The Comprehensive and Progressive Agreement for Trans Pacific Partnership will provide greater market access to Vietnamese firms but also open up the country to foreign products, increasing competition. In particular industries such as automobile and agriculture would face intense competition.
Clothing and leather products, chemicals, plastic products, and transport equipment and machinery are expected to get an export boost while imports will grow in almost all sectors. Under the CPTPP average trade-weighted tariffs would drop from 1.7 per cent to 0.2 per cent for Vietnamese exporters. Non-tariff measures are predicted to reduce by 3.6 percentage points in terms of tariff equivalence.
With strict rules of origin, Vietnam would have to develop supporting industries to benefit from the trade deal. The country plans to improve the investment environment and protect intellectual property rights to attract investors. Institutions and administrative systems need to be reformed to take advantage of the CPTPP.
It is also necessary for Vietnam to focus on small and medium-sized enterprises. These account for a majority of the economy and labor market and have to be aligned with global supply chains. CPTPP was signed last March following a period of turbulence caused by the departure of the United States.