CPTPP officially takes effect: A well-planned action plan needs to be developed
PhD. Tran Toan Thang |
How do you assess the export growth ability of Vietnam with CPTPP?
- With CPTPP, in the forecast of the National Center for Socio-Economic Information and Forecast, the exports will grow by 4%, the imports will grow below 3.8%. The CPTPP Agreement helps Vietnam raise exports, but mainly in traditional markets, while in the expanded markets such as Mexico, Canada and Peru, the export will not significantly increase. This comes first from the similarities in production between Vietnam and those markets. These countries also mainly produce and export consumer goods. Vietnam and those countries are in competition rather than cooperation. In order to export Vietnamese goods, they must have similar quality with cheaper prices. So, production costs must be reduced. Currently, wages in the above countries are higher than Vietnam. However, the level of wage increase in Vietnam is also quite high. This is the reason why Vietnam's production cost advantage is reduced. In order to exploit these markets well, Vietnamese enterprises need to focus on finding niche markets.
Industries such as garments and textiles and leather and footwear are identified to benefit from CPTPP. Could you please elaborate on this?
- With the CPTPP Agreement, most light and labor intensive industries still benefit. This agreement can create additional growth rates for this sector from 4-5%, and increase the exports by 8.7-9.6%. Calculation results show that in the CPTPP Agreement, the garment and textile industry will still increase production scale and export value. An export growth rate increase by 8.3-10.8%. The high export growth rate of this industry is due to higher price competitiveness of the garment and textiles industry and footwear industry in new markets in CPTPP, while maintaining the key markets as the US and the EU. On the contrary, the influence of the CPTPP Agreement on the heavy industry is not significant (0.8-1.2%). The main reason is that Vietnam does not have a competitive advantage in industrial goods and its partners in the CPTPP Agreement are not partners that can promote the development of Vietnam's heavy industry.
In the opposite direction, which industries will be disadvantaged when implementing CPTPP, sir?
- Due to the impact of the CPTPP Agreement, the output growth rate of some industries may be reduced, including livestock, food processing and insurance service. The livestock industry is greatly affected by the CPTPP Agreement because of its very weak competitiveness. For example, the impact of CPTPP on beef cattle is remarkable. The rate of beef imports from markets such as the United States and Australia into Vietnam is relatively high, and in the near future it is very difficult to find solutions to change this. For the agricultural industry, to change competitiveness, it must start from seed, scale and farming practices. All three factors in Vietnam are weak.
For the food processing industry, due to the slow roadmap of tariff reduction compared to other industries (tax rate reduces to 0% after 15 years), the impact is not really considerable. In the service industry, the commitments of the service industry in the TPP agreement are fully transferred into the CPTPP Agreement, which shows that the impact of the CPTPP Agreement on financial services is not significant. Specifically, the CPTPP Agreement creates 0.01-0.03% of growth and also increases the import of these services at a relatively high level (2.4-3.6%), while making the export reduce by 2.8-3.2%.
CPTPP boosts economic integration in Asia Pacific The Comprehensive and Progressive Agreement on Trans-Pacific Partnership took effect on December 30, creating a free trade ... |
As for you, what should be noted in the process of developing an action plan to make the most of the opportunities and minimize the challenges from CPTPP?
- At present, Vietnam's integration strategy is available, but there is not a strategy on free trade agreements (FTAs). For the CPTPP Agreement in particular and FTAs in general, a well-planned action plan should be developed based on the tariff reduction roadmap. In that plan, it is necessary to have a roadmap to improve problems in specific commodity groups and industries. That plan must also clarify the tasks of each industry. On the basis of the general plan, the enterprises must make plans for themselves.
Thank you Sir!
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