The Australian Business Review, 9 October 2015. TPP a game-changer for some Southeast Asian nations, by Jake Maxwell Watts and Kathy Chu from the Wall Street Journal.

An edited extract of the original article appears below.

Even before the ink is dry on the Trans-Pacific Partnership trade deal, companies are laying out plans to expand in Vietnam and Malaysia, both rapidly developing Asian nations whose growth depends heavily on external trade.

Manufacturers of apparel, rubber gloves and bikes are among those considering increasing production in the Southeast Asian countries to capitalise on export growth expected from the accord, which sweeps away tariffs to markets including the US, the world’s biggest economy.

The mammoth trade agreement is seen as a game-changer for these national economies, according to an analysis by Washington, DC-based think tank Peterson Institute for International Economics. By 2025, membership of the TPP could boost exports from Vietnam by an additional 29 per cent and from ­Malaysia by almost 12 per cent, the institute predicts…

“I expect there to be quite a stampede” of foreign investment in Southeast Asia when the final text of the agreement is published,” she said…

Malaysia and Vietnam, for example, currently have no free-trade agreement with the US, a voracious consumer of both raw materials and manufactured products. Exporters from these economies to the US must pay taxes on every product that arrives on US soil…

Tariffs on garment exports from Vietnam to the US are expected by economists to eventually drop to near zero from the current 17 per cent, although it may take years. In the year ending July 2015, the US bought $US10.8 billion ($15bn) worth of apparel from Vietnam…

United Sweethearts (apparel manufacturer) is already planning a second factory in Vietnam, and TPP will accelerate its plans…

Currently, countries without FTAs with the US face tariffs that can be up to 10 per cent or higher depending on the type of apparel…

 

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