Regarding the impact of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on Vietnam, talking to Vietnam Customs News reporters, Mr. Tran Toan Thang (photo), Head of Department of World Economic Affairs, National Center for Socio-Economic Information and Forecasting (NCIF) of the Ministry of Planning and Investment said that, in order to take opportunities as well as deal with challenges, the development of an action plan is quite important.
What do you think about the opportunity to promote the export of goods to new markets in the CPTPP?
- The CPTPP helps Vietnam to export more, but mainly in traditional markets, while it is not much help in opening new markets such as Mexico, Canada and Peru. This comes primarily from the similarity in production between Vietnam and these markets. These countries also mainly produce and export consumer goods. Vietnam and these countries are in a more competitive position than cooperation. In order to promote the exports of Vietnamese goods, the goods must have similar quality, but cheaper. To do so, the cost of production must be reduced. Currently, wages in these countries are higher than in Vietnam. However, the salary increase of Vietnam is quite high. This is the reason that the advantages of cost of production in Vietnam decreased. In order to take advantages of these markets, Vietnamese businesses need to focus on niche markets.
Could you analyze more clearly about the impact of the CPTPP on Vietnam's commodities?
- With the CPTPP, most of the light and labor-intensive industries still benefit. The Agreement can contribute an additional growth for this industry by 4-5%, and the export growth can be increased from 8.7-9.6%. The calculation results show that in the CPTPP, the textile industry has increased its production scale and export value. The growth rate of export increased by 8.3 - 10.8%. The high export growth rate of this industry is due to higher price competitiveness in the CPTPP market, while retaining the key markets of the US and the EU.
In contrast, the impact of the CPTPP on the heavy industries is weak (0.8-1.2%). The main reason is that Vietnam has no competitive advantage in industrial products and partners in the CPTPP are not the partners that can promote Vietnam's heavy industry.
Besides, due to the impact of the CPTPP, the output growth of some sectors may be reduced, including livestock, food processing, and insurance services. The livestock sector is heavily influenced by the CPTPP due to its very weak competitiveness. In agriculture, the current tariffs of countries with livestock products are not high. Thus, lowering tariffs in TPP or CPTPP do not create much export impact. In the food processing industry, due to the slow tariff reduction schedule compared to other sectors (tax at 0% after 15 years), the impact is not really great in terms of the average/ year as well as the first period of the CPTPP.
In the service sector, applying all service commitments from the TPP Agreement to the CPTPP, the impact of the CPTPP on the financial services sector is small. Specifically, the CPTPP adds 0.01-0.03% of the growth, and also increases the imports of these services at a relatively high level (by 2.4-3.6%), while the exports are reduced by 2.8-3.2%.
Recently, the Government has made many moves to promote institutional reform, improve investment environment and business... to help enterprises develop and take full opportunities from FTAs, including the CPTPP. Do you think this preparation is enough?
- At present, the Government has done quite well in creating the expectation for businesses that things are changing. The Government assists, the economic growth is good, the FDI attraction gets good results..., all create the confidence for the enterprises. However, all issues seem to be resolved in the context of a specific case, which is not the principles. For example, in investment in BOT projects, the way to deal with each case is one that does not form the principle of BOT investment. The insiders will need to create principles that ensure stability and sustainability. This is what is missing.
What are the basic solutions for Vietnam to take full opportunities and minimize challenges when joining the CPTPP, Sir?
Recent researches suggests that too many FTAs could reduce the benefits of an FTA. On the other hand, the use of preferential tariffs through FTAs in Asian countries is quite low (on average 4 enterprises with only 1 that can use it, in Vietnam it is about 37%). This is due to the size of enterprises being small, as well as information to help them access FTA has not done well. Vietnam should have a good strategy to overcome this, after that the CPTPP really work efficiently.
At present, Vietnam has an integration strategy, but there is still no strategy for FTAs. Normally, with FTAs, Vietnam is invited to participate but not actively to calculate what a FTA is to take part in, to negotiate with this year... With the CPTPP in particular and FTA in general, it needs to develop an action plan based on the tariff reduction schedule. In that plan, there should be a road map to improve the problems in each group and sector. Because the Government looks at the general, while the enterprises only look at the commodity category. In addition, the plan must also make the issue clearly that how each sector must act. On the basis of the general plan, enterprises themselves plan for themselves. From the perspective of enterprises, they also need to change themselves, raise awareness to invest in the long term, gradually improve the competitiveness.
Mr. Tran Le Huy, General Secretary of Forest Products Association of Binh Dinh: With the CPTPP, the exports of wood and wood products to many markets will be more favorable.
Currently, with the CPTPP without the United States, the importers of wood and wood products from Vietnam only have Japan, Canada and Australia. Therefore, the CPTPP does not have much impact as the expectation of the wood sector on a TPP includes the United States. The Japanese market still imports furniture and wood chips, plywood, and fine art wood from Vietnam. However, the demand from this market is limited. In general, in all three markets of Japan, Canada and Australia, the demand for wood and wood products is unlikely to increase sharply. The increase or decrease is mainly due to the changes in supply, not the need for high import growth.
However, in major markets such as Japan, Australia, Canada... believe that, when the CPTPP officially comes into force, the exports of wood and wood products will be more favorable than the current time. Therefore, businesses should not ignore the CPTPP, they should make efforts, and be ready to take opportunities. If you do not care, do not participate, it means that businesses have placed themselves outside the "game".
Mr. Le Tien Truong, General Director of Vietnam National Textile and Garment Group (Vinatex): Hope Vietnam Trade Office actively support to take full advantages of the CPTPP.
In the period of international integration, the textile and garment industry has been expanding in the past 20 years. With the CPTPP, the textile and garment industry has the potential in two markets of Australia and Canada. In order to be able to quickly and effectively utilize the opportunities provided by the CPTPP, in addition to the active contact of enterprises, textile and garment enterprises request the Vietnam Trade Office in these countries to pay great attention and support. Textile enterprises hope to catch up quickly with the information related to the CPTPP to focus on the Fall/Winter 2018 for Spring/Summer 2018 production.
Source: VCN
Key words: develop, an action plan, welcome, the CPTPP
