Initial results of CPTPP implementation in Vietnam surpass expectations
Initial results of CPTPP implementation in Vietnam surpass expectations
Better-than-forecast export results
In an official report to the National Assembly regarding the CPTPP’s impact on the Vietnamese economy, the government forecast a 4.04 percent increase in exports to CPTPP markets from now until 2035, meaning an annual increase of about US$700 million.
In fact, however, Vietnam has achieved better results. In 2019, exports to the six of the 11 member countries that have ratified the CPTPP reached US$34.4 billion, up 8.3 percent compared with 2018, while imports from these Pacific Rim markets reached US$30.1 billion, up a mere one percent. Exports to markets which had no free trade agreement with Vietnam in the past, such as Canada and Mexico, also grew considerably. Specifically, exports to Canada grew 28.2 percent, and to Mexico 26.8 percent.
Luong Hoang Thai, Director of the Multilateral Trade Policy Department of the Ministry of Industry and Trade, attributed 2019’s export growth in part to the CPTPP.
Textiles, garments, leather and footwear - sectors forecast to be the biggest beneficiaries of the CPTPP - have achieved notable results. Phan Thi Thanh Xuan, Vice President and Secretary General of the Vietnam Leather, Footwear and Handbag Association (LEFASO), told Vietnam Economic News that domestic companies had taken advantage of the trade deal to boost exports. As a result, leather and footwear exports to CPTPP member countries grew 11 percent in 2019, with especially high growth rate recorded for exports to Canada and Mexico.
In the textile and garment sector, despite some bottlenecks pertaining to rules of origin, businesses have taken the initiative in promoting exports. For example, the Saigon 3 Garment Joint Stock Company has sought partners to export about US$1 billion worth of products to Australia, Canada and Japan. The Garment 10 Corporation has met about 50 importers from Canada and is developing suitable export products, hoping to sign contracts in the near future.
Reform pressure
Despite favorable initial results, Vietnam has yet to take full advantage of the CPTPP. Luong Hoang Thai attributed this, among other things, to the decision of the Trump Administration to pull out of the deal before it was finalized. “In the process of reporting the effects of the CPTPP to the National Assembly to prepare for its ratification, we realized that the agreement would bring Vietnam less opportunities after the US withdrawal. However, in order to accelerate international integration and take further steps, the National Assembly decided to ratify the CPTPP,” Thai said.
Nguyen Thi Thu Trang, Director of the WTO and International Trade Center of the Vietnam Chamber of Commerce and Industry, said the biggest opportunity of the CPTPP for Vietnam lies in creating pressure for institutional improvements.
The CPTPP not only provides an orientation for various institutional reforms in Vietnam, it also creates pressures on Vietnam to resolve difficult problems such as those related to the environment and labor.
Trang believes the CPTPP will lead Vietnam to accelerate investment and business environment improvements. To implement the CPTPP effectively, in her opinion, Vietnam needs to fully understand the legal contents of the agreement; tighten coordination between relevant ministries and sectors; and issue legal documents for CPTPP implementation.