Nghiên cứu về Việt Nam và CPTPP: Lợi ích, cơ hội, thành tựu và thách thức

Nội dung text: Nghiên cứu về Việt Nam và CPTPP: Lợi ích, cơ hội, thành tựu và thách thức

1. A STUDY ON VIETNAM AND THE CPTPP: BENEFITS, OPPORTUNITIES, ACHIEVEMENTS AND CHALLENGES NGHIÊN CỨU VỀ VIỆT NAM VÀ CPTPP: LỢI ÍCH, CƠ HỘI, THÀNH TỰU VÀ THÁCH THỨC Te Fu Chen Lunghwa University of Science and Technology Abstract The CPTPP is a high-standard regional economic agreement which Vietnam has ratified and is expected to bring the country much benefits, opportunities, achievements and challenges which have to grapple with are significant. The study aims to analyze the characteristics of the CPTPP as a new generation FTA, the study uses literature analysis methods to summarize the benefits, opportunities, achievements and challenges of Vietnam’s CPTPP participation and constructs an integrated model to be the reference for the industries in Vietnam. The results show that with the participation of the CPTPP, the average growth in Vietnam’s export turnover will increase compared with the non-CPTPP scenario and given its unique conditions, Vietnam could be a good example of how a developing Asian country and one with a dominant state-owned sector can successfully pursue economic integration via the CPTPP. The study also suggests government to promote the export of Vietnamese goods in the context of participation in CPTPP. Keywords: Vietnam, CPTPP, Benefits, Opportunities, Achievements and Challenges Tĩm tắt CPTPP là hiệp định hợp tác kinh tế khu vực tiêu chuẩn cao mà Việt nam đã thơng qua và được kỳ vọng sẽ mang lại cho quốc gia này nhiều lợi ích, cơ hội, thành tựu và thách thức cĩ ý nghĩa quan trọng. Nghiên cứu này nhằm mục tiêu phân tích các đặc điểm của CPTPP với tư cách là Hiệp định thương mại tự do (FTA) thế hệ mới, nghiên cứu sử dụng phương pháp phân tích tổng quan để tổng kết các lợi ích, cơ hội, thành tựu và thách thức của việc Việt Nam tham gia vào CPTPP và xây dựng một mơ hình tích hợp để làm tham chiếu cho các ngành tại Việt Nam. Kết quả nghiên cứu cho thấy với việc tham gia vào CPTPP, tỷ lệ tăng trưởng trung bình trong kim ngạch xuất khẩu của Việt Nam sẽ tăng lên so với trường hợp khơng tham gia CPTPP và với những điều kiện đặc trưng của mình, Việt Nam cĩ thể là một ví dụ điển hình cho một quốc gia châu Á đang phát triển và ngành kinh tế chủ yếu thuộc sở hữu nhà nước cĩ thể hội nhập kinh tế thành cơng thơng qua CPTPP. Nghiên cứu cũng đề xuất chính phủ nên tăng cường xuất khẩu các mặt hàng của Việt Nam trong bối cảnh gia nhập vào CPTPP. Từ khĩa: Việt Nam, CPTPP, Lợi ích, Cơ hội, Thành tựu và Thách thức. 907
2. 1. Introduction 1.1 Overview of the CPTPP According to Nguyen Huy Hoang and Truong Quang Hoan(May 2019), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is among the most notable mega-free trade agreements (FTAs) in the world today.The TPP, originally known as the “P4 agreement” (Brunei, Chile, New Zealand and Singapore), was extended into a 12-member agreement, following the entry of Australia, Peru, Vietnam, the United States (US), Canada, Malaysia, Mexico and Japan. The fanfare surrounding the TPP declined significantly after US President Donald Trump announced the US withdrawal from this deal. Overcoming this setback, at the TPP summit in Chile on 14 March 2017, all 11-remaining member countries of the TPP affirmed that the TPP should maintain its high standards and be comprehensive in all areas. This commitment was reaffirmed by participating countries on the sidelines of the Asia-Pacific Economic Cooperation (25th APEC) Summit in Vietnam, held on 11 November 2017. At this summit, the TPP was renamed the “Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP)” to reflect the new configuration after the US withdrawal. The CPTPP officially came into force on 30 December 2018 following ratification by the first six countries, namely Mexico, Japan, Singapore, New Zealand, Canada and Australia.15 Despite the US withdrawal, the CPTPP remains one of the largest FTAs in the world, accounting for 13.3 percent of global gross domestic product (GDP).16 The CPTPP aims to set a new standard for global trade, and incorporates new and emerging issues by holding forth five key features. Firstly, it aims to create a comprehensive market access that eliminates tariffs and other barriers to trade in goods and services and investment. Secondly, it aims to create a regional agreement by facilitating the development of production and supply chains among TPP members. Thirdly, it employs an approach of cross-cutting trade issues through building on work being done in the APEC and other fora by incorporating four new cross-cutting issues: regulatory coherence, competitiveness and business facilitation, small-and medium-sized enterprises, and development. Fourthly, it focuses on new trade challenges by addressing emerging trade issues such as those caused by digital technology. Fifthly, it is a living agreement that allows for the updating of the agreement in response to potential trade issues in the future as well as new issues stemming from expansion of the agreement to include new countries.17 Compared to the TPP, the CPTPP differs in several ways. 15 “CPTPP to be effective in Vietnam from January 14”, vietnam-from-january-14/145042.vnp, accessed on 1 April 2019. 16 “The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)”, overview/, accessed on 6 April 2019. 17 Outlines of the Trans-Pacific Partnership Agreement”, accessed on 7 April 2019; and see Ian F. Fergusson, Coordinator, Mark A. McMinimy, and Brock R. Williams (2015), “The Trans-Pacific Partnership (TPP) Negotiations and Issues for Congress”, Congressional Research Service, accessed on 7 April 2019. 908
3. (1) It suspends the application of 22 provisions from the chapters on trade facilitation, investment, services, public procurement, intellectual property rights (IPR), environment and transparency, which were inserted in the TPP at the request of Washington.18 (2) The CPTPP emphasizes that when making policies, member states should first and foremost consider their own changing “country-specific” circumstances and priorities.19 (3) The CPTPP is a progressive agreement as it goes beyond reducing costs for businesses. For instance, it includes commitments to safeguard high labour and enironmental standards across the Asia-Pacific region.20 1.2. The CPTPP evolved from the Trans-Pacific Partnership (TPP) According to Riyaz Dattu, Gajan Sathananthan (2019), the CPTPP evolved from the Trans-Pacific Partnership (TPP), which was a comprehensive regional trade agreement negotiated between 12 countries bordering the Pacific Ocean including the United States (U.S.). However, on the heels of being inaugurated into his Office in January 2017, U.S. President Donald Trump issued an executive order unilaterally terminating the U.S.’s involvement in the deal. As the TPP required ratification by at least six states that together accounted for more than 85% of the GDP of all signatories, the TPP could not proceed without the U.S. involvement.The TPP was revived as the CPTPP by the remaining 11 countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The CPTPP incorporates, by reference, large portions of the TPP agreement, with the exception of some provisions relating to intellectual property and investor-state dispute settlement (specifically concerning “investment agreements” and “investment authorizations”), which were previously important demands for U.S. participation in the TPP. 1.3. CPTPP implemented in Vietnam The study will explain the implications of the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership, implementation in Vietnam, Canada’s largest trading partner in the Association of Southeast Asian Nations (ASEAN) region since 2015.On January 14, 2019, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) was implemented in Vietnam, following the December 30, 2018 implementation by Canada, Australia, Mexico, New Zealand, Japan and Singapore. This occurred in advance of the inaugural meeting of the CPTPP Commission held in Japan on January 19, 2019.Vietnam has a population of 94.5 million people and has a nominal gross domestic product of US $247.43 billion. It has been Canada’s largest trading partner in the Association of Southeast Asian Nations (ASEAN) region since 2015, with Canada exporting nearly $750 million per year in goods and nearly 18 Matthew P. Goodman (2018), “From TPP to CPTPP”, Center for Strategic and International Studies (CSIS), accessed on 7 April 2019. 19Pradumna B. Rana and Ji Xianbai (2017), “TPP’s Resurrection: Will It Be Finally Ratified?”, RSIS Commentary, No. 219 - 17 November 2017. 20 “The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)”. 909
4. $100 million in services to Vietnam and importing approximately $4.7 billion in goods and $100 million in services from Vietnam. Historically, Canada’s top five exports to Vietnam have been agricultural products, seafood, metals and minerals, fertilizers and industrial machinery, and Vietnam’s top five imports into Canada have been electronic machinery and equipment, textiles, industrial products, footwear and seafood. Vietnam is a rapidly emerging economy, with GDP growth of over 6% in 2018.With Vietnam’s adoption, the remaining countries that have yet to do so are Brunei, Chile, Malaysia and Peru. Once fully implemented, the CPTPP will create a vast Pacific-rim trading bloc made up of almost half a billion consumers and representing 13.5% of the global GDP (Riyaz Dattu, Gajan Sathananthan, 2019). 1.4. The impact of the CPTPP on Vietnam's exports Since Vietnam officially became a member of ASEAN (1996), the country has recorded important achievements including a rapid growth in and high growth rate of goods export turnover over the years. Vietnam's export turnover reached $214.1 billion (2017), nearly 30 times higher than its export turnover 20 years ago (in 1996, the total export turnover was only $7.2 billion) (Ministry of Industry and Trade, 2018). Composition of export goods. Industrial goods comprise the highest proportion of total exports from Vietnam, accounting for 81.3%, followed by agricultural and aquatic products (12.1%) and fuel and minerals (only 2%). Vietnam exports 29 items with a turnover of over USD$1 billion each; among these, 8items have a turnover of over USD$6 billion each. The leading exports comprise phones and components, textiles, footwear, machinery, equipment, tools, and spare parts (Ministry of Industry and Trade, 2018). However, up to now, the localization rate in Vietnamese industries manufacturing key export products 1272 has remained limited. The textile, leather and footwear industries have the highest localization rates of 51% and 45%, respectively. Meanwhile, the localization rates in such industries as automobiles and electronics are only 10% and 20%, respectively. Export market structure. In addition to traditional markets, such as ASEAN and Northeast Asia (Japan, China, Korea), Vietnam's exports have increased strongly to other markets, such as the EU, the US andespecially the markets of countries with which Vietnam has signed a FTA. Specifically, in 2017 Vietnam's exports to the US totaled USD 41.61 billion (accounting for 19.43% of total export turnover).Similarly, exports to Europe, China, ASEAN, Japan and South Korea accounted for USD 41 billion (19.15%), USD 35.46 billion (16.56%), USD 21.7 billion (10.14%), USD 16.8 billion (7.85%), and USD 14.8 billion (6.91%), respectively. Thus, in recent years, the US and the EU have been Vietnam’s two largest export markets (in 2017, turnover came to more than USD 80 billion, accounting for 38.58% of all exports), with which Vietnam gained a trade surplus of nearly USD 60 billion) (Ministry of Industry and Trade, 2018). According to Van Su Haa and Hoi Quoc Leb(2019), Vietnam’s participation in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is expected to facilitate the country’s international integration after its WTO membership in 2007 as the agreement will create one of the world's biggest free trade blocs accounting for about one tenth of the world economy. In particular, the CPTPP is a new generation FTA, 910
5. which is more comprehensive in all areas (Nguyen, 2016; Petri & Plummer, 2016). This study of Van Su Haa and Hoi Quoc Leb(2019) aims at estimating the impact of the CPTPP on Vietnam's exports in comparison with a scenario of non-implementation of the agreement, and suggesting some policies and measures to promote the export of Vietnamese goods in that context. This research forecasts the impact of the CPTPP on Vietnam's export of goods after this agreement is officially put into effect. The study shows positive results in assessing the relationship between Vietnam and CPTPP partner countries on the export of goods without US involvement as well as the impact of Vietnam’s export partners, such as China and Korea. While vast existing studies have analyzed the benefits and challenges for participating countries as well as the roles of key players such as Japan and Australia in the CPTPP, little attention has been paid to the participation and contribution of smaller economies such as Vietnam. Vietnam offers an interesting case study as it is among the few ASEAN Member States and the only socialist economy joining the CPTPP.21The aim of this paper is to shed light on Vietnam’s position on the CPTPP, and begins with an overview of the CPTPP, followed by a discussion about the benefits and opportunities to Vietnam stemming from this arrangement. The final section examines Vietnam’s achievements and challenges to the CPTPP and constructs an integrated model to be the reference for the industries in Vietnam. 2. Literature Review 2.1. CPTPP has started to benefit Vietnam's economy According to Minh Thu - Jun (10, 2019), after four months of implementing CPTPP, Vietnam’s trade with Canada, Mexico and Japan has increased by over 70 per cent, 8 per cent and 4 per cent, respectively.Vietnam’s trade with Canada and Mexico has increased by over 70 per cent and 8 per cent, respectively. According to Deputy Prime Minister Pham Binh Minh at the recent National Assembly meeting, in the first four months of implementing the recent Comprehensive and Progressive Agreement for Trans- Pacific Partnership (CPTPP), Vietnam has witnessed positive trading results with some of the CPTPP members compared to the same period last year.For example, Vietnam’s trade with Canada and Mexico has increased by over 70 per cent and 8 per cent, respectively. These two countries, nevertheless, have not signed a free trade agreement (FTA) with Vietnam yet. For Japan, the trading partner that Vietnam has already had a FTA with, the trade figure has risen by 4 per cent during the period. These figures themselves, as noted by Minh, have started to prove that CPTPP is in fact benefiting Vietnam's economy.The country, however, is also facing certain difficulties and challenges in the implementation of CPTPP. Minh said that as it is a new-generation FTA that comes with high standards, Vietnam will come across strict regulations in terms of the origin of goods for even sectors of its strength like textile and garment.To take advantage of the zero or low tariff governed by CPTPP, the sector therefore must satisfy 21 Besides Vietnam, Brunei, Malaysia and Singapore are ASEAN Member States participating in the CPTPP. 911
6. the origin of goods test, which could come in as a rather big challenge for many domestic enterprises.In addition, the country may have to deal with foreign goods that detour into Vietnam to change their origin, in a bid to enjoy the tariff reductions under CPTPP or under other FTAs that Vietnam has signed.CPTPP, meanwhile, has provisions for investor- state dispute that allow foreign investors to sue the member state. To gear up for this, Vietnam must comply with all regulations to keep itself free from any trouble arising from the dispute with foreign investors.To fully appreciate all benefits from CPTPP, Vietnam will need to round up its legal framework to implement the trade pact in an efficient way. Businesses, on the other hand, must understand thoroughly the favours, opportunities and challenges that CPTPP offers to ramp up their activities and production accordingly (Minh Thu - Jun, 2019). 2.2. CPTPP Brings Vietnam Direct Economic Benefits and Stimulate Domestic Reforms According to Hanoi(March 9, 2018), the Comprehensive and Progressive Pacific Partnership (CPTPP) will yield robust economic gains for Vietnam, says a new World Bank report, released today as Vietnam and 10 other countries sign the agreement. Multilateral trade agreements such as the CPTPP are expected to further boost Vietnam’s investment and export driven growth model, according to the report, Economic and Distributional Impacts of Comprehensive and Progressive Agreement for Trans-Pacific Partnership: The Case of Vietnam.“Even under conservative assumptions, the report estimates that CPTPP would increase Vietnam’s GDP by 1.1 percent by 2030. Assuming a modest boost to productivity, the estimated increase of GDP would amount to 3.5 percent from CPTPP,” according to Ousmane Dione, World Bank Country Director for Vietnam. All income groups are expected to benefit from this new agreement, although higher-skilled workers in the top 60 percent of the income distribution may reap more. In addition, the anticipated increase in FDI is expected to lead to a further expansion of services sectors and boost productivity growth. It will create opportunities for domestic private firms to integrate into global value chains and promote the development of the SME sector. “The new agreement will bring direct benefits to Vietnam, from trade liberalization and improved market access. Most importantly, it will help stimulate and accelerate domestic reforms in many areas.” said Sebastian Eckardt, the World Bank Lead Economist for Vietnam. “Delivering commitments under the CPTPP will contribute in promoting transparency and supporting the creation of modern institutions in Vietnam.”(Hanoi, 2018) The CPTPP is expected to stimulate reforms in areas such as competition, services (including financial services, telecommunications, and temporary entry of service providers), customs, e-commerce, environment, government procurement, intellectual property, investment, labor standards, legal issues, market access for goods, rules of origin, non-tariff measures, trade remedies etc.The report is supported by the Australia - World Bank Group strategic partnership (ABP II) which supports Vietnam’s development agenda through technical assistance, capacity building, and analytical work. “Together with the World Bank, we are committed to helping Vietnam take advantage of the substantial economic opportunities created through CPTPP” Australian Charge d’ Affaires Rebecca 912
7. Bryant said. “This includes assistance to enhance competitiveness, reduce trade barriers, and improve connectivity” (Hanoi, 2018). 2.3. CPTPP opens up new opportunities for Vietnam’s exports TRUNG HUNG(2019) indicated, the textile and apparel industry still has more room for export growth.NDO - The Comprehensive and Progressive Agreement for Trans- Pacific Partnership (CPTPP) and related tariff commitments have opened up multiple opportunities for Vietnam's export industries, with a range of key products including furniture, garments and footwear, experts have said.Sharing at a recent seminar on "Vietnam's textile, footwear, furniture and beverage industries under the opportunities and challenges from CPTPP,” which was co-organised by the Vietnam Chamber of Commerce and Industry and the Australian Embassy in Vietnam, economists projected that CPTPP and its tariff commitments will open up markets of the 11 economies participating in the agreement offering great opportunities for many Vietnamese export items. Experts held that among the export sectors gaining more opportunities from the CPTPP, the wood and textile industries will be the two to benefit the most. Specifically, with zero import tax tariff, experts said that the CPTPP will bring great opportunities for the lumber industry, as once the CPTPP is implemented, 95 tariff lines will be reduced to 0%.For that reason, timber enterprises will benefit from importing raw materials from the markets such as Canada and Japan in the CPTPP, while exporting products within the bloc they will also enjoy the zero percent tax rate. In addition, the benefit of zero import tax is also a great opportunity for businesses to cut their costs for renewing machinery and equipment by 20-30%.In recent years, export turnover of Vietnam’s wood industry has continuously increased. Vietnam is now the second largest timber exporter in Asia and among the Top 5 timber exporting countries in the world. In 2019, the export turnover of Vietnamese wood and forest products is expected to reach about US$11 billion. With that growth, in addition to the export tax advantages from CPTPP, the Government and Vietnam's timber industry have set a target of reaching a total export value of about US$20 billion by 2025 for the sector (TRUNG HUNG, 2019). Both the wood and textile industries are facing great opportunities from CPTPP.Along with the wood industry, it is also expected that there will be more growth opportunities from CPTPP for the textile sector. Currently, Vietnam's leather and footwear exports are the second largest in the world, behind only China. Vietnam’s textile and apparel exports are also ranked third in the world, behind China and approximately equal to India.Before the CPTPP took effect, the CPTPP member countries' markets accounted for 12.5% of Vietnam's total footwear exports, 16% of total textile exports, 20% of total wooden exports and more than 23% of the country’s total beverage exports to the world.However, experts also warned about the new challenges that will arise from the CPTPP. Besides creating opportunities to access new markets, CPTPP with commitments on market opening will also result in considerable competitive pressure for enterprises, even in the domestic market.Especially, the detailed and complex conditions of CPTPP's rules of origin would be another obstacle for businesses, as not all of them could meet to take advantage of tariff preferences, not to mention that the CPTPP also includes other 913
8. commitments on labour, environment, intellectual property, etc., that could increase the cost for businesses(TRUNG HUNG, 2019). With the two sectors identified as gaining the most opportunities - the wood and textile sectors each have different commitments on tariff reduction and rules of origin. Therefore, in order to boost exports in the future, experts suggested enterprises to have appropriate business plans and sustainable development solutions to effectively take advantage from the CPTPP (TRUNG HUNG, 2019). 2.4. Vietnam - The CPTPP for exporters: opportunities available now Frederick et al., (2019) indicated, what are the main and immediate benefits that the CPTPP brings to Vietnam exporters? The entry into force of the CPTPP brings with it preferential import tariff rates applicable to CPTPP originating goods. Import tariffs can amount to a substantial increase on the end cost of goods. For businesses operating in a competitive market preferential tariff rates may afford them a comparative advantage by reducing costs. Under the CPTPP, import tariff rate reductions occur automatically after the Agreement has entered into force in a member country's territory. Import tariff rate reductions will follow the terms of pre-negotiated schedules included in the Annex of the original TPP Agreement. There are two main conditions for access to CPTPP preferential tariff rates abroad: (1) goods must 'originate' in one or more CPTPP member countries, and (2) goods must be imported into another CPTPP member's territory. (1) Originating goods To be an “originating good” a good must be grown, raised, caught, hunted, mined or extracted within a CPTPP member country. A product that is made from materials originating in a CPTPP territory would likewise be originating, as would a product that has undergone substantial manufacturing within CPTPP members' territories. The actual manufacturing inputs required to qualify a good as CPTPP originating are product specific. Additionally, the "accumulation principle" allows goods produced in a process that involves more than one CPTPP member to qualify as well. Manufacturers assessing the origin of their goods are encouraged to contact Baker McKenzie for a product specific origin analysis. After a Vietnam exporter has established their good as originating they can apply to their respective Foreign Trade Management Office to certify the origin of the good under the CPTPP (Frederick et al., 2019). (2) Member countries CPTPP member countries are shown as table 1: 914
9. Table 1: CPTPP member countries Source: (Frederick et al., 2019) Only member countries who have legally adopted the CPTPP and formally notified other members of their adoption may enjoy preferential tariff rates. This includes the first 6 members to ratify the CPTPP (Australia, Canada, Japan, Mexico, New Zealand and 915
10. Singapore), and Vietnam, the seventh member to ratify. Annual tariff rate reductions occur on 1 January of each calendar year following entry into force. 3 The first 6 members and Vietnam have completed two rounds of tariff cuts on CPTPP originating goods, with round three cuts set to occur on 1 January 2020.4. Importantly, not all signatories have ratified the CPTPP, Brunei, Chile, Malaysia and Peru have yet to complete legal procedures to bring the Agreement into effect.Additional market opportunities will be realized as the remaining 4 CPTPP signatories ratify the Agreement(Frederick et al., 2019). (3)Exporter gains Since 14 January 2019, Vietnam originating goods exported to other CPTPP members have been eligible for preferential tariff rates in the 6 other CPTPP ratified countries.5 Similar to Vietnam's tariff rate schedule discussed above, each of the other CPTPP member countries have their own respective tariff rate elimination schedule. Many import tariffs are immediately eliminated under the CPTPP. The below table summarizes each member country's time frame for tariff elimination, the current year of tariff rate treatment and a summary of goods which have a multi-year tariff phase out schedule, rather than outright tariff elimination.For importers from all countries except Singapore, this means that they will need to check the specific duty rate for a specific time period to determine the applicable CPTPP duty rate, noting the possibility that even more favorable import tariffs may be available under other trade agreements, be they current or future agreements.CPTPP exporters are encouraged to continue monitoring the progress of CPTPP ratification, since preferential tariff rates will be immediately available as the agreement enters into force for each of the remaining 4 signatories(Frederick et al., 2019). 2.5. Vietnam and the CPTPP: Achievements and Challenges (1) Benefits and challenges to Vietnam (Nguyen Huy Hoang and Truong Quang Hoan, 2019) Vietnam joined the CPTPP talks in 2008. There are many motivations behind Vietnam’s participation in this deal.Thanks to tariff reduction, Vietnam will be able to benefit from increased exports to CPTPP markets, especially those with which Vietnam does not currently have FTAs such as Canada, Mexico, and Peru, and particularly of goods for which Vietnam enjoys comparative advantages such as textiles, footwear, electronic and agricultural products. In particular, Vietnam is predicted to be the biggest beneficiary, with expected growth in foreign trade and investment of 30.1 per cent and 14.4 per cent respectively by 2030.22 By entering into production networks among the CPTPP members, Vietnam can further integrate itself in global production value chains, thereby promoting economic growth and reducing poverty. In particular, according to Ousmane Dione, World Bank Country Director for Vietnam, even under “conservative assumptions” a 2018 World Bank report “estimates that CPTPP would increase Vietnam’s GDP by 1.1 percent by 2030. Assuming a modest boost to productivity, the estimated increase of GDP will amount to 3.5 percent from 22 CPTPP Commission holds first meeting in Tokyo”, commission-holds-first-meeting-in-tokyo.html#0tPqZdKgEgP1YGsH.97”, accessed on 8 April 2019. 916
11. CPTPP”.23 At the same time, the increasing export to CPTPP markets can create about 20,000-26,000 jobs on average each year for Vietnam particularly in the manufacturing sector such as in textile and garment, thereby helping to reduce the number of people living under the poverty line, by nearly one million by 2030.24 Additionally, the commitments on services and investment in the arrangement can possibly help Vietnam improve its investment climate and attract more foreign direct investment (FDI) from countries within and outside CPTPP, thereby improving the production capability of the whole economy. Furthermore, Vietnam’s participation in CPTPP may spur the process of domestic economic restructuring, particularly regarding economic institutions and the reform of state-owned enterprises (SOEs),25 while creating a more level-playing field for private sector and small and medium enterprises (SMEs).Vietnam also faces remarkable challenges by signing on to the CPTPP. The industrial production structure of Vietnam is not consistent with the provisions of the CPTPP, particularly regarding the rules of origin. Due to the small scale of its domestic industries and the lack of strong supporting industries, Vietnam has to import most of its intermediate inputs. This makes it difficult for Vietnam to meet the requirements of domestic content under the CPTPP. Vietnam also has to revise many existing regulations regarding trade, customs, intellectual property, and labour to bring them in line with the CPTPP as well as bridge any existing gaps between the CPTPP and other bilateral and multilateral agreements that Vietnam is participating in, such as the Regional Comprehensive Economic Partnership (RCEP). At the same time, Vietnam will also face a challenge in state budget revenue as the reduction and removal of import tariffs under the deals will lead to a decrease in state revenue.26 Other challenges include facing the increasing competition of exports and investment from other CPTPP members, promoting the participation of private sectors and SMEs in economic activities of the country, and carrying out comprehensive reforms of the SOEs.27 In Vietnam, SOEs perform multiple significant economic and social roles such as generating employment and promoting social stability. However, under the CPTPP, these roles will be considerably constrained by new regulations that will restrict the SOEs from obtaining financing or preferential treatment from the Vietnamese government. Furthermore, all SOEs in CPTPP member states have to ensure transparency in operation 23 The World Bank, “CPTPP Brings Vietnam Direct Economic Benefits and Stimulate Domestic Reforms”, PRESS RELEASE, direct-economic-benefits-and-stimulate-domestic-reforms-wb-report-says, accessed on 8 April 2019. 24 “HiệpđịnhđốitáctồndiệnvàxuyênTháiBìnhDương” (The Comprehensive and Progressive Agreement for Trans-Pacific Partnership), 9fe7-baa47f75a7c0, accessed on 11 April 2019. 25 Le Hong Hiep (2015), “The TPP’s Impact on Vietnam: A Preliminary Assessment”, ISEAS Perspective, No. 63 Issue 2015. 26 “Vietnam gets to grips with CPTPP”, Vietnam Investment Review, to-grips-with-cptpp-63736.html, accessed on 28 March 2019. 27 Bui Thanh Nam (2018), “CPTPP Serving Vietnam as Opportunities and Challenges”, Modern Diplomacy, accessed on 28 March 2019. 917
12. and information provision.28 With the additional need to promote fair competition between foreign companies and SOEs under the CPTPP, SOEs are further constrained from giving preferential treatment to local firms.29 These conditions put strong pressure on SOEs to undertake critical reforms especially in the way they are run, managed and assessed. (2) Vietnam’s contribution (Nguyen Huy Hoang and Truong Quang Hoan, 2019) Given its unique conditions and status, Vietnam stands to enhance the value of the CPTPP in various ways: A. The demonstration effect that developing Asian countries or countries with a dominant state-owned sector can take part in a high-standard trade deal such as the CPTPP. B. With an emerging market and strategic geographical position, Vietnam provides other CPTPP countries attractive opportunities to do business and expand their presence inthe region. C. As a proactive member, Vietnam made crucial contributions in terms of hosting meetings and finalizing negotiations to complete the signing of the CPTPP. D. The participation of RCEP countries such as Vietnam, Singapore and Malaysia which are also part of the CPTPP also helps to accelerate negotiations on the RCEP itself. E. Vietnam’s presence in the CPTPP will facilitate other countries’ participation in this agreement in the future. F. As a CPTPP member, Vietnam can capitalize on its unique position to play the role of a hub that offers investors services and a production base for entry into the lucrative CPTPP market. In summary, Vietnam has demonstrated positive and proactive participation and contribution towards regional free trade integration through the CPTPP. Vietnam has also re-affirmed its commitment to free trade and the rationale of its regional and international economic integration strategy. 2.6. The impact of participation in the CPTPP agreement on exports With strong export growth in recent years, Vietnam is expected to take a firmer second step towardsintegration by participating in the “new generation FTAs,” especially the CPTPP Agreement. Comparedwith traditional FTAs, the CPTPP offers Vietnam many opportunities and challenges with its distinctive, emerging characteristics as follows (Van Su Haa and Hoi Quoc Leb, 2019): (1) The level of liberalization (openness) is substantial. (2) The CPTPP offers a wide range of commitments. (3) There are institutional commitments in this agreement. (4) With respect to partnerships, Vietnam has big leading trading partners in the CPTPP such as theUnited States (if the United States returns to the TPP), Japan, Singapore, Malaysia, etc. 28 SOE divestment a priority in CPTPP era”, Vietnam Investment Review, divestment-a-priority-in-cptpp-era-65586.html, accessed on 7 April 2019. 29 “The New CPTPP Trade Pact is Much Like the Old TPP”, cptpp-trade-pact-is-much-like-the-old-tpp/, accessed on 7 April 2019. 918
13. Regional integration plays an extremely important role in Vietnam's foreign policy. Recently, some free trade agreements have been conceived as new generation free trade agreements or “new generation FTAs”. Participation in new generation FTAs is a decisive factor in Vietnam's international integration and will enhance the country's position, especially in a dynamic, sensitive area such as the Asia-Pacific region, where there is strategic economic and trade competition among major countries. In March 2018, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership — CPTPP Agreement was officially signed in Chile with 11 member countries (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam). The CPTPP or TPP-11 Agreement superseded the Trans-Pacific Partnership Agreement (TPP or TPP-12) after the United States withdrew from it. The CPTPP will create one of the world's largest free trade areas, with a market of about 499 million people and a gross domestic product (GDP) of about $10.1 trillion, accounting for 13.5% of world GDP (Petri et al., 2012). The new generation FTA is believed to have the strongest impact on the economies and trade of the Asia-Pacific region and in the world. Therefore, joining the CPTPP (or TPP-11) demonstrates a new level for the country in the regional and international integration process. Compared to traditional FTAs, the new generation FTA has the following three outstanding points (Nguyen, 2016). (1) the new generation FTAs include agreements that are considered “non- commercial”, such as those dealing with labor or the environment, and involving a commitment to sustainable development and good governance. (2) compared with traditional FTAs and WTO agreements, new generation FTAs have more new content, relating to investment, competition, public procurement, and e- commerce, and promote the development of small and medium enterprises, providing technical assistance for developing countries as well as allowing reasonable time for transition, so that these countries can adjust their policies in line with their level of development (Bivens, 2015). (3) in addition with the content of previous FTAs and WTO agreements, new generation FTAs include new content and are better prepared to deal with such matters as trade in goods, the protection of animal and plant health in international trade, trade in services, intellectual property rights (IPR) (also known as “TRIPS plus” and “TRIPS super plus”), trade protection, rules of origin, transparency and anti-corruption measures, and investor-state dispute settlement (ISDS). Thus, in comparison with WTO agreements, new generation FTAs include “WTO plus” elements which address issues previously not under the auspices of the WTO but currently necessarily agreed to because of changes in the international trade context (Ha, 2016). The CPTPP is expected to be a paradigm for regional cooperation, create favorable conditions for trade and investment, and have the ability to address some of the new challenges in international trade relations in the early 21st century. To meet these expectations, the CPTPP has five main characteristics (described in the following 919
14. paragraphs) that make it not only a new generation FTA but also a landmark agreement for the 21st century, creating a new standard for global trade (Nguyen et al., 2011). (1) Comprehensive market access: The CPTPP will reduce or eliminate tariffs and non-tariff barriers in the trade in both goods and services. In this respect, whereas other FTAs only cut tariffs in line with the roadmap, the CPTPP's general rule is that all tariff lines are subject to a 0% import tax rate. (World Bank, 2018). (2) A regional approach to making commitments: The CPTPP facilitates the development of production and supply chains, as well as of uninterrupted regional trade networks. It enhances efficiency, supports the achievement of employment creation goals, improves living standards and competitiveness, promotes conservation efforts and creates favorable conditions for cross-border integration and the opening up of the domestic market (Petri & Plummer, 2016). (3) The help in coping with new trade challenges: The CPTPP also helps deal with the new challenges posed by commercial development practices. Achieving goals through CPTPP commitments will contribute to improving innovation, productivity and competitiveness by addressing new issues, including the Internet and the development of the digital economy, the role and increased participation of state-owned enterprises (SOEs) in the global economy via international trade and investment, the ability of small enterprises to take advantage of trade agreements, and other issues (Vu, 2015). (4) The comprehensive commercial feature of the agreement: The CPTPP commitments are not limited to traditional trade issues but cover non-commercial ones, such as intellectual property, SPS and TBT measures, competition and public procurement, labor issues, the environment, government procurement, state-owned enterprises, etc. Therefore, the CPTPP has added new elements to ensure that economies at all levels of development and businesses of all sizes can benefit from trade (Le, 2015). (5) A foundation for close regional economic integration: The signing of the CPTPP will provide a solid foundation for regional economic integration and open the door to other economies in the Asia-Pacific region. The CPTPP itself is a means to unite a group of different countries in the region with various geographical and historical features, languages, as well as diverse scales and levels of their development (Van Su Haa and Hoi Quoc Leb, 2019). 2.7 Opportunities from TPP for Vietnam (1) Opportunities for regional economy If launched, TPP will become one of the largestcommercial areas in the world with over 800 millionpeople, contributing over 40% of the world GDP andabout 30% of global trade turnover. The impact of TPP inthe prime time is relatively small, but in 2025, TPP canbring increased revenue for the global economy up to104 billion US dollars. This study indicates that TPP is the path to regional liberalizationwhich brings the most benefit for the countries. By 2025, the global GDP will increase 104.3 US billion, corresponding to 0.1% increase level. All countriesparticipating in TPP gain benefits from this Agreement (Phan Quan Viet, 2015). 920
15. Table 2: GDP increases by country in 2025 with TPP scenario Source: Ministry of Planning and Investment. (2) Opportunities for Vietnam A. Opportunity to boost exports Many countries participating in TPP areimportant export markets of Vietnam. Among them, there are 2 of the 3 largest importers of our country asthe United States and Japan. Therefore, TPP will openup opportunities to increase exports of Vietnam to theUnited States, Japan and other members of TPP, thanksto stronger and higher commitments to open marketsthan the existing commitments in the region. As for theUnited States, through TPP, Vietnam will have theopportunity to increase exports the products withinherent strengths (textiles, seafood, footwear, woodproducts ) to this market.TPP poses very high demand that is to eliminateall import duties immediately after the Agreement comesinto force (except for the group of goods with 3-5 yearroadmap, few with a roadmap of less than 10 years).This requirement is both opportunity and challenge forVietnamese enterprises. With the elimination of all tariffbarriers, export items of Vietnam will have a chance topenetrate the United States market.If you look at the current members of TPP, theUnites States is the most important strategic partner.The United States is the largest export market ofVietnam. Vietnam exports to the United States anaverage of 3 years (2010-2012) reaching 17 billion USdollars with the impressive growth rate of 17.5%. IfVietnam does not join TPP, the possibility of establishinga bilateral FTA with the United States is extremely difficult (Phan Quan Viet, 2015). 921
16. Among traditional and mainstay exports ofVietnam, textile is at the top, followed by footwear, woodand wood products, seafood with exports turnover in2012 respectively reaching 7.5 billion US dollars, 2.3billion US dollars, 1.8 billion US dollars and 1.2 billionUS dollars. If the United States eliminated import tariffsfor these items that will be a huge advantage (textilesand footwear are the commodity groups that the UnitedStates imposes a very high tax (12-48%).However, whether these advantages are reallybeneficial for exporters or not will depend on the rules todetermine the origin of goods.Besides the opportunities to import higherquality goods with cheaper price to replace sources ofgoods from countries with lower technological level asASEAN, China, the enterprises will face the removal oftariff barriers dropped from an average of 11.7% today.While the tax is almost the only protection tool, ifbeing lifted, the request set out is to review a lot of plansand strategies to develop the sector at present, forexample, the strategy to develop automobile industry (Phan Quan Viet, 2015).The opportunity to boost exports and increase in income and export turnover of Vietnam compared with TPP countries and some other countries in the region in 2025shown as the follows and table 3: a.Financial services: This is a field very interested by TPP countries, particularly the United States with extensive commitments on market access in the areas of banking, insurance and securities. With a low level of development, Vietnam faces new proposals and is under pressure to open its markets. b.Agriculture and rural areas: For the agricultural sector, with about 70% of the population being engaged in agricultural activities, TPP has brought opportunities but also many challenges. Opportunities opened up when joining TPP are our agricultural products will have access to a large market with high consumption, especially in the US market. c. Textile sector - gaining big benefit from TPP: With Vietnam’s textile industry, since the government issued a policy on innovation, implementation of the policy of international economic integration and deployment of the strategy of industrialization and modernization of the country, there have been outstanding developments. Textile industry in Vietnam has grown to become a key economic sector, leading the country in terms of export turnover. d. Fisheries: The direct impact of TPP for Vietnam fisheries industry has been identified as coming from the tariff measures (tax incentives for Vietnam’s fisheries imported into TPP member countries as well as tax incentives for fisheries of TPP partner countries for import into Vietnam) and border measures related to the import (trade remedies, technical barriers, sanitary and phytosanitary measures, ). e. Livestock sector: The concern of the livestock industry about the ability to lose at home is totally reasonable. Many Vietnamese livestock businesses will be heavily affected by livestock products imported under TPP commitments; especially the source of beef, chicken, pork from 4 countries as the United States, Canada, Australia and New Zealand currently flooded in Vietnam market. 922
17. Table 3: Increase in income and export turnover of Vietnam compared with TPP countries and some other countriesin the region in 2025 Source: Ministry of Industry and Trade B. Promoting and attracting investment Joining TPP, Vietnamese goods have opportunities to penetrate export markets more strongly thanks to lower taxes. Accordingly, Vietnam attractsforeign investors more strongly than the countries in the region. The foreign investors, especially from China, ASEAN will increase their investment in Vietnam to takeadvantage of a TPP member of Vietnam. Many expertssaid that this is the biggest benefit that Vietnam obtains from TPP. Besides, within TPP member countries there arealso countries which are important investment partners,with highly additional capabilities for Vietnamese economy such as the United States, Australia, NewZealand, Singapore When TPP is in effect, thisagreement will also help promote and increase investment of the above countries in Vietnam, especially in some areas Vietnam wants to develop such as high tech industries, raising the level of sectors of industry,services, agriculture, enabling Vietnam to participatebetter in the value chain of the region and the globe (Phan Quan Viet, 2015). C. Stepping up international integration andempowerment of the position of the country The participation in TPP will help Vietnam have further conditions and opportunities to implement the policy of enthusiastic and proactive international integration that the Eleventh Party Congress in 2011 set out. This Agreement will also help Vietnam strengthen multifaceted relations with international partners in the Asia-Pacific, which has many important partners ofVietnam in particular and ASEAN in general, such as the United States, Japan, Korea Joining TPP with manyprovisions and high level of requirements in liberalizationof trade and market of products, services andenvironment also demonstrates the determination and commitment to reform and change strongly of the Government of Vietnam. Thereby, it increases the attractiveness of Vietnam’s market in particular and the prestige of Vietnam in general for investors and international community; contributing to raising Vietnam's position (Phan Quan Viet, 2015). D. Promoting institutional reform, restructuring andimproving the competitiveness of the economy 923
18. In fact, after nearly 30 years of innovation andopening, it is shown that the successful opening of theeconomy always motives to boost economic reformsand improve the development of Vietnam. At the sametime, the active reforms and opening policies create opportunities for Vietnam's successful international integration. TPP has created challenges and also pressure on Vietnam to promote its institutional reform, improving the business environment, reforming SOEs, perfecting the legal system These reforms ahead is toensure adequate conditions for Vietnam to enter the "playground" of TPP but in the long run, they have apositive impact on the health of the economy, promoting economic and social development of Vietnam. Through TPP, relations of trade, investment andcooperation in education, science and technology between Vietnam with TPP members can improve and expand quickly. Accordingly, it creates more resourcesfrom outside to help Vietnam to develop and modernizethe country in the new period.According to the quantitative study of the East -West Center (US), the countries with economies of smallscale, especially in Vietnam will be the country receivingthe most benefit from TPP and the free tradeagreements in the region. The center predicts that by2025 Vietnam's GDP will increase by 14.7%, mainly dueto the expansion of trade through TPP. TPP is a comprehensive regional free tradeagreement. With Vietnam, joining TPP is "an opportunityto make a leap" in areas such as economicdevelopment and export promotion, trade facilitation, efficiency in supply chain, modernization and upgradingservice sectors, accelerating the equalization of State enterprises, opening the market (Phan Quan Viet, 2015) (3). Some Challenges for Vietnam However, besides opportunities, joining TPP wouldalso pose many difficulties and big challenges forVietnam. Here are the main challenges (Phan Quan Viet, 2015). A. Increasing pressure on market opening, competition Joining TPP will increase the pressure on market opening, competition for enterprises of Vietnam, in the context of Vietnam’s generally weak competition capacity and many inadequacies in the ability to manage. The opening degree of Vietnam's economy is still low and is protected more than any other TPP member countries. In fact, in Vietnam, services market, labor market, science and technology have not yet fully developed or have only been at the beginning to emerge. B. Difficulties for some key export sectors TPP refers to all economic and social issuessuch as tariffs, technical barriers, non- traditional sectors (labor, environment and anti-corruption ) in 22 groupsof field. Besides tax reduction opportunities, the barriersas technical regulations, sanitary and phytosanitary ordefense of trade with the regulation of non-marketeconomy which the United States implemented are verylikely to disable the benefit from reduction of tariffs ongoods of Vietnam. For example, the provisions of TPP on rules of origin and environment will cause difficulties for some key export items of Vietnam, suchas textiles, fisheries, seafood C. Pressure of consolidating the legal framework andthe criteria according to international standards 924
19. The commitment and implementation of deepand broad commitments within the framework of TPP will require Vietnam to quickly strengthen its legalsystem, indicators on quality of products, environment, society, etc. according to international practices. Meanwhile, the legal system of Vietnam is lessdeveloped than the other partners in TPP. Vietnam's law is weak from the stage of draftingto promulgation and enforcement. D. Too large gap for the level of development The most serious challenge for Vietnam covering the above-mentioned challenges is that Vietnam has a too large gap in the level of development compared to all TPP members. Besides, Vietnam also has major differences with the partners in TPP such as: - On the market economy. - Vietnam has made great strides in the process ofliberalizing the economy and become a member of WTO. - Trade relations between Vietnam and other partnersin TPP are mainly related "vertically", which means the export of raw materials, processed products andthe importation of technology, machinery, etc. (4) Some Measures and Proposals TPP or any other free trade agreements havetwo sides of theirs, including opportunities and challenges with the economy. The efficient utilization of opportunities that TPP brings depends largely on the maturity, vision and pragmatism required of eachcountry. From practical opportunities and challenges posed by TPP to Vietnam as analyzed above, based onstrategic research perspective, we propose a number of recommendations to contribute to help Vietnam take advantage of opportunities and cope better with the challenges, as follows (Phan Quan Viet, 2015): A. Vietnam should join TPP in the stage of negotiations with a more positive and more proactive spirit. B. To participate in TPP effectively, Vietnam should accelerate the implementation of the commitments to reform and develop the market economy, improve the efficiency and competitiveness of the economy. . C. It is necessary to quickly consolidate thelegal system, the system of economic assessment indicators to be in conformity with international practice. 2.8 CPTPP - Customs issues for Vietnam The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) officially entered into force for Vietnam on 14 January 2019. From a customs perspective, there are a number of noteworthy issues as follows (Fred Burke et al., 2019): (1) Drastic Tariff Elimination and Reduction: CPTPP member countries agreed to eliminate duties on 97% to 100% of tariff lines for imports from Vietnam that qualify under the applicable rules of origin. For example, Canada agrees to eliminate duties in 95% of tariff lines, which accounts for 78% of the total value of exports from Vietnam. (2) Advanced Rules of Origin: CPTPP inherited its advanced rules of origin and origin procedure from the Trans-Pacific Partnership (TPP). In particular, the CPTPP rules 925
20. of origin encourage the integration of member countries’ production, and promotes the formation of a complete supply chain among member countries. (3) Simplified Origin Procedure: For the first time, Vietnam is engaging in a FTA where origin can be self-certified by the importer. Traditionally, origin is only certified by the exporter or the manufacturer, after which the Certificate of Origin must be issued by the competent authority of the exporting country. (4) Delay in CPTPP Implementation: Though the CPTPP entered into force on 14 January 2019 for Vietnam, the Vietnamese Government is behind schedule on promulgating relevant legislation to implement the CPTPP. In particular, Resolution 72/2018/QH14 approving the CPTPP does not accommodate the direct application of a number of chapters including Chapter 3 on origin and origin procedure. 2.9 Taiwan’s participation in the CPTPP strengthens Vietnam-Taiwan bilateral economic relations According to The Bureau of Foreign Trade, MOEA, Taiwan30, in 2017, Taiwan was Vietnam’s fifth largest trading partner and fourth largest FDI source. Vietnam and Taiwan have been enjoying close cooperation in the sectors including education, health, industry, agriculture and tourism. (1)Vietnam’s proactive role in the CPTPP (MOEA, 2017) Taiwan welcomes Vietnam’s efforts in strongly supporting trade liberalization, and accordingly playing an active role to conclude this significant agreement. As a founding country of the Comprehensive and Progressive Trans Pacific Partnership (CPTPP), Vietnam can look to maximize its interests when considering the admission of other countries. Taiwan’s participation would certainly be in Vietnam’s interests. (2)Long term trade and investment relations (MOEA, 2017) Vietnam and Taiwan enjoy close and cooperative economic ties. In 2017, Taiwan was Vietnam’s fifth trading partner. Imports from Taiwan to Vietnam were worth US$ 127 billion (6.02 percent of its total imports) imports), making Taiwan Vietnam’s fourth largest source of imports. Meanwhile, Taiwan was Vietnam’s 18th largest export market at US$ 257 billion (1.2 percent of the total). Taiwan is a major investor in Vietnam, with investment s amounting to US$30.9 billion between 1988 and 2017, 80 percent of which are focused on manufacturing, a key sector for Vietnam’s economic development. Taiwanese investments have created an estimated 1.4 million jobs in Vietnam, and both countries benefit from their complementary economic structures. (3)Building stronger economic ties Based on these deep trade and investment relations, Taiwan’s participation in the CPTPP will certainly result in mutual benefit on the economic front, including through table 4 (MOEA, 2017): 30 926
21. Table 4: Taiwan’s participation in the CPTPP will result in mutual benefit on the economic front Mutual benefit Contents A. Enhanced Taiwan’s participation in the CPTPP will strengthen bilateral investment investment relations, make foreign direct investment more efficient and effective, and encourage more foreign portfolio investments in Vietnam. Interested Vietnamese companies are also welcome to seek investment opportunities in Taiwan’s robust market. B. Expanded Taiwan’s inclusion in the CPTPP will further enhance Vietnam’s trade export competitiveness by linking its producers to supply chains throughout the Asia-Pacific region. Under the CPTPP, Taiwan envisages importing more products from Vietnam, such as textiles, footwear, agriculture, seafood, furniture, phones, vehicles, and equipment/accessories. It also creates great potential for the exchange of services, such as education, tourism, and banking. C. Business Taiwanese companies have already made major investments in collaboration and Vietnam, including: Formosa Plastic’s integrated steel plant in Ha success stories Tinh; China Steel Sumkin Joint Stock Co. in Ba Ria Vung Tau; Foxconn’s electronics manufacturing facilities in Bac Ninh and Bac Giang; Far Eastern Group’s textiles project in Binh Duong Province; and Pou Chen Group’s footwear manufacturing in Ho Chi Minh City and neighboring provinces. Taiwan is one of Vietnam’s main sources of yarn. With the Yarn Forward rules of origin in the CPTPP, Taiwan’s inclusion will reduce the need for Vietnam’s textile and clothing industries to alter their established supply source. Taiwan’s yarn industry can further strengthen the competitiveness of Vietnam’s growing apparel industry. D. Economic Taiwan’s integration into this agreement will also reinforce cooperation bilateral cooperation, enabling both economies to work together to increase Vietnam’s capacity in areas such as labor, environment, investment, customs, trade facilitation, and various services sectors, creating a win-win scenario for both countries. E. Agriculture Agriculture is one of Taiwan’s strengths. To cope with the exchange challenges of climate change and food safety, and contribute to environmental protection, we have been promoting intelligent agriculture. This policy also corresponds to Vietnam’s needs in terms of establishing high-tech agricultural parks. Taiwan is also willing to strengthen cooperation with Vietnam on quality production systems, such as those for rice, disease-resistant banana breeding, bio-agriculture, and microbial fertilizers. Based on a bilateral cooperation platform, Taiwan and Vietnam have been actively collaborating with each other to help further develop their agricultural industries. F. E-commerce Taiwan and Vietnam signed an MOU on e-commerce cooperation in 2017 to establish a specialized product marketing section on B2B network platforms. The electronic commerce chapter in the CPTPP encourages members to work together to assist SMEs to overcome obstacles to its use; exchange information and share experiences on regulations, policies, enforcement and 927
22. compliance regarding electronic commerce; exchange information and share views on consumer access to products and services offered online. Taiwan’s inclusion in this agreement will broaden the bilateral e-commerce cooperation in multiple areas, enabling SMEs from both sides to expand on-line business opportunities. Source: (MOEA, 2017) 3. Constructing an integrated model of CPTPP in Vietnam After above comprehensive literature review, the study constructs an integrated model as figure 1, the model begins with an overview of the CPTPP, followed by a discussion about the benefits and opportunities to Vietnam stemming from this arrangement. The final section examines Vietnam’s achievements and challenges to the CPTPP and constructs an integrated model to be the reference for the industries in Vietnam. An overview of the CPTPP The benefits to Vietnam The opportunities to Vietnam Achievements to the CPTPP Challenges to the CPTPP The reference for the industries in Vietnam Figure 1: An integrated model of CPTPP in Vietnam An overview of the CPTPP: set a new standard for global trade, and incorporates new and emerging issues by holding forth five key features: (1) Firstly, it aims to create a comprehensive market access that eliminates tariffs and other barriers to trade in goods and services and investment. (2) Secondly, it aims to create a regional agreement by facilitating the development of production and supply chains among TPP members. (3) Thirdly, it employs an approach of cross-cutting trade issues through building on work being done in the APEC and other fora by incorporating four new cross-cutting issues: regulatory coherence, competitiveness and business facilitation, small-and medium- sized enterprises, and development. (4) Fourthly, it focuses on new trade challenges by addressing emerging trade issues such as those caused by digital technology. (5) Fifthly, it is a living agreement that allows for the updating of the agreement in response to potential trade issues in the future as well as new issues stemming from expansion of the agreement to include new countries. 928
23. The benefits to Vietnam: Vietnam will be able to benefit from increased exports to CPTPP markets, especially those with which Vietnam does not currently have FTAs such as Canada, Mexico, and Peru, and particularly of goods for which Vietnam enjoys comparative advantages such as textiles, footwear, electronic and agricultural products. In particular, Vietnam is predicted to be the biggest beneficiary, with expected growth in foreign trade and investment of 30.1 per cent and 14.4 per cent respectively by 2030. By entering into production networks among the CPTPP members, Vietnam can further integrate itself in global production value chains, thereby promoting economic growth and reducing poverty. The opportunities to Vietnam: (1) Opportunities for regional economy: If launched, TPP will become one of the largest commercial areas in the world with over 800 million people, contributing over 40% of the world GDP and about 30% of global trade turnover. (2) Opportunities for Vietnam: A. Opportunity to boost exports a. Financial services: b. Agriculture and rural areas: c. Textile sector - gaining big benefit from TPP d. Fisheries e. Livestock sector B. Promoting and attracting investment Joining TPP, Vietnamese goods have opportunities to penetrate export markets more strongly thanks to lower taxes. Accordingly, Vietnam attracts foreign investors more strongly than the countries in the region. C. Stepping up international integration and empowerment of the position of the country D. Promoting institutional reform, restructuring and improving the competitiveness of the economy Achievements to the CPTPP: Given its unique conditions and status, Vietnam stands to enhance the value of the CPTPP in various ways: The demonstration effect that developing Asian countries or countries with a dominant state-owned sector can take part in a high-standard trade deal such as the CPTPP. A. With an emerging market and strategic geographical position, Vietnam provides other CPTPP countries attractive opportunities to do business and expand their presence in the region. B. As a proactive member, Vietnam made crucial contributions in terms of hosting meetings and finalizing negotiations to complete the signing of the CPTPP. C. The participation of RCEP countries such as Vietnam, Singapore and Malaysia which are also part of the CPTPP also helps to accelerate negotiations on the RCEP itself. 929
24. D. Vietnam’s presence in the CPTPP will facilitate other countries’ participation in this agreement in the future. E. As a CPTPP member, Vietnam can capitalize on its unique position to play the role of a hub that offers investors services and a production base for entry into the lucrative CPTPP market. Challenges to the CPTPP: Some Challenges for Vietnam: A. Increasing pressure on market opening, competition B. Difficulties for some key export sectors C. Pressure of consolidating the legal framework and the criteria according to international standards D. Too large gap for the level of development 4. Conclusions and Recommendations The CPTPP is a high-standard regional economic agreement which Vietnam has ratified and is expected to bring the country much benefits, opportunities, achievements and challengeswhich have to grapple with are significant. The study aims to analyze the characteristics of the CPTPP as a new generation FTA, the study uses literature analysis methods to summarize the benefits, opportunities, achievements and challenges of Vietnam’s CPTPP participation and constructs an integrated model to be the reference for the industries in Vietnam. The results show that with the participation of the CPTPP, the average growth in Vietnam’s export turnover will increase compared with the non-CPTPP scenario and given its unique conditions, Vietnam could be a good example of how a developing Asian country and one with a dominant state-owned sector can successfully pursue economic integration via the CPTPP. The study also suggests governmentto promote the export of Vietnamese goods in the context of participation in CPTPP. The study makes a comprehensive literature review on introduction including OVERVIEW OF THE CPTPP, The CPTPP evolved from the Trans-Pacific Partnership (TPP), CPTPP implemented in Vietnam, The impact of the CPTPP on Vietnam's exports. furthermore, makes Literature Review including CPTPP has started to benefit Vietnam's economy, CPTPP Brings Vietnam Direct Economic Benefits and Stimulate Domestic Reforms, CPTPP opens up new opportunities for Vietnam’s exports, Vietnam - The CPTPP for exporters: opportunities available now, Vietnam and the CPTPP: Achievements and Challenges, The impact of participation in the CPTPP agreement on exports, Opportunities from TPP for Vietnam, CPTPP - Customs issues for Vietnam: (1) Drastic Tariff Elimination and Reduction(2) Advanced Rules of Origin(3) Simplified Origin Procedure(4) Delay in CPTPP Implementation. The CPTPP, a high-standard regional economic agreement which Vietnam has ratified, is expected to bring the country much benefit but the challenges it has to grapple with are significant. Given its unique conditions, Vietnam could be a good example of how a developing Asian country and one with a dominant state-owned sector can successfully 930
25. pursue economic integration via the CPTPP.Vietnam’s contribution towards the successful conclusion of the CPTPP was evidently demonstrated during APEC 2017 held in Da Nang City. To meet the requirements of the CPTPP, Vietnam will need to significantly upgrade its industrial production structure and reform its economic institutions, domestic regulations and the SOE sector (Nguyen Huy Hoang and Truong Quang Hoan, 2019). World Trade organization (WTO) accession can be seen as a milestone marking Vietnam's first step towards integration. The country is now trying to negotiate a number of free trade agreements called “new generation FTAs” in particular the Comprehensive and Progressive Agreement for Trans-Pacific Partnership - CPTPP (or TPP-11), which is expected to constitute the second step for Vietnam towards stronger integration (Van Su Haa and Hoi Quoc Le, 2019). In short, Vietnam has been playing a proactive and important role in promoting mega-regional trade agreements such as the CPTPP. Vietnam’s accession to the CPTPP created motivation for low-income countries or countries with a dominant state-owned sector to be part of a high-standard trade agreement as well as to play a role in rule- making. Vietnam has made positive contributions to the negotiations and signing of the CPTPP, particularly in the 2017 APEC summit held in Da Nang. With an emerging market and strategic geographic location, Vietnam provides other CPTPP members opportunities to promote exports and do business, thereby simultaneously expanding their presence in the region. Vietnam’s participation in the CPTPP also contributes to speeding up the negotiation of the RCEP and encourages other RCEP members to take part in the CPTPP.Yet to meet its commitments under the CPTPP, Vietnam will need to press on with much needed economic reforms in general and to upgrade its industrial production structure in particular. In addition, a more concerted effort should be put on improving domestic regulations and institutions as well as the competitiveness of SOEs (Nguyen Huy Hoang and Truong Quang Hoan, 2019). Finally, Taiwan’s participation in the CPTPP strengthens Vietnam-Taiwan bilateral economic relations. In 2017, Taiwan was Vietnam’s fifth largest trading partner and fourth largest FDI source. Vietnam and Taiwan have been enjoying close cooperation in the sectors including education, health, industry, agriculture and tourism. Based on these deep trade and investment relations, Taiwan’s participation in the CPTPP will certainly result in mutual benefit on the economic front, including through: A. Enhanced investment B. Expanded trade C. Business collaboration and success stories D. Economic cooperation E. Agriculture exchange F. E-commerce. REFERENCES 1. Bivens, J. (2015). The Trans-Pacific Partnership Is Unlikely to Be a Good Deal for American Workers. EPI Briefing Paper No. 397, Economic Policy Institute, Washington, DC. 2. Bougheas, S., Demetriades, P. O., &Morgenroth, E. L. (1999). Infrastructure, transport costs and trade. Journal of international Economics, 47(1), 169-189. 3. Capaldo, J., Izurieta, A., &Sundaram, J.K. (2016). Trading Down: Unemployment, 931
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