The impacts of TPP and AEC on the Vietnamese economy: Macroeconomic Aspects and Livestock Sector

On 3rd August 2015, the Institute for Economic Research and Policy (VEPR), VNU University of Economics and Business (UEB) held the international scientific conference, under the framework of the research project "The impacts of TPP (Trans-Pacific Partnership) and AEC (ASEAN Economic Community) on the Vietnamese economy: Macroeconomic Aspects and Livestock Sector" conducted by VEPR under sponsorship of International Cooperation Agency of Japan (JICA).

The research combines quantitative models (general equilibrium model GTAP and partial equilibrium model GSIM) with field-depth interview to sketch the changes of Vietnamese economy in general and the livestock sector in particular after joining the TPP and AEC.
The conference received huge interests and was attended by leaders and representatives of government agencies, policy makers, national and oversea research institutes, international sponsors, institutions as well as enterprises, and mass media.
At the conference, Dr. Nguyen Duc Thanh - Director of the Institute for Economic Research and Policy presented the results of research, which refers to: the context of integration and overview of Vietnamese livestock sector, results of simulation model on impact of TPP and AEC on the livestock sector as well as policy discussions.

Dr. Nguyen Duc Thanh presented research results

Based on the research results, the research team came up with some conclusions on the macro economy and Vietnamese livestock sector. Under the impact of removing tariffs and non-tariff barriers between countries in the TPP and AEC, structure of Vietnamese economy will change. Disadvantaged sectors (as agricultural sectors, dairy, forestry, wood products, mining) will be narrowed, while the advantaged sectors will be expanded both on output and labor (especially apparel, leather manufacturing and construction).
Examining the scenarios assessing TPP’s impacts, results show that Vietnam’s trade with other TPP countries increases in all case. Meanwhile, Vietnam increases imports and slightly decreases exports with non-TPP economies. Exports in textiles, apparel, leather and footwear from Vietnam to the US surge impressively while Vietnam’s total exports slightly declines. The possible reasons for this decrease include the contraction of a number of domestic industries due to the competition from other countries, the competition (and constraints) in primary factors and the change in trade directions from outside TPP to TPP.

From the results of simulation scenarios, Vietnam is shown to be the member achieving largest GDP change in percentage term. However, the economic impact of AEC is insignificant compared to that of TPP. When decomposing the GDP change, it is observed that the increase in GDP, thanks to trade liberalization, comes primarily from increases in consumption and investment, surpassing the surge in import after tariff cut.
For the livestock sector, studies indicated the sector’s low competiveness, featuring mostly small scale farming and production, heavy dependence on imported breeds and feeds, common disease-stricken problems, limited slaughter hygiene and food safety and environmental pollution. These features are prominent across all livestock sub-sectors such as swine, poultry, cattle, milk and diary. The simulation results reveal that in both free trade blocs, output will decline in almost all livestock industries, except for live animal products (mainly live swine and poultry). In particular, the output of other meat (swine meat, poultry meat, offal and fat) will fall most remarkably in terms of absolute value and percentage change. Moreover, the declining output also leads to a drop in the labor demand (both skilled and unskilled) in the livestock sector.
At the conference, the report received numerous contributions and comments from experts and participants. Comments all highly valued the efforts of the authors in giving quantitative study of TPP and AEC’s impact to Vietnam using updated database of Project Global Trade Analysis (GTAP). Besides, participation also gave contributions and comments on the accuracy of the assessment using the GTAP model, impact of TPP and AEC from enterprises’ views and competitiveness of Vietnam livestock products in the context of integration etc.

Here are some photos of the conference:

Mr. Fumihiko Okiura - Deputy Representative of the International Cooperation Agency of Japan (JICA) gave the opening speech at the conference

The research team (from the left: BA. Nguyen Thanh Tung, Dr. Nguyen Thi Thu Hang, Dr. Nguyen Duc Thanh, Prof. Ken Itakura, BA. Nguyen Thi Linh Nga) discussed at conference

Dr. Nguyen Anh Thu - Vice Rector of the UEB gave comments on the study

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Thanh Tu

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