TPP countries seek to forge ahead even as Canada wavers

TPP countries seek to forge ahead even as Canada wavers

Vietnam resists to rules that would improve rights for its workforce but agrees to move forward with CPTPP.

As trade officials gather in Tokyo this week to try and forge ahead with a trade pact that U.S. President Donald Trump abandoned last year, the new 11-member club risks getting bogged down by resistance from Canada.

The member countries of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP), also known as TPP 11, reached a basic agreement on the pact in November, during the APEC CEO Summit in Da Nang, Vietnam.

But Canada is holding out to secure protection of its cultural industries, like movies, TV, and music, and has said it will not be rushed into signing a deal that other members hope to conclude by March.

That is casting a shadow over a meeting of trade officials from member countries this week in Tokyo and is raising questions about the economic benefits of a pact that doesn’t bring Canada into the fold.

“The overall economic impact of the CPTPP would be significantly further eroded if Canada, which is a Group of Seven nation, decides to postpone its decision about joining,” said Rajiv Biswas, Asia-Pacific chief economist at IHS Markit.

After Trump pulled the United States out of the Trans-Pacific Partnership agreement last year, Japan took a leading role in pushing for a replacement pact.

Along with Australia and Mexico, Tokyo has lobbied hard for the agreement, which aims to eliminate trading barriers and tariffs on industrial and farm products across the 11-nation bloc whose trade totaled $356 billion in 2016.

“Our strong preference is for all 11 countries to join the first wave, but our focus is on bringing a new TPP agreement into force as soon as possible with those who are ready to move,” Australian Prime Minister Malcolm Turnbull said in Tokyo last week.

The talks in Tokyo starting Monday are expected to iron out technical differences on rules for the treatment of labor and intellectual property but unlikely to yield a conclusive statement that member countries will quickly sign the pact.

Canada, which would be the second-biggest economy in the bloc after Japan, is also unhappy over the rules of origin for cars.

“Like Vietnam, one of the crucial elements we secured was what is known as a work plan, a mechanism to deal with outstanding issues, which for Canada includes ensuring the deal provides better access and terms for autos and does not affect our unique cultural sensitivities,” Joseph Pickerill, spokesman for Canadian Trade Minister Francois-Philippe Champagne, said in a statement.

Vietnam has emerged as another swing country because of its resistance to rules that would improve rights for its workforce, although Hanoi hasn’t shown resistance to sign the pact.

“Canada has taken a step back to say they cannot sign TPP 11 right away, but there are expectations that if the remaining 10 countries move ahead Canada will eventually come back,” said Junichi Sugawara, senior research officer at Mizuho Research Institute.

Vietnam’s thirst for beer has global giants eager for a taste of the market

Vietnam is the biggest beer market in Southeast Asia, consuming nearly 4 billion liters last year.

Every evening, large groups of workers and friends gather for lager and snacks at a beer garden along Quang Trung Street in Hanoi.

“Drinking beer is part of our culture,” said Le Tuan Linh, 32, a PR manager at a property business. He and his friends often start the evening with “1-2-3-Zo” before each downing a glass of the amber nectar.

“When we drink beer we can relax, so we often go for a drink after we leave the office,” he said, hoisting a mug of draft beer.

Vietnamese people also have a habit of discussing business over a beer, and the more lager downed, the closer they move to a deal.

Vietnam’s beer-friendly culture stands out compared with other emerging Asian countries like India and Indonesia. In Hanoi, streetside draught beer is as common as coffee.

This market for beer is becoming ever more attractive to global giants that have been racing for stakes in local brewer Habeco and its bigger rival Sabeco, both of which the Vietnamese government plans to privatize.

Recently, Thai Beverage bought a majority stake worth $4.84 billion in Sabeco.

Thai Bev’s local unit, Vietnam Beverage Co Ltd, won the 54 percent Sabeco stake on offer at an auction last month.

The Sabeco deal is expected to help Thai Bev tap into Vietnam’s beer market, worth about $6.48 billion last year, where a young population and booming economy counter the drawbacks of political resistance, a high minimum bid price and a cap on foreign ownership.

The Thai owner of Sabeco plans to increase the brewer’s annual output to 1.9-2 billion liters of beer in 2018 from 1.75 billion liters in 2017, said company execs.

The domestic market share held by Sabeco is also expected to increase to 50 percent from 40 percent on the strength of Thai Beverage’s retail network.

Many international brewers, including Australia’s leading beer company Carlton & United Breweries and Denmark’s Carlsberg, have expressed interest in acquiring shares in Habeco, Vietnam’s third-largest beer company by sales.

Carlsberg has already edged closer to reaching an agreement with the Vietnamese government to increase its stake in Habeco. The brewer, which already owns 17.3 percent of Habeco, has been discussing its priority purchase rights with the Vietnamese government for years.

“Carlsberg, the Vietnamese government and Habeco have reached a common understanding on a number of issues during the negotiations, and we expect this will accelerate the process,” Reuters quoted a Carlsberg spokesman as saying.

The government said last month it expects a stake sale in Habeco to be completed in the first quarter of 2018.