When participating in new generation FTAs, Vietnam has many opportunities. Specifically on politics, national security and foreign strategy.
Prime Minister Nguyen Xuan Phuc witnessed the Signing of Free Trade Agreement (EVFTA). Photo: Thong Nhat-VNA
Vietnam's Opportunity in New Generation Free Trade Agreements is the title of the article of Minister of Industry and Trade Tran Tuan Anh dedicated to the book “Forecast 2020: Demolition / Reconstruction” published by Vietnam News Agency. , buy the copyright of content of international media organization Project Syndicate.
VNA would like to introduce to you the full text of the article:
Recently, Vietnam's economy has witnessed significant progress thanks to the promotion of openness, proactive international economic integration, and active participation in the network of free trade agreements (FTAs).
FTA has been considered as a trend of strong development recently, especially in the context that the Doha Round of negotiations within the WTO is almost no progress. A new trend has been developing and is being negotiated, signed and implemented by many countries as new generation FTAs.
New generation FTAs have a higher scope and level of commitment than conventional FTAs. If in the normal FTAs, the committed areas are only those that have been governed by WTO agreements, such as trade in goods, trade in services, rules of origin, etc. With the new generation FTAs, the scope of commitments is expanded to other new, “non-traditional” areas such as government procurement, state-owned enterprises, trade in relation to the environment. labor, e-commerce …
Regarding the level of commitment, the rate of elimination of tariffs on imports in new generation FTAs often reaches nearly 100% while ordinary FTAs have lower rates. Examples of the new generation FTA are the North American Free Trade Agreement (NAFTA), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Vietnam-EU Free Trade Agreement (EVFTA). …
So far, Vietnam has joined two new generation FTAs, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the FTA between Vietnam and the EU (EVFTA).
Regarding the CPTPP Agreement inheriting the TPP Agreement, Vietnam and 10 countries including Australia, Brunei, Canada, Chile, Malaysia, Mexico, Japan, New Zealand, Peru and Singapore signed the CPTPP Agreement in Chile on March 8. 2018. The Agreement officially entered into force for Vietnam on January 14, 2019.
Basically, the CPTPP Agreement maintains the content of the TPP Agreement: adjusting many issues from traditional trade such as opening of markets for goods, services and investment to less traditional issues such as: Procurement by government agencies, e-commerce, state-owned enterprises and expanding to non-traditional issues in negotiating and signing FTAs such as labor, environment, anti-corruption in trade and investment.
However, the CPTPP allows member countries to postpone 20 groups of obligations with high levels of commitment in areas such as intellectual property, investment, government procurement, financial services … to ensure the balance the rights and obligations of member countries in the context of the United States withdrawing from the TPP Agreement.
Despite this, overall, the CPTPP Agreement is still considered a high quality and comprehensive FTA with the deepest level of commitment ever.
For the EVFTA Agreement, this Agreement was announced by the Vietnamese and EU Leaders to conclude the negotiations on December 2, 2015. On June 30, 2019, the EVFTA Agreement was signed by both sides in Hanoi. EVFTA is a comprehensive, high-quality and guaranteed benefit agreement for both Vietnam and the EU; It also noted the difference in level of development between the two sides.
If put into practice, this agreement will be a huge boost for Vietnam's exports, helping to diversify markets and exports, especially agricultural and aquatic products as well as Vietnamese products. Male capital has many competitive advantages.
The Agreement consists of 17 Chapters, 2 Protocols and a number of memorandum of understanding attached to the main contents of trade in goods (including general provisions and market opening commitments); rules of origin; customs and trade facilitation; food safety and hygiene measures (SPS); technical barriers to trade (TBT); trade in services (including general provisions and market opening commitments); trade defense; compete; state enterprises; Government procurement; Intellectual Property; trade and sustainable development; cooperation and capacity building; legal-institutional.
When participating in new generation FTAs, Vietnam has many opportunities. Specifically on politics, national security and foreign strategy. Accordingly, joining the new generation FTAs will strongly demonstrate the policy of proactive international integration of our Party and State; affirming Vietnam's important role and position in politics in Southeast Asia as well as in Asia – Pacific; truly enhance our position in ASEAN, in the region as well as in the international arena, especially in the context of fast-changing world and regional political-security situation and protectionism. households escalate.
Economically, participating in FTAs will continue to promote trade between Vietnam and CPTPP and EU countries, expanding export markets, especially for Vietnamese products with strengths. For the CPTPP Agreement, the countries; including major markets such as Japan and Canada to reduce import tax to 0% for our goods will create positive effects in promoting export turnover.
Exports with strong points of Vietnam such as agriculture, fishery, electricity and electronics are all eliminated tax when the Agreement takes effect. With this level of commitment, according to an official study by the Ministry of Planning and Investment, Vietnam's export is likely to increase by 4.04% by 2035.
According to the aforementioned study of the World Bank, with this level of commitment, in the context of the basic economic conditions remaining unchanged, Vietnam's exports may increase by 4.2% and with fake In the context of productivity growth, the export growth will be 6.9% by 2030.
Processing line of exported shrimp products at the factory of Minh Phu Seafood Group in Ca Mau province. Photo: Vu Sinh – VNA
For the EVFTA Agreement, Vietnam's exports currently account for nearly 1.5% of the total EU import turnover. Among them, only about 42% of Vietnam's export turnover is entitled to a tax rate of 0% (including goods items under the GSP universal tariff incentive program).
This is a very modest figure compared to Vietnam's export potential as well as the EU market size. With the commitment to cut taxes in the EVFTA Agreement and especially the strong complementary trade structure, the potential for the two sides to further develop economic-trade relations after the FTA is huge.
According to research by the Ministry of Planning and Investment, the FTA between Vietnam and the EU will help Vietnam's exports increase by an average of 6.7% for the first 5-year period, 13% for the next 5 years and 20 % period 5 years later.
Joining the new generation FTAs will help Vietnam diversify its economic and trade relations, especially the diversification of import and export markets, avoiding excessive dependence on a specific region, helping the economy. cope better with external fluctuations.
In addition, Vietnam also has opportunities to participate in regional and global supply chains. Currently, countries participating in CPTPP and EVFTA agreements account for 13.5% and 22% of global GDP respectively. According to the General Department of Customs, the total trade turnover between Vietnam and CPTPP countries reached more than US $ 51 billion in the first eight months of 2019; between Vietnam and the EU reached about US $ 38 billion by the end of November 2019.
With the scale of GDP and trade turnover, joining these FTAs will open up many opportunities for businesses when the new supply chain is formed, which is an important condition to raise the level of development of the economy, increase labor productivity, gradually reduce assembly, participate in higher value-added production stages, and then step into the development stage of electronics, hi-tech and agricultural products. green industry … This is a great opportunity to improve Vietnam's economy in the next 5-10 years.
Regarding opportunities for institutional reform, improving the business environment, as well as joining the former WTO and joining the new generation FTAs, will be an opportunity for Vietnam to continue improving its legal and business legislation. International; in which, there is a socialist-oriented market economy institution, one of three strategic breakthroughs that the Party has determined.
Along with the ratification of the CPTPP Agreement, the National Assembly also decided to amend some contents of the Intellectual Property Law and the Insurance Business Law as a testament to the policy of continuing to improve economic legal institutions. of the Party and the State.
At the same time, the extensive commitments in the service – investment sector will give Vietnam more opportunities to improve the business environment in a more open, transparent and predictable manner, close to national standards. In addition, the economy has advanced, thus promoting both domestic and foreign investment.
Joining the new generation FTAs also supports the process of renewing the growth model and restructuring Vietnam's economy, especially in areas such as finance – banking, public spending and agriculture – countryside.
The connection with partners with high technology level such as EU, Japan, Canada … also helps Vietnamese businesses to connect with partners with technology and management capacity at the most advanced level in the world. . This is an opportunity for Vietnamese businesses to learn and strive to meet the demands of the global competitive environment.
In terms of employment opportunities, income and sustainable development, joining the new generation FTA will create opportunities to help increase growth. Therefore, socially, as a result, will create more jobs, raise incomes and contribute to poverty reduction.
According to research results of the Ministry of Planning and Investment, CPTPP can help increase the total number of jobs averagely about 20,000 – 26,000 per year. As for the benefits of poverty reduction, according to a World Bank study, by 2030, the CPTPP is expected to help reduce 0.6 million poor people at the poverty line of US $ 5.5 / day. All income groups are expected to benefit.
However, international economic integration in general and participation in free trade agreements in particular, especially the new generation agreements, high and comprehensive standards such as CPTPP and EVFTA are not only brought That opportunity comes with risks and challenges.
These are economic challenges, challenges of completing the legal and institutional framework, challenges in implementing commitments in new areas not yet included in previous FTAs such as labor – environmental union. …
Therefore, in the near future, Vietnam needs to have effective solutions to effectively implement and make good use of the opportunities that these FTAs bring. At the same time, we will continue to focus resources on promoting the ratification of the EVFTA Agreement in the shortest time in order to benefit the people and businesses of both sides soon.
According to VietnamBiz
