Vietnamese businesses are currently making relatively good use of the benefits of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) agreement, especially in the Americas region.

A PROMISING MARKET FOR DEVELOPMENT

Free trade agreements (FTAs) have been a key feature of Vietnam’s international economic integration and import-export activities in recent years. In the last five years, Vietnam has signed a series of FTAs, including the CPTPP, the Vietnam-EU FTA (EVFTA), the Vietnam-UK FTA (UKVFTA), and the Regional Comprehensive Economic Partnership (RCEP). Mr. Tran Thanh Hai – Deputy Director of the Import-Export Department (Ministry of Industry and Trade) – stated that these agreements differ from previous FTAs ​​in that they involve deeper commitments and broader coverage. Particularly in the CPTPP, the geographical scope of participating countries is also quite broad. With the CPTPP, participating countries are located on both sides of the Pacific Ocean, including Vietnam, Singapore, and Malaysia in the Asian region.

Regarding the extent to which the CPTPP agreement is being utilized, Ms. Vo Hong Anh – Deputy Director of the European and American Market Department (Ministry of Industry and Trade) – stated that four American countries are participating in the CPTPP: Canada, Mexico, Peru, and Chile. Of these, three countries are Vietnam’s first FTAs: Canada, Mexico, and Peru; Chile already has a bilateral FTA. Since the CPTPP agreement came into effect for Vietnam in January 2019, we have witnessed a significant surge in Vietnamese exports to CPTPP member countries, particularly in the Americas. For example, exports to Canada in 2021 reached US$5.3 billion, a 20.8% increase compared to 2020 and a 75% increase compared to the period before the agreement came into effect. For example, exports to Mexico in 2021 saw a significant leap, reaching US$4.6 billion, a growth of over 100% compared to the period before the Agreement came into effect. Vietnamese businesses are currently making relatively good use of the benefits of the CPTPP Agreement.

Regarding the structure of Vietnamese exports to CPTPP member markets, telephones and components lead at 20%; followed by computers, equipment, and electronic products at 16%; machinery and equipment and spare parts at 9%; textiles and garments at 10%; and leather and footwear at 7%. For these two product categories alone, thanks to the CPTPP Agreement, exporting businesses have a tariff advantage of 10-20% compared to their direct competitors. According to Ms. Vo Hong Anh, businesses should fully utilize these preferential tariff advantages.

Another strong export item is seafood. Regarding seafood, most CPTPP members have committed to reducing tariffs to 0% within 0-3 years. Currently, the market share of Vietnamese seafood is increasing significantly. For example, in Canada, Vietnam is a leading shrimp exporter, accounting for 34% of Canada’s total shrimp imports; and in Mexico, pangasius (catfish) is a rapidly growing market for Vietnamese pangasius. Mexico is the largest importer of Vietnamese pangasius among CPTPP member countries.

Furthermore, thanks to tariff preferences, Vietnam has become one of the top 5 exporters of wooden furniture to the Canadian market. However, in Mexico and Chile, the market share of Vietnamese wooden furniture is still relatively small, only around 1%, so there is significant room for growth in this sector. Besides that, Vietnam also has strengths in exporting items such as handbags, suitcases, umbrellas, and agricultural products like tea, cashews, coffee, and pepper…

Assessing the markets within the CPTPP, Associate Professor Dr. Luong Duc Long – General Secretary of the Vietnam Cement Association – also believes that promising markets could include Chile, Mexico, and Peru, but the difficulty for these markets lies in transportation due to their distant locations.

Furthermore, the Americas, especially North American countries like the United States and Canada, have relatively strict requirements regarding product quality and production processes, such as social responsibility, environmental responsibility, and labor standards… In addition, businesses face language barriers as they mainly use Spanish in business and communication. Conversely, the level of awareness among importing businesses in this market region regarding the scale, product quality, and production capacity of Vietnam is still low.

LEVERAGING ECONOMIC LINKAGES TO EXPAND MARKETS

In addition, we can consider leveraging the trade infrastructure in CPTPP countries to increase our presence and gradually introduce our goods into this regional market.

Ms. Vo Hong Anh believes that in the coming time, export businesses, besides increasing export turnover, must consider and focus on increasing the value of their products through improving product quality, meeting the criteria, tastes, and requirements of the market; innovating and applying science and technology in the production process. Aiming for green products and sustainable development to suit their target markets. “The advice for businesses is to thoroughly research the market and understand their needs. We are not just selling We must sell what the market needs,” Ms. Vo Hong Anh shared, adding that with such a wide-ranging network of FTAs, we can leverage these economic connections to bring goods to larger markets in the Americas. Notably, Canada and Mexico are both signatories to the USMCA agreement with the United States, and Chile and Mexico have FTAs ​​with most countries in Latin America.

Furthermore, businesses can consider the possibility of production cooperation with CPTPP member countries. For example, exporting raw materials or unprocessed products to these markets, then cooperating in joint ventures to produce, process, and refine them into finished products, and then exporting them to partner markets with which they have FTAs, provided they meet the rules of origin based on utilizing the cumulative rules of origin. This allows them to take advantage of preferential tariffs for exports to third countries.

In addition, we can consider leveraging the trade infrastructure system in… We are exploring CPTPP member countries to increase our presence and gradually introduce our goods into the regional market. For example, in North America there are distribution systems like Walmart and Costco, or retail systems like Fallabella, Sodimac, and Cencosud in Latin America.

Furthermore, logistics and transportation are currently obstacles for Vietnamese goods to access the American market. Ms. Vo Hong Anh suggested that businesses could consider leveraging the logistics infrastructure of CPTPP member countries to export goods. For instance, Canada has a highly developed domestic railway system with the largest transit volume in the region. From this Canadian railway system, our goods can reach other cities in the United States, Mexico, and other South American countries.

Or, exporting goods to Chile through the Iquique regional logistics center… From there, there will be a road transport route to connect with the larger market of approximately 200 million people in Argentina, Brazil, Peru…

“This is also an approach we are considering.” “This suggests that businesses should consider and leverage existing connections and infrastructure to export to the Americas,” Ms. Vo Hong Anh emphasized.

Source: Ministry of Industry and Trade – Author: Tue Minh