The effects of Mega-Regional Trade Agreements on Vietnam

While most studies conclude that Vietnam would have benefited greatly from the now suspended Trans-Pacific Partnership, the country nevertheless stands to gain from participation in other still promising regional frameworks, including the EU-Vietnam Free Trade Agreement, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the Regional Comprehensive Economic Partnership, and the Free Trade Area of the Asia-Pacific. This paper analyzes how Vietnam's economy is likely to be affected by these regional frameworks. We apply a static CGE model, incorporating the effects of capital accumulation, labor supply changes, and productivity growth stemming from trade liberalization. We also analyze “middle income trap” scenarios, in which Vietnam's growth factors fall below the full-potential level and draw policy implications.