Viet–U.S. Pacific Free Trade Talks could Impact on China SOEs

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Oct. 31 – The United States, currently locked in discussions with Vietnam over the nine country Trans-Pacific Partnership (TPP), has had proposals to include new rules concerning state-owned enterprises rebuffed by Hanoi.

The United States believes that SOEs often reap additional benefits directly from the State which amount to unfair subsidies and protectionism. Washington wants a strong and definable regulatory position in place in the Vietnam agreement as it is expected to become the working model for future trade talks with China, which has over 20,000 state-owned enterprises, many of them multinationals in their own right.

Vietnam’s negotiator, Tran Quoc Khanh, said that Vietnam’s SOEs were already WTO compliant and therefore it was not necessary to include additional negotiations specifically for them. The TPP comprises a number of countries around the Pacific Rim, including the United States, Peru, Chile, Australia, New Zealand, Brunei, Malaysia, Singapore and Vietnam, while Japan is pondering membership. The United States wants to eventually expand the group to include all members of APEC.

The United States has regularly stated its opinion that SOE status allows unfair competition from companies in China, and any progress in the negotiations with Vietnam will be keenly monitored by Beijing.

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