Enterprises have to be prepared for taking advantage from CPTPP (The Comprehensive and Progressive Agreement for Trans-Pacific Partnership)

Mr. Pham Binh An, Director of HCM City WTO Affairs Consultation Centre

Dear Sir, although CPTPP is officially signed, it seems like enterprises have not paid much attention to this issue. What do you think about CPTPP?

My observation is that after the TPP (Trans-Pacific Partnership) agreement had been rejected by US President Donald Trump, with the United States pulling out, it seems that businesses do not pay attention anymore. However, this was a very important agreement with a lot of new content, an agreement for the 21st century with a lot of progressive content, so the other 11 countries have agreed to continue the agreement by postponing some of the most difficult terms and CPTPP was signed.

This is still a very progressive and comprehensive agreement that will improve the standards and quality of enterprises and the economy rather than just opening the market. If the enterprises do not research the agreement in order to prepare from now, they will be short of breath and will lose in the implementation of this agreement.

Which areas will enjoy benefits from CPTPP, sir?

- Since the withdrawal of the United States, there have been no studies on the impact of the CPTPP on Vietnam. Although there is a study by the World Bank, it only researched the negotiation phase without signing, so it is not final. However, it is clear that countries are very interested in the Vietnamese market, especially in the area of services and investment. These two areas are attracting the interest of developed countries. Thus, those are potential fields. These two areas will have a lot of competition because many enterprises will come. However, the competition is good for businesses as well as the economy because competition requires enterprises to change a lot, they must approach standards to serve customers better. Typically the banking system has changed a lot recently to meet the needs of the competitive market. This is good for businesses and the economy.

How about the enterprises, dear sir?

The new generation of liberal agreements, including the CPTPP, not only requires macro-level reform but also the standard requirements of enterprises, including many environmental, labor, intellectual property ... Therefore, if enterprises want to enjoy benefits, they not only have to meet the conditions of the origin of goods in order to enjoy preferential tariff rates, but also to meet other standards besides non-tariff barriers which are very complicated, especially labor regulations. This is a very new issue. Also, the environmental issues must ensure sustainable development.

All these issues must be noted in order to fully exploit the CPTPP market as well as markets of the new generation FTA. Long-term investments such as investment in management standards, labor, as well as environment in their businesses should be focused on for gradually connecting chains with other regional and large enterprises. If we meet that standard, we will be able to export to the countries where we have a lot of advantages, otherwise we will only turn around the domestic market and the surrounding markets with the ability to compete in the short term.

Currently, Vietnam has signed and is negotiating for another 16 FTAs. However, the ability to make use of FTAs by enterprises is still very limited. What do you think about this issue?

- In my opinion, in the past, businesses have also paid a lot of attention to FTAs. However, the texts of the agreements are very difficult to understand, which requires a lot of interpretation for each sector. This is an obstacle that makes many enterprises to not have much access to good products to bring benefits to their work. This also causes some companies to be less interested in FTAs. Particularly in HCMC, businesses are very active and very interested in exploiting FTAs not only in export activities but also other activities. Therefore, the tasks of the government and supporting agencies must have the right product for the company to read, understand the benefits, opportunities and challenges to take appropriate activities.

About the ability to take advantage of the FTA in the past, it must be admitted that they have not really done well. In the report on import and export in 2017, the Ministry of Industry and Trade, it also pointed out that only 30% of export value is eligible for preferential treatment from FTAs. This is a relatively low rate and there is plenty of room to grow. In fact, so far many enterprises do not know about FTAs. Many businesses know but have not prepared yet, have not considered their goods to ensure the preferential C/O, by ensuring the origin of raw materials and auxiliary materials on request to enjoy preferential tariffs, and if not, they will not entitled.

So what do you think the enterprises should do to enjoy benefits from the FTA?

- If enterprises want to improve the utilization rate of the FTA, the first thing is information acquisition. This is not a general market information, it must be a very specific information such as how the C/O must be calculated, how much C/O it rates, what raw materials can chain to Use of raw materials in the FTA or inland ... These are major issues that require the investment of enterprises and also need the support of the state.

There are many areas that can take advantage of the FTA but we just use mainly export commodities. Therefore, the problem to do now is the functional agencies must support enterprises with specific information, such as how to process input materials as well as the calculation in order to benefit from the agreement. That is very important in this first phase.

Thank you so much!