The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has created a great opportunity for Vietnam to access new markets, but Vietnamese businesses need to double their efforts to seize the opportunity before other CPTPP member countries open up broader integration, said insiders.
Many Vietnamese businesses have effectively leveraged the CPTPP to boost exports, especially goods from Vietnam to CPTPP member countries in the Asian region. Additionally, the exports to markets without existing Free Trade Agreements (FTA) with Vietnam have also seen a significant increase.
Leverage for export
The CPTPP took effect in Vietnam on January 14, 2019 after the 14th National Assembly of Vietnam passed a resolution ratifying the deal in November 2018. The trade pact is said to help strongly boost import-export activities between Vietnam and countries in the Asia-Pacific region.
Vietnam saw significant growth in trade with not only nations yet to have bilateral or multilateral free trade agreements (FTAs) such as Canada, Mexico, Peru, but also with “challenging” markets like Japan, Australia, and New Zealand.
Despite numerous challenges in the global economy, Vietnam’s total trade with ten countries in the CPTPP hit about 100 billion USD in 2023. Vietnam always enjoys a trade surplus with this market.
Nguyen Thi Thu Trang, Director of the Centre for WTO and Integration under the Vietnam Chamber of Commerce and Industry (VCCI), said Vietnam has at least one FTA with seven out of 10 CPTPP member countries, however, the CPTPP is the first trade agreement in which Vietnam has made a “full-fledged access” to the Amerian market.
Previously, Vietnam had a FTA with Chile, which was a traditional and small-scale agreement. However, with the CPTPP, Vietnam, for the first time, simultaneously accessed markets in South America, namely Peru and Chile, along with two North American markets – Canada and Mexico. These have created tremendous opportunities for Vietnam to access a new and potentially lucrative market, Trang said.
According to Tran Thanh Hai, Deputy Director of the Import-Export Department under the Ministry of Industry and Trade (MoIT), the growth figures for the CPTPP region in recent times have been extremely impressive.
Countries in the Americas such as Canada, Mexico and Peru are relatively new markets for Vietnam. However, the Southeast Asian country’s exports to these markets have increased significantly after the CPTPP agreement took effect, Hai said.
This reflects that Vietnamese businesses have effectively utilised opportunities from new-generation FTA, specifically the CPTPP, he added.
Fully tapping advantages to boost exports
When joining the CPTPP agreement, all the members committed to eliminating almost all of their import tariffs. Accordingly, the majority of import tariffs will be reduced to 0% over a period ranging from 3 – 7 years (in some cases, the timeline may extend, from 10 to 20 years).
CPTPP members committed to eliminating 97-100% of tariff lines on products originating from Vietnam. Meanwhile, Vietnam also removed up to 86.5% of tariff lines three years after the agreement took effect.
Dr. Le Duy Binh, Managing Director of Economica Vietnam, said the volume of Vietnamese goods with added value and high technological content exported to the CPTPP market remains low. Despite substantial demand in the market for many products, many businesses have not yet fully tapped.
Meanwhile, to fully leverage and enjoy incentives brought by the trade pact, companies must meet origin requirements. This remains a challenge for some Vietnamese businesses.
As of the end of 2022, the CPTPP agreement has become effective for most member nations. The UK officially joined the trade deal in July last year. Several other economies have also expressed interest in participating in this agreement.
According to Luong Hoang Thai, Director of the Multilateral Trade Policy Department under the MoIT, many economies, including those in the region such as China, and even some ASEAN countries like the Philippines and Thailand, have expressed their desire to join the CPTPP.
Vietnamese businesses need to focus on measures to increase the quality and value of their goods, and develop green and environmentally friendly products, he stressed./.