One evidence demonstrating Vietnam’s determination and efforts in negotiating FTA is the domestic rapid transition to a new, higher-level stage of economic development, with a wider scope & absolute commitment.
Within a short period, Vietnam has participated in a number of FTAs with deep and extensive commitments such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and Vietnam – EU Free Trade Agreement (EVFTA).
At the time being, CPTPP countries account for 13.5% of global GDP with a total trade turnover of over $10,000 billion. Moreover, CPTPP participants include large markets, opening up opportunities once new supply chains are formed and developed. Participation in CPTPP is an indispensable condition for Vietnam to improve the level of economic development and policy reformation, labour productivity improvement and manual processing reduction. Also, it is the chance for Vietnam to participate in higher value-added production stages and then set foot into the development stage of electronics, hi-tech and environmentally friendly agricultural products.
Similar to joining the WTO, the CPTPP is an opportunity for Vietnam to continue improving its economic and legal institutions which support the process of renewing the growth model and restructuring the economy. At the same time, it represents the possibility to improve the business environment in a more open, transparent and predictable manner; which help Vietnam approach advanced international standards, thereby promoting both domestic and foreign investment.
The fact that CPTPP countries – including markets like Mexico and Canada – recently reduce import tax posed on several Vietnamese products to 0%, has created a thrust boosting export turnover to these markets. According to a World Bank study, Vietnam’s exports to CPTPP countries will increase from $54 billion to $80 billion by 2030.
Regarding the EVFTA, the EU is the 5th largest trading partner of Vietnam with a significant purchasing power of over 500 million consumers, the 2nd largest export market, following the United States and surpassing China, ASEAN, Japan and South Korea. Once put into practice, with the commitment on the elimination of almost 100% of the import tariffs and the future value of trade, EVFTA will be a big push for Vietnam’s exports to the EU. It will potentially help diversify export markets and products, especially for products such as textiles, footwear, agricultural and aquatic products, processed wooden appliances, etc.
Research by the Ministry of Planning and Investment shows that EVFTA will increase Vietnam’s export turnover to the EU by about 20% by 2020; 42.7% in 2025 and 44.37% in 2030 compared to without an agreement. Accordingly, in terms of macroeconomics, EVFTA would contribute to the increase in GDP of Vietnam by an average of 2.18 – 3.25% (2019 – 2023); 4.57 – 5.30% (2024 – 2028) and 7.07 – 7.72% (2029 – 2033).
Not stopping at CPTPP and EVFTA, Vietnam is continuing to expand its export markets through the negotiation of other FTAs such as Vietnam-Israel FTA (VIFTA), Vietnam – EFTA Block (including 4 countries of Switzerland, Norway, Iceland, Liechtenstein) FTA. Also, Vietnam is now negotiating with other ASEAN countries about participating in the Regional Comprehensive Economic Partnership (RCEP). Currently, these agreements have undergone many negotiation sessions and progress has been made in a number of important issues and areas, despite a few outstanding issues needed further negotiations.