Milestone for Vietnam’s integration as mega trade deal takes effect

09:23 | 20/02/2019 Cooperation

(VEN) - This year marks a new milestone in the process of Vietnam’s international economic integration with the coming into force of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on January 14. The new-generation trade deal with the 10 Pacific Rim nations demonstrates Vietnam’s strong commitment to innovation and integration, and is expected to enhance the country’s position in the region and the international arena.

milestone for vietnams integration as mega trade deal takes effect
The CPTPP provides great opportunities for the garment and textile business

New markets

The Trans-Pacific Partnership was seemingly in tatters after US President Donald Trump announced the US withdrawal from the pact. But the 11 remaining members, led by Japan, made great efforts to keep the trade pact alive despite the US absence. In November 2017, ministers from the 11 TPP countries met on the sidelines of the APEC Summit in Da Nang and reached an agreement to push ahead with the trade pact by suspending some provisions from the original deal and rebranding it as the CPTPP. The final version of the trade pact was signed in Chile on March 8, 2018, and the 11 member countries conducted ratification procedures.

Vietnam became the seventh country to ratify the CPTPP, which came into force for the country on January 14. According to experts, the CPTPP may reshape global trade. As for Vietnam, the CPTPP is the most meaningful new-generation trade pact among the 16 trade agreements it has signed or is negotiating.

Nguyen Thi Thu Trang, director of the WTO and Integration Center under the Vietnam Chamber of Commerce and Industry (VCCI), said the highlight of the CPTPP is the deeper and boarder level of commitments by its signatories. Besides trade in goods and services, investment, and intellectual property, the trade pact covers new issues, such as labor standards, environmental protection, and government procurement.

With its deeper and boarder commitment level, the CPTPP is one of the most comprehensive trade deals ever concluded, stripping away 98 percent of tariffs for its 11 signatories The CPTPP will offer greater access for Vietnamese exports to largely unexplored markets in Latin America and Canada.

The big winners: Textile and leather

Domestic and foreign experts are optimistic and confident about Vietnam’s development in the implementation process of the CPTPP.

Ousmane Dione, World Bank Country Director for Vietnam, said delivering commitments under the CPTPP provides a golden opportunity for Vietnam to accelerate development, as competition is a motivating force for Vietnam to continue its pursuit of reforms.

Senior economist Vo Tri Thanh said the CPTPP requires strong institutional reforms from the government to further support businesses in taking advantage of opportunities, while limiting costs in the integration process.

With the deeper and boarder level of commitments to tariff reduction, garment and textile, leather and footwear will benefit most from the deal, with exports of the garment and textile sector projected to increase by more 8.3-10.8 percent as the result of price competition, while maintaining the growth momentum in major markets such as the US and the EU.

Do Khac Dung, deputy head of the Legal and General Affairs Department under the Vietnam National Textile and Garment Group, said that among the 11 CPTPP members, Japan is a familiar market for the Vietnamese garment and textile sector, while the remaining countries are new markets with strong potential.

The CPTPP is also a driving force for big investments in the Vietnamese garment and textile sector. This kind of capital source will help the sector access advanced technologies and techniques, contributing to enhanced competitiveness and improving product quality.

For the leather and footwear sector, the CPTPP is also an opportunity to expand exports to Chile, Australia, New Zealand, Canada and Japan. Vietnamese businesses will also have more opportunities in Canada, which will impose a zero import tariff on both leather shoes and handbags immediately. Other countries will eliminate tariffs in the next 3-4 years.

Pham Hong Viet, chairman of the Hanoi Shoe Leather Association, said businesses have prepared for the CPTPP commitments. Investors from Japan, Chile and Peru have come to Vietnam to seek cooperation opportunities. However, to benefit from this agreement, footwear businesses will have to overcome considerable challenges.

Hang Nga