After the United States officially withdrew from the Trans-Pacific Partnership (TPP) on January 30, 2017, the remaining 11 countries have continued to push forward and reach an agreement on a new name for the TPP agreement, which is the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Basically, the CPTPP preserves the content of the TPP but allows the member states to temporarily postpone a number of obligations in order to ensure a balance in the new context. This has been resolved through the commitments made in texts, annexes and bilateral agreements, concerning each country’s own interests which will be signed when the CPTPP is officially signed. Therefore, the new CPTPP will be more appropriate to the countries’ enforcement capabilities in the new context.
In order to promptly bring the CPTPP into force and provide practical benefits to the businesses and people of the participating countries, there should be at least six, or at least 50% of the number of signatories (whichever is smaller) having notified the Depositary in writing of the completion of their applicable legal procedures. When this condition is met, the Agreement will officially enter into force for the countries which have completed domestic legal procedures 60 days later. As for the remaining signatories, the Agreement shall enter into force 60 days after the date on which they have notified the Depositary in writing of the completion of their applicable legal procedures.
Similar to the TPP, the CPTPP is considered as a new-generation free trade agreement (FTA) with high and comprehensive standards, as it not only covers traditional areas, such as tariff reductions for goods, intellectual property, and trade-related technical barriers, but also deals with new and non-traditional issues, such as labour, the environment, and the procurements of Government and State-owned enterprises (SOEs). In addition, the Agreement sets high standards and requirements for transparency as well as proposing binding mechanisms to resolve disputes. In terms of market openings, CPTPP’s participating countries agree to eliminate almost all import tariffs for each other within the roadmap, whilst liberalising services and investments on the basis of complying with the law of the host country and ensuring State management, thus creating new business opportunities for enterprises and new benefits for consumers of member countries. Despite the US’s absence, the CPTPP will still benefit all participating countries by opening up a new playground with a market size of around 13.5% of the global GDP and a population of nearly 500 million people.
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According to the minister, the CPTPP participation will enable Vietnam to reform its domestic institutions, thereby creating an open and transparent investment-business climate.
Vietnam also places a lot of expectations on the CPTPP. In terms of politics and foreign affairs, the new CPTPP will be a meaningful gathering of countries in the region, which is capable of bringing practical benefits and advantages, and promoting the trend of cooperation in the Asia-Pacific region. Regarding the economy, the participation in the CPTPP in general is beneficial to Vietnam. The Agreement will contribute to facilitating the exports of goods to the relatively large-scale markets of great significance to Vietnam, such as Japan, Australia, Canada, and Mexico, in addition to attracting foreign investment in the sectors and fields of Vietnam’s development demand. Also, participation in the CPTPP will enable Vietnam to reform its domestic institutions, thereby creating an open and transparent investment-business climate, which is a long-term benefit.
The CPTPP is an open agreement, so when another country joins the CPTPP, the benefits to Vietnam will also increase. As a participant from the start, Vietnam will seize a greater advantage in protecting its interests.
Recognising the economic and strategic importance of this Agreement, the Government has instructed the Ministry of Industry and Trade (MOIT), as well as the relevant ministries and agencies to proactively coordinate with the TPP countries to discuss orientations in order to bring the TPP into force in the shortest possible period of time, immediately after the US’s withdrawal, on the basic of ensuring a balance between the rights and obligations of Vietnam. As the host of the Asia-Pacific Economic Cooperation (APEC) forum, Vietnam worked closely with Japan and other countries to maintain the TPP. After a very difficult year of discussions, with the agreement on the brink of collapse at times, the participating countries achieved a breakthrough in terms of the TPP at a ministerial-level meeting organised on the fringes of the APEC Economic Leaders’ Meeting 2017 in Da Nang. Specifically, the member states adopted the new name of the TPP – the CPTPP – and agreed on the basic contents of the Agreement. On that basis, the countries concluded the negotiations over all the remaining contents in Tokyo, Japan in late January.
Currently, the participating countries are completing their domestic procedures, towards the official signing of the Agreement on March 8 in Santiago, Chile. Vietnam is also working with the other nations to complete all of the applicable domestic procedures and join the signing in line with the aforementioned roadmap. Once signed, the CPTPP will be submitted to the National Assembly for consideration, approval and decision on its implementation in reality, in line with the roadmap agreed upon by the participating CPTPP countries.
In the time ahead, in order to ensure that the CPTPP promptly enters into life and benefits the businesses and people of Vietnam, under the direction of the Government, the MOIT will coordinate with the ministries and sectors concerned to continue disseminating the contents and impacts of the Agreement to the public. Moreover, the ministry and other sectors will carry on with the revision of legal normative documents needed to implement the commitments of the CPTPP, whilst accelerating economic restructuring, drastically reforming and reshuffling SOEs, and facilitating the reform and simplification of administrative procedures, aiming to strengthen the competitiveness of the business environment, and promote connections and cooperation between domestic enterprises and foreign companies.
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In order to take advantage of the opportunities brought about by the CPTPP, Vietnamese businesses also need to change their business thinking, using the competition pressure as a driving force for innovation and development.
In order to turn the opportunities offered by the CPTPP into practical benefits, there are some solutions that should be noted by Vietnamese businesses, as follows:
First and foremost, Vietnamese firms should actively seek information on the CPTPP in order to better understand the commitments made by Vietnam, and the partner markets, especially the information on tariff preferences under this Agreement for the products of Vietnam’s strength or high export potential in the near future.
In addition, businesses also need to change their business thinking in the new context, using the competition pressure as a driving force for innovation and development. The CPTPP will certainly bring opportunities for any enterprise which proactively adapts to the changes in terms of the business climate, brought about by international economic integration, via the building and adjustment of their business plans for the medium and long-term periods, aiming to promote the flow of goods into the potential partner markets mentioned above.
Finally, Vietnamese businesses should proactively seek cooperation with the aforementioned partner markets to forcefully attract direct investment into Vietnam, aiming to make effective use of the capital and technology transfers from large corporations. Meanwhile, this is also a good opportunity for Vietnamese companies to participate more deeply in the global and regional supply chains.
With the solutions taken by the Government and the proactivity of enterprises and the people in exploring the information and preparing themselves in readiness for regional and international competition, the MOIT is confident that Vietnam will make effective use of the opportunities provided by the CPTPP in order to continue to flourish for the goal of building a strong country with prosperous people and an equal, democratic and civilised society.
