Vietnam's exports to Canada lead among CPTPP countries

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Bà Trần Thu Quỳnh, Tham tán thương mại, Thương vụ Việt Nam tại Canada.

Could you please share about the export situation of Vietnam's goods to Canada after 5 years of implementing the CPTPP Agreement?

Canada is currently one of Vietnam's key export partners. According to Canadian data, including transshipment through the United States, in 2023, Vietnam's export of goods to this market increased by 136% in turnover value compared to 2018. In other words, 5 years after CPTPP, our exports to Canada have more than doubled, from 4.1 billion USD in 2018 to 9.8 billion USD in 2023. Even according to domestic data, our export value to this area has also increased by 110% after 5 years, being a "billion dollar" market with the highest export growth rate among the group of CPTPP countries. Currently, Vietnam has become Canada's seventh largest import partner and Canada is also a country with a very large trade surplus, up to over 9 billion USD.

How have businesses taken advantage of CPTPP's incentives for Vietnamese goods in the Canadian market in recent times, ma'am?

Although export turnover has rocketed after 5 years of implementing CPTPP, the current rate of using preferential tariffs of Vietnamese exports to Canada is still very low, only reaching 18%. About 81% of Vietnamese exported goods to Canada still use MFN tariff preferences and less than 1% still use GSP tariff preferences. Specifically, in 2022, Vietnam exported 12.85 billion Canadian dollars (CAD) of total turnover to Canada, but up to 10.4 billion CAD of exported goods still used MNF form; only 2.34 billion CAD used CPTPP form and the rest was in GPT.

What is the current level of presence of Vietnamese goods in Canada and which Vietnamese products bear great potential and opportunities in this market?

Vietnamese exports to the Canadian market are still enjoying preferential tariffs under GSP, MFN and CPTPP. In fact, after CPTPP, exporting goods have enjoyed 0% tax. Especially exports of items such as phones, electronics, basic metals, seafood, optical machinery, fruits and vegetables, chemicals, rice, cashews, tea, coffee... have increased dramatically in every form, even up to 1,000% in some items. This shows that CPTPP has a leverage effect, helping both sides pay more attention to the structure of each other's products and markets, thereby indirectly promoting the export of goods without a tax reduction roadmap. Besides, CPTPP also has a positive impact on Vietnam's exports thanks to the spillover effect due to the further bilateral development of the supply chain, transportation and logistics.

For the products that benefit the most from the tax reduction roadmap such as textiles, garments and footwear, CPTPP has had a significant impact on increasing the market share of these products in the Canadian market. To date, the value of Vietnam's textile and garment export turnover to the area has more than doubled compared to 2018, making Vietnam the third largest market share in Canada. For leather products, with a turnover of over 1 billion USD, Vietnam is currently the country with the second largest market share in the region (26%). Furniture products are also very potential, currently Vietnam is the 4th largest exporter to the market.

In addition to Vietnam's traditional key export products, the industries of marine mechanics, automobiles, precision mechanics, construction materials... are bearing a lot of potential and competitive advantages as well as a plenty of room to increase market share. Notably, the market share of almost all these industries is now taken up by Chinese industries so Vietnam has many advantages to be sought by Canadian businesses as an alternative supply source.

To continue to support Vietnamese goods to access and build a solid foothold in the Canadian market, what activities will the Trade Office implement in the coming time, ma'am?

Exploiting FTAs in general and CPTPP in particular is not just about exploiting tax incentives to promote short-term exports. Businesses need to target greater opportunities such as the connection of production, investment, technology, and brands between the two countries to create higher value chains. In particular, businesses need to pay attention to the opportunities to participate in government procurement, government bidding, and oversea public-private cooperation from CPTPP effectiveness. In addition, besides exporting goods, we should focus on exporting services, which is still not fully taken consideration, including shipping services, construction, telecommunications and IT services and franchise services, labor services, tourism...

Therefore, from a local perspective, in addition to supporting businesses in trade promotion activities, participating in exhibitions, verifying businesses and connecting orders, in recent years, the Special Trade Office Promote propaganda on how to exploit and use CPTPP incentives in Canada. We have coordinated with local ministries to organize seminars in Canada and in Ho Chi Minh City to evaluate 5 years of CPTPP implementation to help Canadian businesses better understand cooperation opportunities with Vietnamese businesses.

Therefore, from a local perspective, in addition to supporting businesses in trade promotion activities, participating in exhibitions, verifying businesses and connecting orders, in recent years, the Trade Office have focused on promoting propaganda on how to exploit and use CPTPP incentives in Canada. We have coordinated with local ministries to organize seminars in Canada and in Ho Chi Minh City to evaluate 5 years of CPTPP implementation to help Canadian businesses better understand business opportunities with Vietnamese businesses.

CPTPP can only be effectively exploited done when businesses of both countries understand and apply it in order to implement strategies to find optimal input sources and meet rules of origin to improve competitiveness. Currently, Canadian importers still benefit from CPTPP due to tax incentives of 0% even for some products that use the CPTPP, MFN or GPT preferential forms. Canadian manufacturers are also interested in taking advantage of RVC (regional content) in their input purchasing strategy to take advantage of the principle of cumulative origin in production to export to share FTA markets of both Canada and Vietnam.

We are one of the leading businesses in supporting businesses to connect online with many seminar programs to share information and connect trade in recent years. The Trade Office also continuously updates industry reports on the Electronic Information Portal of the Ministry of Industry and Trade; Information portal about Free Trade Agreements and through press channels so that businesses and associations are able to take full awareness of market structure, competitors, and tastes in order to build appropriate development strategy.

Recently, we have also put into operation the Electronic Information Portal of the Trade Office in English, which includes reputable Vietnamese exporter section. These continue to be the work directions that we will be implemented in the coming time to provide more practical support for businesses to access and expand their presence in the market.

Thank you,ma’am!