Do not miss opportunity from TPP

Friday, 2016-02-05 18:35:47
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The freshly-sealed TPP agreement brings together 12 countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam.
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NDO – Trade and economic ministers from 12 member countries of the Trans-Pacific Partnership (TPP) agreement created an historic moment, officially signing the deal in Auckland, New Zealand on the morning of February 4.

It is neither the first free trade agreement (FTA) Vietnam has participated, nor the only new generation FTA that Vietnam has completed negotiations for so far.

With the presence of two of the three largest economies (the US and Japan), a large market with 800 million people, accumulated GDP of 12 member states accounting for 40% of the world GDP, and trade flow of goods accounting for 30% of global trade, the TPP is expected to be the FTA with the biggest impact on production and business operations in Vietnam in the near future. All organisations and individuals doing business in the country will be under the direct or indirectly impact of the TPP’s commitments.

Compared with enforcement mechanism of the World Trade Organisation (WTO), the TPP is diverse and tighter, providing its member states a better ability to supervise TPP enforcement of other countries, at the same time putting each member under pressure to properly implement the agreement.

As planned, the time for the TPP countries to complete necessary steps to judicial review, signing and ratification according to internal procedures of each country will be about two years - the TPP will likely take effect by 2018.

During that period, TPP member countries as well as companies do not have to implement the commitments in the deal, so it is an important period for them to prepare necessary conditions, as well as take advantage of opportunities available to compete in the TPP. For example, to enjoy preferential tariffs from the TPP, Vietnam's exports need to meet the rules of origin; businesses may have to adjust production lines and set up new sources of raw materials to meet that rule while also looking for customers in the TPP markets.

FTAs that Vietnam has signed and is implementing focus mostly on opening markets for goods, in which, Vietnam and its partners pledge preferential tariff treatment for goods of each other, if they meet regulations the rules of origin in concerned FTAs. Thus, in a market that Vietnam has commitments together under FTAs and the TPP, regarding import and export of goods, businesses can choose to follow the most profitable commitments under any FTA.

The Vietnam Chamber of Commerce and Industry emphasised the need that every enterprise, organisation and individual doing business in Vietnam pay attention to the TPP, at least commitments directly affecting their business operations, from which making appropriate preparations, especially to take advantage of market and institutional opportunities, as well as to overcome competition challenges generated from the agreement.

According to economic experts, rather than just noting the tariff, businesses should focus on self-improvement, innovation, expanding production, and improving product competitiveness, particularly stressing the importance on the origin and quality of goods.

Meeting the rules of origin should be done right from the beginning (from the stage of looking for materials and designing the manufacturing process). It could be a significant problem for many enterprises in Vietnam, but also an opportunity to force the nation to improve the quality of ancillary industries.

It is important take measures to prevent activities from foreign companies of non-TPP members with advantages in raw and auxiliary materials to turn their products into made-in-Vietnam goods to enjoy benefits of the TPP.