nation. The definitions in the VUSFTA go beyond that of the TRIMs Agreement, which includes not just commercial presence but also portfolio investment, tangible and intangible property, contractual rights, intellectual property, and rights conferred pursuant to law. The Chapter 9(Investment) of the KVFTA includes expansive disciplines relating to investment, such as scope, standard of treatment, compensation for losses, expropriation, transfers, performance requirements, dispute settlement, and among others. Vietnam also went beyondits WTO commitments in the field of trade in services when it concluded bilateral FTAs. For instance, according to the VUSFTA, Vietnam has offered market access to anumber of services sectors, including accounting, advertising, banking, computer, distribution, education, insurance, legal, and telecommunications (Manyin, 2001). In case of the FTA with the EU, Vietnam agreed to liberalize new markets in a wide range of sectors, such as buildingcleaning, disinfecting and exterminating, packaging, trade fairs and exhibitions, rental and leasing without operators relating to machinery and equipment, interdisciplinary research and development, technical testing and analysis services, and among others (Delegation of the European Union to Vietnam, 2016). Under the KVFTA, Vietnamese and South Korean governments have committed to not only go beyond the liberalization level of ASEAN-Korea FTA, but also contain provisions for renegotiation about thechapters with the annexes relating to trade inservices and investment based on a negative list approach. Finally, the bilateral FTAs of Vietnam contain WTO+ provisions in the area of intellectual property rights. These agreements go above and beyond the WTO TRIPs agreement by including additional commitments to protect intellectual properties such as copyright, trademark, industrial design, and patent. For example, Article 4.4 of the relevant chapter of the VUSFTA requires copyright protection to be a minimum of 75 years from publication, whereas Article 12 of the TRIPs Agreement requires a minimum of 50 years. 342
12. According to the Article 8.3 of Chapter 12 (Intellectual Property) of the EVFTA, Vietnam will allow an extension of the patentprotection of pharmaceutical products in order to compensate for delays in the marketingapproval ifthe approval process takes more than 24months. 3.3. WTO-extra areas This sub-section turns attention to the WTO-X areas, which refer to commitments in policy issues not currently covered or regulated by the WTO Agreement. Table 7 shows information about the coverage of WTO-X areas in the bilateral FTAs of Vietnam. Unlike the WTO+ issues, WTO-X provisionsare generally scattered inthe text of the agreement,regardless of the title ofchapter. For example, the EVFTA contains the provisions relating to the data protection on pharmaceutical and agrochemical products in the chapter of intellectual property. On the other hand, the chapters on cooperation between countries include various provisions aimed to encourageand facilitate cooperation in many different fields from economic to social issues. As alreadymentioned, Horn et al. (2010) classified WTO-X provisions into 38 categories. In particular, Vietnam has agreed to include a chapter on competition policy with Japan, South Korea, the EEU, and the EU. In order to proscribing anti-competitive practices, for example, Chapter 11 (Competition) of KVFTA contains several substantial rules, such as the implementation of competition laws and policies, application of competition law tostate-ownedas well as private enterprises, cooperation and coordination betweencompetition authorities (Korea Fair Trade Commission,Vietnam Competition Authority and VietnamCompetition Council) , and technical assistances. Among the 38 WTO-X areas, investment measures and intellectual property rights are typical hybrid provisions between a WTO+ and a WTO-X obligation because the two areas are not only covered by WTO TRIMs and TRIPs Agreements, respectively, but also includeparticular commitments which are lying outside WTO mandate. For instance, some FTAs include provisions with respect toadhering tointernational conventions that are not covered by the WTO TRIPs Agreement. In the case of investment, the relevant chapters contain legally enforceable rules regarding the mechanisms for adequatecompensation in case of expropriation as well as the arbitration rules for dispute settlement between states and non-state entities. For example, Vietnamhas agreed with South Korea to the introductionof Investor-State Dispute Settlementin the Section B of Chapter 9 (Investment) of KVFTA. Similar clause can be also found in the bilateral FTAs with the US, the EEU, and the EU. The VEEUFTA and EVFTA commonly include provisionsfor protecting environment and improving labor circumstances, in terms of sustainable development. Under the FTAs with EEU and the EU, Vietnamese governmentreaffirmed the commitments under the Ministerial Declaration of the UN Economic and Social Council on Full Employment and Decent Work of 2006 as well as the obligations deriving from membership of the International Labour Organization (ILO) and the ILO Declaration on Fundamental Principles and Rights atWork and 343
13. Figure 7. Classification of WTO-X Areas in Vietnam’s Bilateral FTAs Areas Vietnam-US Vietnam- Japan Vietnam- Chile Vietnam- Korea Vietnam- EAEU Vietnam-EU Anti-corruption Competition policy Environmental laws Intellectual property rights Investment measures Labor market regulation Movement of capital Consumer protection Data protection Agriculture Approximation of legislation Audio visual Civil protection Innovation policies Cultural cooperation Economic policy dialogue Education and training Energy Financial assistance Health Human rights Illegal immigration Illicit drugs Industrial cooperation Information society Mining Money laundering Nuclear safety Political dialogue Public administration Regional cooperation Research and technology Small &medium-sizedenterprises Social matters Statistics 344
14. Taxation Terrorism Visa and asylum its Follow-up. Moreover, the VEUFTA includes commitments to the effective implementation in their laws and practices of the multilateral environmental agreements, including the UN Framework Convention on Climate Change, the UN Convention on Biological Diversity, and the UN Convention on International Trade in EndangeredSpecies of Wild Fauna and Flora. The EVFTA also contains a separate chapter on the energy issues. The EU and Vietnam agreed to a legal framework in their bilateral FTA, for the purpose of thefacilitation of trade andinvestmentin renewable energy generation through the eliminationof non-tariff barriers, such as local content requirements, as well as the promotion of cooperation. The JVFTA is unique in that it includesparticular commitments on movement of natural persons. In addition to the short-term business visitors, intra-corporate transferees, professional service providers, and contractual service suppliers, Japanese and Vietnamese governments have granted entry and temporary stay for the practicing nurses. As a result of further negotiations, Japanese government has approved conditionally the acceptance of health-care providers under the FTA scheme. According to the bilateral FTA with Vietnam, Japan accepteda total of 470 Vietnamesecandidates (53 nurses and 417 caregivers)during the period of 2014 to2016. Table8.Vietnamese Nursing and Caregiving Candidatesunder the JVFTA Years Number of Nurses Number of Caregivers 2014 21 117 2015 14 138 2016 18 162 Source: Ministry of Health, Labor and Welfare of Japan. Finally,the bilateral FTAs of Vietnam contain a separate chapter for a comprehensive cooperation between member countries, except for the VUSFTA and VEEUFTA. For example, Vietnam has agreed with Chile to cooperate in 13 areas; including (a) economic development, (b) innovation, research and development, (c) agriculture, food industry and forestry, (d) mining and industry, (e) energy, (f) small and medium-sized enterprises, (g) tourism, (h) education and human capital development, (i) culture, (j) gender issues, (k) climate change, (l) health care, and (m) development aspects. Cooperation activities between the two countrieshave been conducted invarious ways, such as building upon existing arrangements, facilitating the exchange of experts and information, promoting cooperation in regional and multilateral fora, guiding cooperative activities, providing technical assistance, and organizing dialogues, conferences, seminars, and training programs. Similar clause can be found in the bilateral FTAs with the Japan, 345
15. South Korea, and the EU. In Table 7, if a particular FTA includes an obligation on the cooperation, three contents - economic policy dialogue, industrial cooperation, and regional cooperation - are marked in black. Meanwhile,the KVFTA hasadditionallyinserted an annex on the cooperation in services related to culture, such as audio-visual, tourism, entertainment, cultural heritage, museum, and library services. 4. Conclusion With the rapid proliferation of regionalismworldwide resulting from the failure of WTO multilateral trade negotiations, the East Asian countries haveconcluded FTAswith major trading and investment partners. Like other ASEAN member countries, Vietnam also has aggressively promoted the conclusion of FTAs. The early FTA policy of Vietnam was mainly based on the ASEAN, so-called ASEAN+1 FTA. However, recently, the Vietnamese government has modified its strategy forthe extension of FTA network from the ASEAN-oriented to bilateral approaches. In order to get a better understanding ofthe bilateral FTAsof Vietnam, this paper examined the content of agreements with the US, Japan, Chile, South Korea, the EEU, and the EU. In particular, this paper focused on two aspects of the FTAs to explain the coverage and depth of integration. One is the WTO+ provisions which refer to policy areas covered by the present WTO agreements. The other is the WTO-X provisions lying outside the current WTO mandate. This methodology, suggested by Horn et al. (2010), provides a useful framework forcomparing and analyzing the characteristics of the agreements. Overall, this paper finds that the coverage and depth of the Vietnam’s bilateral FTAs has been more intensified over time. The relatively new agreements include a large number of WTO+ provisions beyond WTO agreements. For instance, the EVFTA, which concluded in December 2015, contains all of the WTO+ areas, including the reduction of export taxes. The bilateral FTAs with South Korea and the EEU also have a relatively large number of WTO+ provisions, such as the tariff liberalization, customs administrations, SPS, TBT, trade remedy measures, state aid, TRIMs, GATS, and TRIPs. While Vietnam tends to actively commitWTO+ obligations in its bilateral FTAs, WTO-X provisions are concentrated in some areas, such as mainly competition policy, intellectual property rights, investment measures, movement of capital, and cooperation.In particular, the Vietnamesegovernment has sought to enhance comprehensive cooperation with FTA partners in many different fields.A separate chapter on the cooperation can be found in the bilateral FTAs with Japan, Chile, South Korea, and the EU. Although this paper contributes to an understanding of the characteristics of the Vietnam’s bilateral FTAs, there is a need to consider the limitations of this study. First,despite the frequent adoption inrecent FTAs, this paper does not look at new policy areas, such as the commitment related to the electronic commerce. The KVFTA and EVFTA contain a chapter on the electronic commerce or e-commerce, regarding obligations to promote the development of electronic commerce. Second, the TPP was excluded from the review, because the trade pact was regrettablyfrustratedprior to the 346
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