Scherbey told a conference co-held by the HCMC Investment and Trade Promotion Center (ITPC) and HR Media for experts to discuss TPP challenges and opportunities last week that the trade pact is the most comprehensive one in the world’s trade history.
The TPP combines complex and technical rules of the Harmonized System ofcustoms tariffclassification of goods, with the complex rules of Customs Valuation of the General Agreement on Tariffs and Trade (GATT) 1994 agreement. There are additional rules and exceptions for the TPP agreement and these are challenges for both companies and government officials to understand and apply to specific situations.
Vietnamese enterprises can prove the origin of products by themselves but have to keep relevant documents for a period offive yearsfor later inspection. If irregularities relating to their product origins are detected by customs agencies, they would face sanctions. Therefore, they have to concentrate on studying and observing the Rules of Origin (ROO) of the TPP.
Scherbey said it is not important whether the TPP agreement takes effect in 2017 or 2018 and that businesses have little time to make preparations. They will have to hurriedly identify and find ways to overcome the challenges posed by the TPP and the ROO, among others.
Pham Xuan Hong, chairman of the Vietnam Textile and Apparel Association (VITAS), said most material used by the apparel sector is imported, with China accounting for 60%. Many companies in the sector have expressed concern about material purchases to meet the ROO because the TPP is expected to go into force 2018.
Experts at the conference said local firms can make the most of the opportunities by cooperating with foreign-invested enterprises to join the global value chain.
Virginia Foote, president and chief executive officer at Bay Global Strategies and co-chair of Vietnam Business Forum (VBF), told the conference thatdomesticand foreign businesses have to team up with one another as this is an essential part of the TPP.
Foote said she has not seen such cooperation in Vietnam since foreign direct investment (FDI) companies usually invest 100% in their facilities in the country.
Hong of VITAS said a number of FDI companies have set up textile and dying plants in Vietnam and that FDI firms should not build up their own facilities but join hands with local enterprises to bettercapitalizeon Vietnam’s advantages in the apparel sector.
Nguyen Xuan Thanh, director of the Fulbright Economics Teaching Program, said FDI companies account for 60% of Vietnam’s export turnover at present. However, they have loose links withdomesticfirms in supporting industries, which is different from China and other ASEAN nations.
Foote of Bay Global Strategies said U.S. Congress can start the ratifying process of the TPP agreement this summer. A dozen Pacific Rim nations are expected toconducttheir own procedures to ensure the TPP could take effect in 2018.
She said Vietnam will have to adjust many regulations soon.
The TPP will become effective 60 days after all Pacific Rim nations ratify it. If the agreement is not ratified by all the 12 members in two years, it would go into force 60 days after 85% of the member states ratify it. Other member states can join the TPP after they have completed their ratification.
Source: http://www.vietnambreakingnews.com/
Keywords: Firms, urged to brace, TPP challenges
