As Vietnam benefits from increased market access to the US, other Asian exporters of textiles and clothing including Bangladesh may hurt by the giant Trans-Pacific Partnership (TPP) that is scheduled to begin from tomorrow – Friday. India, Pakistan, Sri Lanka and Cambodia are also expected to suffer negative impact effects from trade and investment diversion in the textiles and clothing industry towards TPP members, notably Vietnam, apparel exporters said. “The biggest winner will be Vietnam as foreign investors start to flood the country. Number two might be Malaysia and number three is Japan,” Deborah Elms, executive director at Asia Trade Centre, told CNBC on Tuesday. The TPP agreement covers 12 countries and 40 per cent of the global economy. However, the European Union isn’t expected to be impacted greatly. It already boasts a number of FTAs with Asian economies and is currently negotiating one with the United States, they said. Non-TPP members are expected to bear the brunt of losses due to the impact of trade diversion, where countries prefer to export to their FTA partners rather than non-participating countries. Previous TPP talks have been repeatedly stalled by sticky issues including generic drugs, agricultural subsidies and dairy exports, but experts say it’s now or never for negotiators. Trade representatives kicked off talks in Hawaii on Tuesday and will work towards a-hopefully-successful conclusion at the end of this week. The deal has been five years in the making but contrary to previous talks, optimism is high for an agreement this time around. “Sentiment is very positive. I’ve spoken to negotiators from the U.S. and four other countries and people are excited, they really see the end in sight,” Tami Overby, senior vice-president for Asia at the U.S. Chamber of Commerce (USCC), told CNBC on Tuesday. The Peterson Institute of International Economics (PIIE) echoed Elms in a recent report, citing tariff-free access to U.S. markets for apparel and footwear, Vietnam’s top exports, compared to the current 17-32 percent tax range. That’s expected to boost exports to the US-already Vietnam’s largest export market-and dramatically increase foreign direct investment inflows in a country with the lowest per capita income among TPP members. PIIE also notes that Vietnam would see the largest percentage income gains and export increases out of all countries at 13.6 percent and 31.7 percent, respectively. Malaysia does not yet have bilateral free-trade agreements (FTAs) in place with the US, Canada or Mexico, so it should be another key beneficiary of a TPP agreement. For Japan, the opening of services markets is a major advantage, explained Elms of Asia Trade Centre. A TPP deal would open the services markets of each member nation to one another, and because Japan’s services sector is relatively uncompetitive, it has a lot of room to grow, she said.
