At the CPTPP signing ceremony with the participation of Chilean President Michelle Bachelet (front, middle) in Santiago de Chile on March 8 (Photo: VNA)
Comprehensive and Progressive Agreement for Trans-Pacific Partnership to take effect when ratified by at least six member countries.
by Quang Huy
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Eleven countries signed the landmark Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in Santiago, Chile on March 8 in what one minister called a powerful signal against protectionism and trade wars.
The signing came after US President Donald Trump vowed earlier in the day to press ahead with a plan to impose tariffs on steel and aluminum imports, a move that other nations and the International Monetary Fund said could start a global trade war.
The CPTPP will reduce tariffs in countries that together amount to more than 13 per cent of the global economy, or $10 trillion in GDP. With the US, it would have represented 40 per cent.
“Today, we can proudly conclude this process, sending a strong message to the international community that open markets, economic integration and international cooperation are the best tools for creating economic opportunities and prosperity,” Chilean President Michelle Bachelet said.
Even without the US, the deal will span a market of nearly 500 million people, making it one of the world’s largest trade agreements, according to Chilean and Canadian trade statistics.
The original 12-member agreement, known as the Trans-Pacific Partnership (TPP), was thrown into limbo early last year when President Trump withdrew from the deal three days after his inauguration. He said the move was aimed at protecting US jobs.
The eleven remaining nations finalized a revised trade pact in January. That agreement will become effective when at least six member nations have completed domestic procedures to ratify it, possibly before the end of the year.
The eleven member countries are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
“We are very hopeful, like others, that we will see the CPTPP coming into effect about the end of the year or shortly thereafter,” Australia Trade Minister Steven Ciobo said.
What does it mean for Vietnam’s trade?
Figures from the Ministry of Planning and Investment indicate that the CPTPP will add 1.32 per cent to Vietnam’s GDP and boost export revenue by 4 per cent; a hefty fall from the 6.7 per cent and 15 per cent projected in the original 12-member TPP, in which Vietnam was believed to be one of the biggest beneficiaries.
“The CPTPP will open up new markets for Vietnam’s industrial and seafood sectors and also contribute to the country’s efforts to fight poverty,” Head of the Border Trade Department at the Ministry of Industry and Trade, Mr. Luong Hoang Thai, told local media.
The new deal, he went on, preserves all the tariff outcomes agreed to under the TPP, meaning that custom duties on 95 per cent of goods will be cut or eliminated, either immediately or under pre-defined schedules, once the CPTPP comes into effect.
“Vietnam has been given a longer schedule for the tariff reductions and eliminations, from seven to ten years compared to the common seven-year roadmap,” Mr. Thai said.
The agricultural and textile industries will benefit from the new deal, he believes, as many of the parties have committed to fully opening their respective markets to Vietnamese imports such as seafood, tropical and agriculture products, and textiles, garments and footwear.
Other member countries will also cut tariffs on imports of Vietnamese industrial goods to zero compared to the current average of 1.7 per cent, according to Mr. Thai.
Some non-tariff barriers for Vietnamese goods will also be lifted under the trade deal. “Some countries, such as Japan and Canada, will immediately cut more than 90 per cent of their tariffs for Vietnamese imports after the trade pact takes effect,” he explained.
However, as the agreement is to be implemented on a reciprocity basis, Vietnam will not merely enjoy benefits but also meet some challenges from the CPTPP.
As other member states are slated to open their doors to Vietnamese imports, Vietnam will also eliminate customs duties on goods from other markets. “The biggest challenge will be for the animal husbandry industry, particularly the pork and poultry sectors,” Mr. Thai said.