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Vietnam hopes for export boost from new CPTPP trade deal
VEN.VN - 3/26/2018 10:39:56 AM
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Opportunities for exports
The CPTPP is a new free trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Vietnam’s participation in the CPTPP will benefit the country, as it will contribute to boosting exports to major markets such as Japan, Australia, Canada and Mexico. The CPTPP will also provide opportunities for Vietnam to strengthen foreign direct investment (FDI) in fields that the country seeks to develop. In addition, the pact will force the country to make greater efforts in institutional reforms in order to create a more transparent business and investment environment.
Vietnam’s garment and textile exports to the CPTPP countries currently account for only 13 percent of the total value, much lower than that of 38 percent to the US market. Among the 11 member countries, Japan imports most of Vietnam’s garment and textile products, 8.8 percent. Le Tien Truong, general director of the Vietnam National Textile and Garment Group (Vinatex), said the garment and textile sector would have more opportunities to promote exports to the CPTPP countries, especially Australia and Canada.
In addition, garment and textile material projects will tend to move to Vietnam to take advantage of the CPTPP. To make the most of opportunities, garment and textile businesses hope Vietnamese trade offices abroad will guide them to access member markets.
“The garment and textile sector has pinned its hopes on Australia as Vietnam’s garment and textile exports to this market currently stand at US$200 million a year. Once the CPTPP comes into force, the figure of US$1 billion a year could be attainable,” Le Tien Truong said.
The agreement will also provide additional opportunities for seafood exports. Japan currently is Vietnam’s largest seafood importer among the CPTPP member countries, accounting for more than 15 percent of Vietnam’s seafood export turnover. In addition, Mexico is a major tuna importer. In 2017, tuna export turnover to Mexico reached nearly US$15 million, an increase of 66 percent compared to 2016. With strong commitments to reduce tariffs, shrimp, tuna and octopus exports will benefit greatly from the CPTPP.
Wood and wood products are expected to increase their export turnover when the CPTPP takes effect. According to the Vietnam Timber and Forest Product Association, Japan, Canada and Australia are Vietnam’s major timber importers. In particular, the Japanese market prefers Vietnamese furniture and wood chips, plywood and fine art wood. As a result, when the CPTPP comes into effect, exports of wood and wood products will be more profitable due to a significant reduction in import duties. In particular, Vietnam will be able to import raw materials from the CPTPP economies with tax free to ensure the legitimacy of raw materials. In addition, wood businesses will be able to easily access new technologies from advanced countries to improve product quality and increase competitiveness.
Changes needed to adapt
Although there are significant opportunities for market expansion as with other free trade agreements, the CPTPP also poses a number of non-tariff barriers, particularly in the top potential markets such as Japan, Australia and New Zealand. Businesses need to thoroughly understand the requirements and provisions in the agreement, while policies of the state must also make appropriate changes.
Vietnamese Trade Representative in Australia Nguyen Hoang Thuy says that as one of the CPTPP members, Australia is a potential market for Vietnamese businesses. However, Australia has strict regulations on food safety and hygiene and high technical standards. To benefit from the agreement, export businesses must therefore improve their product quality.
Economist Nguyen Tri Hieu says that proving the origin of products is the most difficult of the CPTPP’s provisions. For example, in the garment and textile sector, businesses enjoy preferential tariffs on raw materials originating mainly from member states or imported from CPTPP countries. However, most of the materials for Vietnam’s garment and textile sector are imported from China. Therefore, Vietnam’s tax policies will have to change in order to restrict the import of raw materials from non-CPTPP countries if it wants local firms to benefit from the agreement.
Minister of Industry and Trade Tran Tuan Anh said that the CPTPP now has 11 member countries, but may admit more in the future. “Even with the US, we still believe that there is an opportunity of pulling this country back,” Tran Tuan Anh said.
Lan Phuong
Read original article here
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