Vietnam Trusts New CPTPP Trade Agreement

The textile & garment industry will receive huge benefits from CPTPP

Analysts say that with the CPTPP (the TPP, now without the US), Vietnam’s expected benefits from the free trade agreement would be lower than it would have been with the TPP with the US.  US President Donald Trump withdrew the US from the TPP after he was elected last year. 

However, the textile and garment, footwear, and food and beverage industries will still receive huge benefits from the CPTPP because the commitments on opening markets made in the old TPP have not changed. 

As for the textile and garment industry, Japan is the second largest export market for Vietnam, with annual growth rate of 23 percent. 

Its garment imports from Vietnam accounts for a smaller proportion than from China (6 percent vs 65 percent). However, imports from China are on the decrease, while imports from Vietnam are rising thanks to preferential tariffs.

Regarding the seafood sector, CPTPP countries import $2 billion worth of seafood products a year, or 23 percent of total revenue. Of these, Japan alone accounts for 15 percent. Shrimp, octopus and tuna exporters will be the biggest beneficiaries.

CPTPP, however, is less attractive than the TPP and offers fewer opportunities to increase output and exports. But it is expected to lead to a greater level of export diversification in terms of export markets.

In its report released after the CPTPP was signed, the World Bank estimates that CPTPP would help Vietnam’s GDP increase by 1.1 percent more by 2030, while export turnover to CPTPP countries may increase to $80 billion, or 25 percent of Vietnam’s total export turnover.

Of this, the important business fields of Vietnam, including food and beverage, footwear and textile and garment would see export turnover increase by $10.1 billion, $6.9 billion and $0.5 billion, respectively.

Prof Carlyle Thayer from New South Wales University, in an interview with Tien Phong, commented that the major benefit CPTPP can bring to Vietnam is better access to markets with lower tariffs, especially to Canada, Mexico, Chile and Peru (countries that do not have an FTA with Vietnam). 

He said that CPTPP is an open agreement which paves the way for other countries and territories to join. These include South Korea, Taiwan, Indonesia, Thailand and Philippines.

Nestor Scherbey, CEO of Customs, Trade & Risk Management Services, pointed out that the agreement retains nearly all the provisions of TPP, except 20 provisions that the US wanted, which have been postponed and have not been eliminated. This means that the US is welcome to return to the agreement.

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