According to the Ministry of Industry and Trade, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will improve the competitiveness of Vietnamese exports and their market development, especially in such CPTPP member markets as Canada, Peru, and Mexico.
Within the framework of this Pacific Rim trade pact, Canada, Mexico and Peru have committed to deep tariff cuts for Vietnamese goods. Specifically, Canada has committed to cutting or reducing 94 percent of all tax lines, while Chile, Peru and Mexico have pledged to cut or reduce 95, 81 and 77 percent of tax lines, respectively. Vietnamese goods in these markets are expected to benefit from other market incentives, apart from tax reductions.
According to the Ministry of Industry and Trade’s European-American Market Department, the Canadian market has high potential for Vietnamese goods given its pursuit of trade liberalization, diverse investment and trade markets to reduce dependence on the US.
Vietnam has a great advantage in bilateral trade with Canada, as Canada’s tariff cuts will benefit 78 percent of Vietnam’s export value. Canada offers many opportunities for Vietnamese businesses to boost seafood, wood furniture, textile, tea, pepper, and cashew exports to this market.
Mexico is continuing its market opening strategy along with strengthening trade relations with traditional partners and seeking new markets in Latin America and the Asia-Pacific region to avoid reliance on key partners like the US. Mexico has simplified goods clearance procedures and automated many foreign trade formalities, the European-American Market Department said.
Mexico is Vietnam’s third largest Latin American trade partner after Brazil and Argentina. In 2018, Vietnam exported goods worth US$2.24 billion to Mexico, mostly telephones, footwear, computers, textiles and garments. Vietnamese businesses can take advantage of tax incentives offered by CPTPP to increase Tra and Ba Sa fish, tuna; rice, textile and garment exports to Mexico, for which this market has high demand.
About 75 percent of Peru’s import and export companies are small and medium-sized, providing easy access for Vietnamese businesses to the Peruvian market and to neighboring markets of Ecuador, Colombia, Bolivia and Brazil through Peru. Vietnamese-Peruvian trade remains modest, reaching only US$250 million in 2018. The CPTPP is expected to enable Vietnamese businesses to export cashews, tea, pepper, vegetables, coffee, textile and footwear to Peru.
Canada, Mexico and Peru account for a significant part of the 10 CPTPP countries’ total import value of almost US$2.5 trillion, 1.7 percent of which come from Vietnam. The Ministry of Industry and Trade recommends that businesses make the most of the new FTA opportunities to boost exports to CPTPP markets.