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The markets covered by the 11 countries, who are currently members of the CPTPP cover over 13% of the global GDP and a market of over 500 million and as such will offer great opportunities to both foreign and domestic firms in Vietnam. The bulk of the opportunities will accrue to export orientated companies, because of the tariff reductions, in those markets however other benefits are expected to be better market access for foreign companies wishing to enter Vietnam and CPTPP is also expected to stimulate domestic reforms in several areas such as financial services, telecommunications, customs, and intellectual property to name a few.
The CPTPP will surely enhance export opportunities to such markets as Japan, Australia, Canada and Mexico, particularly in the textile, footwear, electronic goods and fisheries, through the tariff reductions committed under the Agreement. These enhanced opportunities should also help attract more foreign direct investment into these sectors, as well as accelerating the shift of manufacturing investments from China to Vietnam.
One of the challenges to Vietnam is that CPTPP also imposes high standards of governance and transparency, which require Vietnam to carry out comprehensive institutional and market reforms. To take advantage of the tariff reductions Vietnam will also need to increase domestic support industries to ensure that Vietnam can comply and meet the relatively high origin requirements under the Agreement. Another challenge for Vietnamese businesses is the challenge from increased competition from member countries in areas such as automobiles and agriculture.
It should also be noted that the Agreement sets high standards of transparency, IP protection, and dispute resolution which have long been on the agenda of foreign businesses operating in Vietnam and one would hope that the requirements of the CPTPP will give the Government the stimulus and ammunition to address many of these perceived weaknesses.
Kenneth M Atkinson