Accordingly, basically, the CPTPP Agreement retains the content of theTrans-Pacific Partnership TPP Agreement but allows member countries tosuspend 20 groups of obligations including 11
INTRODUCTION TO THE COMPREHENSIVE AND
History of the formation of the CPTPP
The Trans-Pacific Strategic Economic Partnership, known as the P4 agreement, initially comprised four countries: Brunei, Chile, New Zealand, and Singapore Launched between 2002 and 2008, the P4 agreement failed to garner significant interest from other Pacific economies due to the relatively small size of its member nations' economies.
On September 22, 2008, the United States joined the P4 agreement, proposing the creation of a new Trans-Pacific Partnership (TPP) instead of continuing with the old framework Following this, Australia and Peru also committed to the TPP, while Vietnam was invited to participate Initially joining as an observer with the Politburo's approval, Vietnam officially announced its participation during the APEC Summit in Yokohama on November 13-14, 2010 The TPP subsequently expanded to include Malaysia, Mexico, Canada, and Japan, increasing the total number of member countries to 12.
After over 30 technical negotiation sessions and more than 10 ministerial discussions, TPP member countries successfully concluded their negotiations during the Ministerial Meeting in Atlanta, USA, in October 2015 On February 4, 2016, the ministers from the 12 TPP member nations officially finalized the agreement.
The Signing Ceremony for the TPP Agreement took place in Auckland, New Zealand, marking a significant milestone However, on January 30, 2017, the United States announced its withdrawal from the agreement In response, the remaining TPP countries engaged in active discussions to determine the future direction of the agreement in light of this new development.
On November 10, 2017, during the APEC Summit Week in Da Nang, Vietnam, member countries reached a significant breakthrough on the Trans-Pacific Partnership (TPP), now known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which includes 11 nations: Canada, Mexico, Peru, Chile, New Zealand, Australia, Japan, Singapore, Brunei, Malaysia, and Vietnam The ministers confirmed agreement on core issues and completed remaining negotiations by January 2018 in Tokyo The official signing of the CPTPP took place on March 8, 2018, in Santiago, Chile The agreement took effect in Australia, Canada, Japan, Mexico, Singapore, and New Zealand on December 30, 2018; in Vietnam on January 14, 2019; and in Peru on September 19, 2021 Malaysia ratified the CPTPP on October 5, 2022, with implementation on November 29, 2022, followed by Chile on December 22, 2022, effective February 21, 2023, and Brunei on May 13, 2023, with enforcement on July 12, 2023 As of now, all 11 member countries have ratified the CPTPP.
Member
The original P4 agreement, which included Brunei, Chile, New Zealand, and Singapore, expanded to the Trans-Pacific Partnership (TPP) when the United States joined, adding Australia, Peru, Vietnam, Malaysia, Mexico, Canada, and Japan, totaling 12 member countries However, in 2017, the U.S withdrew from the TPP, citing concerns that the agreement harmed American workers and favoring bilateral negotiations for their efficiency and simplicity compared to multilateral agreements.
16 agreements with 20 countries in 2016 after the Obama administration approved the TPP
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has been established by the remaining members of the original TPP, comprising 11 former member countries The United Kingdom has become the first nation outside the founding group to join this agreement, officially signing on July 16, 2023, after applying for accession in February 2021, which increases the total membership to 12 countries.
In addition to member countries, there are currently 05 other countries/economies that have officially applied to join the CPTPP, including:China, Chinese Taipei (9/2021), Ecuador (1/2022), Costa Rica (8/2022) andUruguay (12/2022).
Overview and main commitments of the CPTPP agreement
The CPTPP Agreement, comprising 7 articles and 1 appendix, governs the relationship with the Trans-Pacific Partnership (TPP) signed by 11 countries—Brunei, Chile, New Zealand, Singapore, Australia, Peru, Malaysia, Mexico, Canada, Japan, and Vietnam—on February 4, 2016, in New Zealand It also addresses matters concerning the agreement's validity, as well as the processes for withdrawing from or joining the CPTPP Agreement.
The CPTPP Agreement retains the core elements of the original Trans-Pacific Partnership (TPP) Agreement while allowing member countries to suspend 20 specific obligations This includes 11 obligations from the Intellectual Property Chapter, 2 from the Government Procurement Chapter, and 7 from other chapters such as Customs Administration, Investment, and Telecommunications The adjustments were made to accommodate the United States' withdrawal from the TPP, ensuring a balanced approach to the interests and obligations of the remaining member countries through various bilateral amendments.
The CPTPP comprises 30 chapters and 9 appendices, addressing a wide array of issues typical of free trade agreements (FTAs), including market access for goods, services, and investments It also covers less conventional topics such as government procurement, e-commerce, and state-owned enterprises, while incorporating non-traditional areas like labor rights, environmental standards, and anti-corruption measures in trade and investment Despite the suspension of certain high-commitment obligations by member countries, the CPTPP remains a high-quality and comprehensive FTA with an unprecedented depth of commitment.
Vietnam's journey to join, negotiate, and sign the TPP Agreement, followed by the CPTPP, involved extensive preparation and alignment with the Politburo's guidelines The outcomes of these negotiations have successfully safeguarded Vietnam's core interests while providing significant reserves and flexibility for effective implementation of the Agreement, ultimately benefiting the nation.
The CPTPP outlines tariff commitments divided into two main categories: import tax commitments and export tax commitments, specified for each tariff line in the Tariff Schedule Each CPTPP member nation has its own tariff commitment table applicable to individual partners or all CPTPP countries These commitments to provide tariff incentives typically manifest in three distinct forms.
Committed to eliminating tariffs as soon as the CPTPP agreement officially takes effect In this case, the tariff will be 0% at the time the CPTPP takes effect.
The commitment to eliminate tariffs under the CPTPP agreement involves a phased approach, with tariffs gradually reduced to 0% over a specified period rather than immediately upon the agreement's enactment Typically, the roadmaps for tariff elimination range from 3 to 7 years, although some instances extend to 10, 15, or even over 20 years.
Commitment to tariff quotas: In this case, tariffs are only reduced or eliminated with a certain quantity and volume of goods, (called the quota).
If the threshold is exceeded beyond the quota, the tariff will be higher (Tariff quotas are not preferential)
CPTPP countries have made significant tariff commitments to Vietnam, with immediate tariff elimination on approximately 78-95% of tariff lines upon the Agreement's activation, and up to 97-100% by the end of the reduction roadmap For instance, Canada will abolish import taxes on 95% of tariff lines, impacting 78% of Vietnam's export turnover to Canada, including 100% tariff elimination on seafood and timber exports Japan has also pledged to eliminate tariffs on 86% of tariff lines (93.6% of Vietnam's exports) immediately, with nearly 90% eradicated after five years Notably, this marks Japan's first commitment to fully remove import taxes on most agricultural and fishery exports from Vietnam The tax elimination roadmap varies, with ordinary goods taking about 5-10 years and sensitive goods over 10 years or subject to tariff quotas.
Vietnam's tariff commitments to CPTPP partners involve a preferential tariff schedule applicable to all member countries, with varying levels of tariff incentives for different goods Specifically, 65.8% of tariff lines will see a reduction to a 0% tax rate immediately upon the agreement's enactment, while 86.5% will achieve this status by the fourth year, and 97.8% by the eleventh year The remaining items will have import taxes eliminated by the sixteenth year or through tariff quotas Overall, Vietnam's commitment to market openness is notably lower compared to the commitments made by other CPTPP countries towards Vietnam.
3.2.2 Commitment to services and investment:
CPTPP countries implement a pick-and-drop approach along with a "only forward, not backward-ratchet" mechanism for the service and investment sectors This allows nations to reserve certain measures that may contradict the four key obligations of the Service Chapter—National Treatment, Least Favored-Nation Treatment, Market Access, and Presence in the Host Country—as well as the Investment Chapter's obligations—National Treatment, Most Favored-Nation Treatment, Implementation Requirements, and Senior Personnel Management and Board of Directors These reservations are categorized as the "List of Reserved Measures Incompatible with the Main Obligations of the Services Chapter and the Investment Chapter" (NCM Portfolio of Services-Investments) Furthermore, regulatory measures that do not exhibit discrimination can be maintained without needing to be reserved in the Agreement.
Regarding the specific commitment to open the market, we are also more committed to opening up than the WTO as follows:
The Principle of Most-Favored-Nation (MFN): We agree with the
The MFN principle mandates that CPTPP member countries must be treated no less favorably than other partners However, we retain the right to implement measures that allow for differential treatment of States with existing bilateral or multilateral agreements established before this Agreement's effective date, including ASEAN Member States under relevant ASEAN agreements Additionally, we reserve the right to apply differential treatment measures for States under agreements formed after the Agreement's entry into force, specifically in maritime activities such as rescue operations, seafood, and aviation.
CPTPP countries can establish joint ventures for basic telecommunications services with a capital contribution of up to 49%, while for value-added services, this limit increases to 65% after five years Additionally, after five years, 100% foreign investment is permitted for services not linked to network infrastructure Vietnam retains the right to regulate non-infrastructure services, requiring providers to register or obtain licenses Furthermore, CPTPP investors in submarine fiber optic cables must connect through local landing stations and can only sell capacity to licensed telecommunications and Internet service providers in Vietnam.
We are dedicated to expanding the banking market by introducing innovative financial services and electronic payment solutions for card transactions Alongside this market expansion, we remain committed to upholding the licensing rights of financial regulators and safeguarding Vietnam's interests in international agreements.
Distribution services: Vietnam commits to remove restrictions on
After five years from the Agreement's effective date, there will be an expansion of retail outlets Meanwhile, Vietnam maintains restrictions on foreign involvement in the distribution of key commodities, specifically petroleum, pharmaceuticals, and video recording products.
Certain sectors exceed WTO commitments, particularly in areas where we actively seek foreign investment, including healthcare, sports facilities, entertainment services, environmental services, and business services We permit CPTPP countries to invest beyond WTO limits, allowing many sectors to establish enterprises with 100% foreign ownership.
Countries have reached a consensus on a comprehensive framework for procurement bidding by government agencies, which includes the use of extensive international bidding to select contractors from CPTPP nations Notably, preferential bidding conditions will not be applied to contractors or domestic goods and services, although Vietnam has established a 25-year transition period for this regulation The rules emphasize transparency in information and procedures throughout all stages of the bidding process, alongside regulations to uphold integrity and a structured approach for addressing contractors' complaints.
Validity of the CPTPP
The CPTPP Agreement will take effect 60 days after at least six member countries, or half of the total members (whichever is fewer), notify New Zealand, the Agreement's Depository, that they have completed their internal legal ratification procedures.
For countries outside the specified group, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will become effective 60 days following their notification to New Zealand regarding the completion of their internal ratification processes.
Withdraw from or join the CPTPP
The CPTPP is an open agreement, which allows the admission of new members, allowing existing members to withdraw from the agreement on relatively simple conditions:
The CPTPP allows any country or tariff territory to join if an agreement is reached on the terms and means with all members of the CPTPP.
5.2 Withdrawal from the CPTPP agreement:
Under the CPTPP, a member state intending to withdraw must provide written notice to the Depository, New Zealand, and inform all other member countries The withdrawal becomes effective six months after notifying New Zealand, unless a different agreement is reached among the parties The agreement remains valid for the other member states.
Rules of origin
Each Free Trade Agreement (FTA) establishes specific rules of origin that goods must meet to qualify for tariff benefits Under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a product is deemed to have CPTPP origin if it satisfies one of three defined criteria.
Case 1: Pure origin: Goods of pure origin are goods grown, harvested or caught in the CPTPP area such as crops, live animals, minerals and substances naturally produced in CPTPP countries.
Case 2: Goods are produced entirely in the CPTPP area and only from raw materials originating from the CPTPP for example, pastry products produced in Vietnam from chocolate ingredients originating from Mexico, Australian sugar and New Zealand milk (all countries are CPTPP members) are considered to have CPTPP origin in this form.
Case 3: Goods manufactured in the CPTPP, using raw materials not of CPTPP origin but meeting the specific rules of origin of the goods specified in Appendix 3-D of chapter 3 (CPTPP Agreement Documents) This is the most common case in the context of production, which is usually in a chain with raw materials and stages taking place in many countries around the world However, this is also the most complex group of rules of origin and has the most differences between the CPTPP and the FTAs that Vietnam has signed The CPTPP stipulates
3 methods of determining origin in this case, including: Tariff Shift rules; Regional value content rules; Production Process rules
The Commodity Conversion Rule, or HS code conversion (Change in Tariff Classification - CTC), mandates that raw materials lacking origin must undergo a significant production process within the CPTPP This transformation is essential to alter the nature of the materials, resulting in a final product that possesses a different HS code from the original raw material.
In the CPTPP, the conversion of HS codes involves three levels: chapter, heading, and subheading Most HS codes have specific conversion rules, requiring that non-origin materials belong to a different chapter, group, or subgroup than the finished product Additionally, these codes must not match any listed exceptions Notably, raw materials without origin may still qualify as originating goods under the De Minimis principle, provided their value does not exceed 10% of the total product value However, this principle does not apply to textile and garment products, which have distinct regulations regarding negligible proportions outlined in Annex 3-C of the agreement.
Regional Value Content (RVC) rules require that a certain percentage of the raw materials used in goods must originate from CPTPP member countries for those goods to qualify as CPTPP origin The CPTPP outlines three methods for calculating RVC: the Centralized Value Method, the Indirect Method (build-down), and the Direct Method (build-up), with a specific calculation method for automobiles and auto parts based on net cost These methods are detailed in Article 3.4, Chapter 3 of the Agreement While the RVC calculation methods in the CPTPP are largely similar to those in Vietnam's previous FTAs, the CPTPP introduces flexible provisions, including a separate aggregation rule and adjustments for raw material value, allowing businesses to better comply with RVC requirements.
The Specific Process rule within the CPTPP mandates that goods originating partially from outside the agreement must undergo a defined production process in CPTPP countries to qualify as CPTPP origin This rule is particularly relevant for products where applying regional content rules or HS conversion proves to be too complex or unfeasible.
6.2 Separate rules of origin for each product
The CPTPP establishes distinct rules of origin for each product or product group as outlined in Chapter 3, allowing businesses to select the most suitable rules for their needs These rules may include a single criterion, such as HS code conversion or regional value content (RVC), or multiple criteria that can be applied simultaneously Consequently, businesses must assess the specific rules of origin relevant to their product codes to determine the applicable regulations, enabling them to choose one or more rules as necessary.
6.3 Exceptions to origin for "sets of goods"
A set of goods, defined by its unique HS code, consists of various items packaged together for retail, such as drawing tools like pencils, rulers, and compasses, typically enclosed in a plastic bag To qualify for origin under the CPTPP, all items in the set must have origin; alternatively, the total value of non-origin goods must not exceed 10% of the set's overall value.
6.4 Rules of origin for refurbished goods
Under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), refurbished goods receive the same treatment as new goods of their kind, ensuring equitable trade practices The agreement features flexible rules of origin, allowing raw materials sourced from the dismantling of used goods within CPTPP countries to be processed and utilized in the production of refurbished items Importantly, these raw materials maintain their CPTPP origin status, regardless of the original export country, promoting seamless trade in refurbished products among member nations.
6.5 Procedures for certification of origin
The CPTPP introduces a novel self-certification mechanism for origin, allowing importers, exporters, and producers to certify the origin of their goods independently This marks a significant shift for Vietnamese enterprises, which traditionally rely on state-appointed agencies, such as the Ministry of Industry and Trade or the Vietnam Chamber of Commerce and Industry, for origin certification While Vietnam has initiated pilot programs for self-certification within ASEAN, this approach differs from the practices in the United States, where only importers self-certify, and in the EU, where the responsibility lies with exporters.
The CPTPP's self-certification of origin mechanism enables importers, exporters, and producers to certify their own product origins, offering a flexible approach that benefits businesses during the export process Importantly, Vietnam is not obligated to implement this self-certification mechanism immediately upon the agreement's activation.
For imports: Vietnam, Brunei, Malaysia, Mexico, Peru are allowed to reserve the form of self-certification of origin by importers within 5 years from the effective date of the agreement
Member States, including Vietnam, can simultaneously implement two methods for issuing certificates of origin for exports over a period of five years from the agreement's effective date, with a possible extension of an additional five years These methods include the traditional process of issuing certificates of origin by authorized agencies and allowing eligible exporters the option of self-certification of origin.
The CPTPP outlines specific regulations regarding the procedures and conditions for certifying origin, emphasizing the importance of compliance within set time limits Key aspects include the investigation and verification of origin information, the retention of supporting documents, and confidentiality measures, all of which are crucial for competent State agencies to uphold.
Dispute resolution mechanism
The dispute settlement mechanism of the CPTPP is exclusively applicable to member countries, addressing disputes arising from the interpretation or application of commitments within the agreement This mechanism is invoked in cases where a member state's measures are perceived as inconsistent with the CPTPP, when a member fails to meet their obligations, or when a member believes their expected interests have been undermined by actions taken by another member However, certain exclusions may apply as specified in specific commitments outlined in the chapters of the CPTPP.
The dispute settlement process under this mechanism is almost similar to the
WTO's state-level dispute settlement process This process can be summarized as follows:
If a consultation fails, parties can request the formation of a Panel after 60 days, or 30 days for perishable goods, from the consultation request date.
The jury, composed of three members chosen based on specific criteria outlined in the agreement, is tasked with producing a Preliminary Report within 150 days, or 120 days in emergency situations.
The disputing parties are allotted 15 days to provide feedback on the contents of the Panel's Preliminary Report, or a different timeframe may be established through mutual agreement.
Final Report of the Panel
The final report must be made within 30 days of the issuance of the Preliminary Report, unless otherwise agreed by the parties
The disputing parties must make the Panel's final report available to the public within 15 days of the date it is made
Enforcement of the Juror's Judgment
The agreement promotes public and third-party involvement in the dispute resolution process by granting access to submitted documents and the final report Additionally, parties involved in the hearing and NGOs can request to provide written comments to the Panel Importantly, third-party members of the agreement, who are not directly involved in the dispute, are permitted to attend hearings, submit written comments, and present their perspectives directly to the Panel, thereby enhancing transparency and inclusivity in the process.
Dispute settlement result: If the final report of the Panel determines that:
If a member state of the CPTPP takes actions that contradict its obligations or fails to comply with the agreement, thereby undermining the interests of other members, it will be granted a reasonable timeframe to rectify or retract its violations Should the breaching member fail to fulfill its responsibilities within this period, the affected party may pursue compensation or suspend benefits under the agreement for the violating member.
The CPTPP regulates the implementation control mechanisms of its members to ensure that the Agreement is properly and fully implemented
The agreement establishes various control mechanisms for member implementation, including the formation of the Trans-Pacific Partnership Council, which addresses all matters related to the agreement's execution and the state-level dispute resolution process Additionally, specific chapters, such as SPS, TBT, and public procurement, incorporate distinct enforcement assurances alongside the general provisions of the agreement.
The dispute settlement mechanism in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is essential for overseeing member countries' adherence to the agreement In the CPTPP, there are three primary dispute resolution mechanisms designed to address conflicts arising from the implementation of the agreement.
The state-level dispute settlement mechanism among CPTPP members addresses disputes that arise from the obligations outlined in the CPTPP agreement This mechanism is applicable to nearly all chapters of the CPTPP, ensuring a structured approach to resolving conflicts between member countries.
The dispute settlement mechanism established under the CPTPP facilitates resolution between host states and foreign investors from other CPTPP nations, specifically pertaining to investment-related issues.
The contents are related to the bilateral dispute settlement mechanism For example, in the labor chapter, in a bilateral letter between
Vietnam and its 10 CPTPP partner countries have established a distinct reservation agreement regarding the usage of dispute resolution mechanisms and the application of sanctions in specific labor disputes.
Differences of the CPTPP agreement compared to other agreements that
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) represents a significant milestone in Vietnam's approach to international economic integration Unlike previous free trade agreements (FTAs), the CPTPP demands a higher level of commitment, encompassing not only tariff reductions but also stringent requirements for legal reforms and regulations related to labor, environmental standards, intellectual property, and state-owned enterprises.
A key feature of the CPTPP is its commitment to the principle of "only forward, not backward," ensuring that regulations and policies, once improved in line with the agreement's commitments, cannot be reverted to a less favorable state Additionally, Vietnam is granted a three-year transition period to effectively implement this principle.
The CPTPP mandates substantial legal reforms from its member states, compelling Vietnam to revise numerous existing and newly issued legal documents to align with the agreement's commitments As a result, the Vietnamese Government has prioritized the development of legislation to implement the CPTPP, particularly following its entry into force on January 14, 2019.
The CPTPP establishes stronger commitments for trade in services and investment compared to previous FTAs by utilizing an "opt-out" approach in its commitment table This method specifies restricted sectors and sub-sectors for market opening, in contrast to the "opt-in" approach commonly used in other FTAs Consequently, the CPTPP promotes greater market openness while improving transparency and predictability in trade and investment regulations.
The CPTPP enables Vietnam to enhance trade relations with member countries lacking bilateral FTAs, facilitating access to major markets through preferential tariffs and favorable trade regulations Additionally, this agreement necessitates significant reforms in Vietnam, including improvements in the business environment, the protection of labor rights, better management of state-owned enterprises, and the safeguarding of intellectual property.
THE IMPACT OF THE CPTPP ON VIETNAM AND OTHER
For Vietnam
Regarding politics, national security and defense and foreign policy strategy:
CPTPP member countries unanimously uphold the principles of political institutions, national security, independence, sovereignty, and territorial integrity, emphasizing non-interference in each other's internal affairs During negotiations with Vietnam, all member nations have demonstrated a strong commitment to respecting these fundamental principles.
Joining the CPTPP as an early member will showcase Vietnam's commitment to proactive international integration, reinforcing its significant geopolitical role in Southeast Asia and the Asia-Pacific This move will elevate Vietnam's standing within ASEAN and on the global stage, particularly amid the rapidly evolving political and security landscape and rising protectionism.
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has significantly lowered tariffs and trade barriers, enhancing Vietnamese businesses' access to CPTPP markets and boosting their competitiveness High consumer demand, particularly from Japan and Canada, further propels Vietnam's export growth The Ministry of Industry and Trade projects that Vietnam's export turnover to CPTPP markets will rise by 18.7% in 2023 compared to 2019, reaching an impressive 88.5 billion USD.
In 2023, Vietnam is projected to attract $20.4 billion in foreign direct investment (FDI) from CPTPP countries, marking a 16.7% increase since 2019 The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has fostered a stable and transparent investment climate, while Vietnam's robust macroeconomic environment, skilled workforce, and competitive labor costs further enhance its appeal Additionally, the CPTPP Agreement ensures the protection of foreign investors' interests, reinforcing Vietnam's position as a prime destination for investment.
The Vietnamese Government has implemented various policies to enhance business competitiveness, focusing on improving the business environment, developing human resources, and facilitating market access Additionally, these measures aim to ensure compliance with the higher standards of product quality, production processes, and environmental protection outlined in the CPTPP.
Vietnamese enterprises have been forced to improve their competitiveness
According to the World Bank's Global Competitiveness Index (GCI), in
2023, Vietnam ranks 67 out of 190 countries in terms of competitiveness, up 5 places compared to 2019 Vietnam's labor productivity has also improved significantly in recent years.
Since the implementation of the CPTPP, investment in green technology and renewable energy projects has significantly increased Numerous businesses are now adopting effective strategies to enhance energy efficiency and minimize waste.
The rising demand for environmentally friendly products and services is driving businesses to adopt sustainable production practices Consumers are becoming more conscious of their choices, favoring products with transparent origins that prioritize health and environmental safety.
The CPTPP has significantly boosted job creation in Vietnam, particularly in export and related sectors, thanks to increased export growth and foreign direct investment (FDI) Estimates from the Ministry of Labor, Invalids and Social Affairs indicate that approximately 1.3 million new jobs have been generated between 2019 and 2023, leading to improved living standards for the population.
For other members
The CPTPP agreement, like its effects in Vietnam, fosters export growth, enhances foreign direct investment (FDI), boosts competitiveness, and elevates national standing, while addressing various environmental and social issues to improve citizens' lives and broaden market access Nonetheless, it also presents notable challenges, including the potential rise in income inequality, increased unemployment, and cultural conflicts.
OPPORTUNITIES, CHALLENGES AND SOLUTIONS OF
For the State
The reduction of import taxes to 0% by countries like Japan and Canada is set to significantly enhance Vietnam's export turnover Vietnamese enterprises will benefit from preferential tariff commitments when exporting to CPTPP member countries, with Australia pledging to immediately cut tariffs on 93% of tariff lines, impacting approximately 2.9 billion USD of Vietnam's export turnover Similarly, Canada has committed to a 94.9% reduction in tariffs, which corresponds to 77.9% of its import turnover from Vietnam, valued at around 0.88 billion USD.
Export products in key sectors such as agriculture, fisheries, electricity, and electronics will benefit from immediate tariff exemptions upon the Agreement's implementation Official research by the Ministry of Planning and Investment indicates that Vietnam's exports could rise by 4.04% by 2035 Additionally, a World Bank study suggests that if economic conditions remain stable, exports may grow by 4.2%, with potential productivity improvements driving growth rates up to 6.9% by 2030.
Establishing Free Trade Agreement (FTA) relations with CPTPP countries will enable a more balanced restructuring of Vietnam's import and export market A World Bank study from March 2018 predicts that by 2030, Vietnam's exports to CPTPP nations are expected to rise from $54 billion to $80 billion, representing 25% of the country's total exports.
Opportunities to participate in regional and global supply chains
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) encompasses countries that represent 13.5% of global GDP and facilitate over $10 trillion in trade, including key markets like Japan, Canada, and Australia This agreement is poised to create significant opportunities through the establishment of new supply chains, fostering economic development, enhancing labor productivity, and enabling Vietnam to transition towards higher value-added production stages By participating in the CPTPP, Vietnam can elevate its economy over the next 5-10 years, advancing into sectors such as high-tech industries and green agricultural products.
Industries projected for significant growth include food, beverages, tobacco, textiles, and select manufacturing and service sub-sectors Notably, the most substantial expansion is anticipated in food, beverage, tobacco, textile, chemical, plastic, leather products, transportation equipment, and machinery Research from the Ministry of Planning and Investment indicates that the CPTPP can drive an average growth rate of 4% to 5% in light and labor-intensive industries, with export growth potentially reaching between 8.7% and 9.6%.
Joining the World Trade Organization (WTO) and participating in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) presents a significant opportunity to enhance our economic legal framework, particularly the socialist-oriented market economy This initiative aligns with our Party's strategic goals of renewing our growth model and restructuring the economy It also aims to improve the business environment by fostering openness, transparency, and predictability, ultimately attracting both domestic and foreign investment while adhering to advanced international standards.
Joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is expected to enhance economic growth, leading to job creation and increased income levels, ultimately contributing to poverty alleviation Research from the Ministry of Planning and Investment indicates that the CPTPP could generate an additional 20,000 to 26,000 jobs annually Furthermore, a World Bank study predicts that by 2030, the CPTPP may lift approximately 600,000 individuals above the poverty line of $5.50 per day, benefiting all income groups.
Economic growth enhances resources for improving human resources and public health care in Vietnam As CPTPP member countries have more developed economies that complement Vietnam's, imports from these nations generally do not compete directly with local products By implementing a strategic tax reduction plan and strengthening the social security system, Vietnam can effectively address social challenges arising from CPTPP participation Additionally, the CPTPP Agreement's environmental protection commitments ensure that trade liberalization and investment attraction occur in an environmentally sustainable manner, fostering more sustainable economic growth for Vietnam.
Vietnam faces challenges in competing with certain agricultural products, particularly pork and chicken, despite producing them However, the withdrawal of the United States from the CPTPP has reduced competitive pressure on these markets Additionally, Vietnam has established a lengthy implementation roadmap for these products, with some chicken types having extended timelines for development.
10 years) This is a much longer roadmap than Vietnam's commitment to open the market in ASEAN, which is also very competitive in the production of certain types of meat
Certain industrial products, such as paper, steel, and automobiles, from CPTPP countries pose challenges for our domestic production However, it is reasonable to believe that the competitive pressure will remain manageable, as our products primarily target the middle market segment, while those from CPTPP countries tend to focus on the high-end market segment for the next 10-15 years.
To address challenges in agriculture and animal husbandry, the Government has recently implemented three Decrees aimed at restructuring the agricultural sector These measures focus on reorganizing production, piloting advanced production models, and promoting the application of science and technology The initiatives are designed to support enterprises and farmers in enhancing agricultural production and business activities, ultimately improving the productivity and quality of agricultural products to boost competitiveness both domestically and in the global market.
Many large corporations in Vietnam are increasingly investing in the agricultural sector by leveraging advanced production and management technologies This modern approach enhances the competitiveness of their products in the domestic market Furthermore, negotiations indicate that the opening of markets in specific agricultural sectors will follow a strategic roadmap to facilitate the restructuring process.
To enhance competitiveness, it is essential to extend the tax reduction roadmap, allowing time for domestic production restructuring and encouraging large-scale investments in high technology This proactive approach should prevent reliance on the roadmap, which could hinder innovation and lead to challenges Additionally, it is crucial to innovate and strengthen communication efforts to ensure that all businesses understand the opportunities and challenges presented by the CPTPP and the broader context of international economic integration and participation in new-generation free trade agreements.
Challenges in perfecting the legal and institutional framework
To fulfill the commitments of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), various legal regulations concerning trade, customs, intellectual property, labor, and trade unions must be revised While there is significant pressure to align the legal framework with the new standards set by the Agreement, this challenge will be addressed for three key reasons.
First, the most difficult commitments, which require large enforcement resources such as in the field of intellectual property, have been "postponed" by
11 countries after the United States withdrew from the TPP Agreement
Many new commitments align with the Party's guidelines and State laws, particularly in areas like government procurement, environmental protection, and the support of small and medium-sized enterprises Consequently, the pressure to reform the legal system remains minimal.
For enterprises
Market expansion: CPTPP helps Vietnamese businesses access the market with more than 149 million consumers in 11 member countries, including many high-income markets such as Japan, Canada and Australia.
Lower tariffs: The CPTPP is committed to cutting tariffs on most trade items between member countries, helping Vietnamese businesses export goods to the CPTPP market at more competitive prices.
Investment attraction: The CPTPP creates a more open and transparent investment environment, attracting foreign investment into Vietnam, especially in potential sectors such as manufacturing, processing and services.
To enhance competitiveness and meet the stringent product quality, service standards, and rules of origin set by the CPTPP, Vietnamese enterprises must focus on improving their technological innovation and corporate governance.
Fierce competition: Vietnamese enterprises must compete with enterprises from other CPTPP member countries, which have a higher level of production and technology.
Requirements for product standards: Vietnamese enterprises need to meet high standards of product quality, services and rules of origin to enjoy tariff preferences in the CPTPP.
Production costs: Production costs in Vietnam may be higher than in some other CPTPP member countries, affecting the competitiveness of businesses.
Shortage of human resources: Vietnam may have a shortage of highly qualified human resources to meet the needs of businesses in a more competitive environment after joining the CPTPP.
Improve competitiveness: Businesses need to invest in technological innovation, improve the quality of products and services and the efficiency of corporate governance.
Market research: Businesses need to study the CPTPP market to understand consumer needs and requirements for products and services in these markets.
Cooperation with other businesses: Businesses can cooperate with other domestic and international businesses to share resources, experience, and markets.
Take advantage of support programs: The Vietnamese government has many programs to support businesses to participate in the CPTPP, businesses need to learn and use these programs effectively.
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) represents a significant advancement in fostering free trade and enhancing market diversification among its member countries Since its implementation, the CPTPP has opened new avenues for economic collaboration and growth.
In 2018, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) established a significant free trade area, encompassing economies that account for 13.4% of the global GDP The United Kingdom's signing of the accession protocol in July 2023 further extends the CPTPP's geographical influence and enhances its economic strength.
This agreement not only reduces trade barriers but also sets high standards for intellectual property and protects against intellectual property theft for companies operating abroad
The CPTPP exemplifies international collaboration, as member states unite to exchange information on state-owned enterprises and address issues related to state intervention in the market.
The successful implementation of this agreement necessitates that businesses and governments in member countries remain flexible and adaptable, balancing economic interests with labor and environmental considerations.
First of all, I would like to send my most sincere thanks to Mr Nguyen Xuan Dao In the process of studying and learning about international trade policy,
I have received significant support and dedicated guidance from my teacher, which has greatly enriched my understanding of the CPTPP Agreement and enabled me to successfully complete my essay on this topic.
While taking the test, it's inevitable to encounter challenges I welcome your feedback to enhance my essay and make it more comprehensive.