The CPTPP Agreement is a cooperation agreement between Vietnam and 10 countries including Australia, Japan, Malaysia, Mexico, New Zealand, Peru, Brunei, Canada, Chile, and Singapore. By the end of 2018, 6 countries including Vietnam have completed ratification of the agreement.
The National Assembly of Vietnam has passed a resolution on ratifying the CPTPP Agreement and related documents on November 12, 2018. Accordingly, the Agreement will come into effect for Vietnam from January 14, 2019, along with the expectation that CPTPP will help strengthen the mutually beneficial link between members and boost economic growth in the Asia-Pacific region.
More specifically, CPTPP is expected to create a large, open market of 500 million people and is estimated to account for 13% of global GDP. According to a study by the Ministry of Planning and Investment, CPTPP can help Vietnam’s GDP and exports increase by 1.32% and 4.04% respectively by the year 2035. Adhering to the agreement has also contributed to the total number of jobs increasing by an average of 20,000 – 26,000 annually.
In terms of content, the Agreement will provide common standards for member countries on the promulgation of laws related to investment and trade. At the same time, it creates a non-tariff barrier for many agricultural and industrial products.
This is considered a great opportunity for Vietnam, especially for the agricultural and fishery sectors. Accordingly, many key export products of Vietnam now have the opportunity to enjoy significant tax reductions, as many products are taxed at 0%, while also having a new chance to enter into new markets such as Canada, Peru and Mexico. Moreover, in these potential markets, many of Vietnam’s major competitors such as India and China are not yet members of the CPTPP, therefore are not entitled to the agreement’s preferential tax.
In addition, the CTPPP also poses some challenges for Vietnam, the biggest of which will be policy changes. For example, CPTPP sets specific requirements for labor rights and working conditions to ensure fair trade between members. However, this requirement is deemed necessary, helping Vietnam to accelerate the reform of the law & coming closer to the global standards.
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