(TIỂU LUẬN) ECONOMIC RELATIONS BETWEEN VIETNAM AND COUNTRIES OF THE COMPREHENSIVE AND PROGRESSIVE AGREEMENT FOR TRANS PACIFIC PARTNERSHIP (CPTPP)

FOREIGN TRADE UNIVERSITY HO CHI MINH CITY CAMPUS -*** MID-TERM ASSIGNMENT Major: International Business Administration SUBJECT OF ASSIGNMENT: ECONOMIC RELATIONS BETWEEN VIETNAM AND COUNTRIES OF THE COMPREHENSIVE AND PROGRESSIVE AGREEMENT FOR TRANS-PACIFIC PARTNERSHIP (CPTPP) Class: K59CLC1 – Team: 01 Students’ name Nguyễn Đình Kim Chi Ngơ Thành Danh Nguyễn Quốc Dũng Nông Thế Duy Hoan Trần Ngọc Mai Subject: Soft-skills development PhD: Tran Nguyen Chat Students’ ID 2011116330 2011116339 2011116355 2011116392 2011116454 Ho Chi Minh City, December, 2020 TABLES OF CONTENTS ABSTRACT OF ASSIGNMENT ……………………………………………….3 CHAPTER 1: INTRODUCTION 1.1 Rationale of the research 1.2 Research background 1.3 Aims & Objectives …………………………………………………… 1.3.1 Aims .6 1.3.2 Objectives .7 1.4 Scope of the research 1.4.1 Research subjects 1.4.2 Scope of the research 1.5 Research methods 1.6 Contribution of the research 1.7 Structure of the research .8 CHAPTER 2: OVERVIEW OF VIETNAM’S TRADING PARTNERS 2.1 Overview of Vietnam’s trading partners .……………….9 2.1.1 Definition ………………………………………… 2.1.2 Feature …………………………………………… 2.1.3 Classification ……………………………………… 2.2 Overview of members grouping ………………………………….9 2.2.1 Developed countries ……………………………… 2.2.1.1 Australia ………………………………10 2.2.1.2 New Zealand ………………………….10 2.2.1.3 Japan ………………………………… 10 2.2.1.4 Singapore … ……………………… 10 2.2.1.5 Canada ………………… ……………11 2.2.2 Developing countries ……………………………… 11 2.2.2.1 Brunei ………………………………….11 2.2.2.2 Malaysia ……………… …………… 11 2.2.2.3 Chile ………………………………… 11 2.2.2.4 Mexico …………………………………12 2.2.2.5 Peru …………………………………….12 CHAPTER 3: ECONOMIC RELATIONS BETWEEN VIETNAM AND COUNTRIES OF COMPREHENSIVE AND PROGRESSIVE AGREEMENT FOR TRANS-PACIFIC PARTNERSHIP (CPTPP) 3.1 Investment ……………………………………………………… 13 3.1.1 Investment relation between Vietnam and developed partner countries in CPTPP ……………………………………………………… 13 3.1.1.1 Inward FDI flows ………………………13 3.1.1.2 Outward FDI flows …………………….14 3.1.1.3 Inward FDI stocks …………………… 14 3.1.1.4 Outward FDI stocks ……………………15 3.1.2 Investment relation between Vietnam and developing partner countries in CPTPP ……………………………………………………… 16 3.1.2.1 Inward FDI flows ………………………16 3.1.2.2 Outward FDI flows …………………….17 3.1.2.3 Inward FDI stocks …………………… 17 3.1.2.4 Outward FDI stocks ……………………18 3.2 Trade ………………………………………………………………19 3.2.1 Vietnam’s import………………………………… 19 3.2.1.1.Vietnam’s import from countries in America 19 3.2.1.2 Vietnam’s import from countries in Asia …….20 3.2.1.3 Vietnam’s import from countries in Oceania …21 3.2.2 Vietnam’s export …………………………………….21 3.2.2.1 Vietnam’s export to countries in America ……21 3.2.2.2 Vietnam’s export to countries in Asia ……… 22 3.2.2.3 Vietnam’s export to countries in Oceania …….23 CHAPTER 4: FINDINGS AND CONCLUSION 4.1 Findings ………………………………………………………… 24 4.2 Conclusion ……………………………………………………… 26 INDEX OF REFERENCE ……………………………………………………….27 APPENDIXES ……………………………………………………………………28 ABSTRACT OF ASSIGNMENT The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is among the most notable mega-free trade agreements (FTAs) in the world today While vast existing studies have analyzed the benefits and challenges for participating countries as well as the roles of key players such as Japan and Australia in the CPTPP, little attention has been paid to the economic relation between Vietnam and CPTPP Vietnam offers an interesting case study as it is among the few ASEAN Member States as the only socialist economy joining the CPTPP The aim of this research is to analyze the economic relation between Vietnam and other countries in this Agreement, and begins with an overview of the Agreement, followed by statistics of investment and trade between sides The final section will be our findings about this relation CHAPTER 1: INTRODUCTION 1.1 Rationale of the research: At the APEC Vietnam 2017 Summit held in Da Nang, the Trans-Pacific Partnership (TPP) was announced with a new name: Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) Without the participation of the US, but this agreement is expected to create new power for the economy All ministers agreed that CPTPP is a comprehensive agreement, has high standards on the basis of balancing the interests of its members, and features the level development of the countries The results achieved in Da Nang demonstrate the great capacity of 11 countries to promote economic growth, create jobs, improve people's lives, and generate profits and increase economic impact among countries in the region The negotiation between 11 countries has been going on actively in many years, with many difficulties However, the result is the CPTPP Minister Tran Tuan Anh said that 12 countries have spent many years negotiating, building an agreement that both has very high standards and satisfies all Therefore, when President Donald Trump decides to withdraw the US from TPP, countries have certain difficulties in reaching a new equilibrium point However, with the CPTPP, he oriented: “The most important road we have passed” and “very confident in the near future” Although in the situation there is a country drawn from, but all countries have their determination and desire to continue on this path The nature and quality of the agreement can be reflected through two additional words: “Comprehensive” and “Progressive”, that is what all CPTPP leaders are aiming at and see it as a goal for the coverage of the agreement Therefore, the new CPTPP name has reached a very high consensus of department heads In the new situations, many countries still favor promoting trade and investment, on a bilateral rather than multilateral basis The implementation of the CPTPP is an important result, demonstrating the valid term of multilateral economic integration in Asia-Pacific, which is strongly oriented for inclusive development and regional integration CPTPP is a new agreement, not only to trade with the open marketplace but also the other problems about the main policy, customs resulting in freedom of commerce within 11 countries Vietnam has many export opportunities, but the domestic market will also compete fiercely But the most important thing when joining the CPTPP is that Vietnam will grow faster to become a fully market economy Vietnam will get rid of trade barriers that the applying countries not recognize Vietnam as a market economy For the above reasons, the authors research the topic: “Economic relation between Vietnam and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)” and stress this is a prominent issue for Vietnam in order to analyze the findings, opportunities and challenges of Vietnam in this agreement 1.2 Research background: There have been many articles and research considering and evaluating the relation between Vietnam and CPTPP since it became one of the members of the Agreement But most of them haven’t dug deeply into the economic relation of the sides, especially investment and trade relation “CPTPP Signed: “Opportunities for Vietnam’s Enterprises”, news on Vietnam Briefing March 16, 2018, had predicted opportunities and challenges Vietnam’s economy would face after signing CPTPP and proposed what our country needed to facing these challenges The report was a conjecture written right after Vietnam had signed CPTPP, so it didn’t have a concrete ground to analyze “CPTPP Brings Vietnam Direct Economic Benefits and Stimulates Domestic Reforms”, WB Report by Nguyen Hong Ngan, stated that CPTPP would yield robust economic gains for Vietnam, just like the news below, it was written early without clear statistics or concrete evidence to prove “Utilizing New Generation FTAs for Import and Export Growth: Potentials for Vietnam When Joining CPTPP”, report by Nguyen Thi Nhieu; Tran Huong Lien; Tran Huong Lan at Institute for Trade Strategy and Policy Studies Vietnam Academy of Science and Technology, presented policy recommendations and implications to best take advantage of the benefits when participating in new generation FTAs, especially CPTPP, for the import-export and economic development of Vietnam This report hadn’t mentioned anything concerning investment relations “Taking full advantage of opportunities from CPTPP”, news on the Ministry of Industry and Trade of the Socialist Republic of Vietnam’s main page, has indicated that CPTPP has initially brought about positive effects for foreign trade activities and wondered why many opportunities from the agreement have not been fully explored Its main content has only aimed at trade activities and analyzed the way to penetrate other potential countries in CPTPP but has not been concerned about investment relations between our country and CPTPP “Vietnam gets to grips with CPTPP”, Khoi Nguyen report, has taken opinions of many economic consultants about Vietnam’s joining CPTPP and stated Vietnam’s numerous opportunities to expand trade networks and draw in more investment but it analyzed few statistics of investment and trade conducted between Vietnam and CPTPP 1.3 Aims and objectives: 1.3.1 Aims: The research is conducted for: ● People’s understanding clearly about CPTPP and the economic relation between Vietnam and other countries in this Agreement ● People’s understanding the meaning of CPTPP to Vietnam in term of economic development ● People’s knowing about missions, challenges, problems of Vietnam when joining CPTPP ● People's vision for the development of Vietnam in the future with CPTPP as well as its plan of going further in development 1.3.2 Objectives: ● Analysing the information about Vietnam and CPTPP ● Searching for the profits, the problems and how can we solve those problems 1.4 Scope of the research: 1.4.1 Research subjects: Economic relations (Investment and Trade) between Vietnam and countries of Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) 1.4.2 Scope of research: ● Space range: research on how CPTPP impacts Vietnam’s economy on investment and trade among trans-pacific countries ● Time range: data is collected from scientific research from 2008 - 2020 (from TPP to CPTPP) and basic data collected through qualitative research and quantitative research which is constructed according to topic research 1.5 Research methods: The research uses both qualitative and quantitative research to collect secondary data ● The authors combine the result of qualitative research and secondary data from official sources to identify and categorize the Vietnam-CPTPP partners relation, interpreting patterns of the business relation between Vietnam and the other countries ● On the other hand, the quantitative research is carried out by collecting statistical data from intracen.com, trademap.com to recognize the trends of the development in the economic relation between Vietnam and another countries of CPTPP, which can predict the further development of it as well as understand the potential opportunities and challenges 1.6 Contribution of the research: This research is one of the first research conducted to analyze the economic relation between Vietnam and the Comprehensive and Progressive Agreement for TransPacific Partnership (CPTPP), especially in categories: investment and trade This research is conducted based on learning from deficiency of the older research and it develops ideas from the pioneer ones in related fields This research is conducted in a new background with new statistics 1.7 Structure of the research: This research includes main parts, and each part is divided into smaller categories: Part 1: Introduction Part 2: Overview of Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) Part 3: Economic relations between Vietnam and countries of Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) Part 4: Findings and conclusion CHAPTER 2: OVERVIEW OF VIETNAM’S TRADING PARTNERS 2.1 Overview of Vietnam’s trading partners: 19 Unit: Million dollars Vietnam’s inward FDI stocks by developing partners in CPTPP 20,000.00 18,000.00 16,000.00 14,000.00 12,000.00 10,000.00 8,000.00 6,000.00 4,000.00 2,000.00 0.00 2009 2010 2011 2012 2013 Malaysia Brunei Darussalam 2014 2015 Mexico Chile 2016 2017 2018 2019 Peru Figure 3.1.2.3 3.1.2.4 Outward FDI stocks: Vietnam had many outward FDI stocks in developing countries, especially in Peru and Malaysia The value of investment was the biggest with 1,336.88 million dollars for Peru (2013) and 1,220.79 million dollars for Malaysia (2014) The investment value in Peru remained stable from them The investment value in Malaysia fell by 6,5% the next year and stabilized Vietnam had little outward FDI stocks in Brunei and almost few investments in any project of other countries Unit: Million dollars 20 Vietnam’s outward FDI stocks by developing partners in CPTPP 1600 1400 1200 1000 800 600 400 200 2009 2010 2011 2012 2013 2014 Malaysia Brunei Darussalam 2015 2016 Mexico Chile 2017 2018 2019 Peru Figure 3.1.2.4 3.2 Trade relation: Since the CPTPP came into force with Vietnam on January 14th, 2019, import and export of products has changed significantly from the groups of countries in the agreement Specifically products from Machinery, Fish and crustaceans, Footwear, Textile and Telecomunication and electronic components The countries involved in the CPTPP are divided into three groups of countries based on the specific region First, the Americas include Canada, Mexico, Chile and Peru Second, Asia includes Japan, Singapore, Malaysia and Brunei Finally, the Oceania region includes Australia and New Zealand 3.2.1 Vietnam’s import: 3.2.1.1 Vietnam's imports from countries in America: Unit: USD Thousand 21 In general, there are two-dimensional trends taking place between countries in America Firstly, in terms of up trend, there are Mexico and Canada Specifically, Mexico rose from $287,066 million in 2018 to $303,793 million in 2019 and Canada rose from $99,746 million in 2018 to $133,307 million Thereby, seeing Canada's annual import rate increase higher than Mexico's annual import rate is 33.6% compared to 5.8% Secondly, in terms of steady and somewhat declining trends, there are Chile and Peru Specifically, Chile dropped from $65,095 million in 2018 to $65,079 million in 2019 and Peru dropped from $3 million in 2018 to $1 million in 2019 As a result, Chile's annual import rate decreased by 0.02% and Peru's annual import rate decreased by 66.67% 3.2.1.2 Vietnam's imports from countries in Asia: Unit: USD Thousand 22 In general, there are two-dimensional trends taking place between countries in Asian Firstly, in terms of up trend, there are Japan and Malaysia Specifically, Japan rose from $8,920,358 in 2018 to $9,310,638 in 2019 and Malaysia rose from $2,370,854 in 2018 to $2,530,675 in 2019 Thereby, seeing Malaysia's annual import rate increase higher than Japan's annual import rate is 6.7% compared to 4.4% Secondly, on the downtrend there are Singapore and Brunei Specifically, Singapore dropped from $839.687 in 2018 to $731,309 in 2019 and Brunei dropped from $147 in 2018 to $80 in 2019 As a result, Singapore's annual import rate decreased by 12.9% and Brunei’s annual import rate decreased by 45.6% 3.2.1.3 Vietnam's imports from countries in Oceania: Unit: USD Thousand 23 It can be seen that both countries tend to increase Specifically Australia increased from $64,574 in 2018 to $64,609 in 2019 and New Zealand increased from $21,449 in 2018 to $29,629 in 2019 3.2.2 Vietnam's exports: 3.2.2.1 Vietnam's exports to countries in America: Unit: USD Thousand 24 In general, all four countries have a strong up trend, especially Canada and Mexico Specifically, Canada increased from $1,344,338 in 2018 to $1,907,681 in 2019 and Mexico increased from $1,174,650 in 2018 to $1,799,717 in 2019 This is a good sign for Vietnam's exports to countries in the Americas The figures showed that big countries trusted their products Specifically products from Machinery, Fish and crustaceans, Footwear, Textile and Telecomunication and electronic components 3.2.2.2 Vietnam's exports to countries in Asia: Unit: USD Thousand 25 From the line chart we can see that Vietnam's exports to Asian countries in the CPTPP have taken place in two directions Firstly, the two countries with a strong up trend are Japan and Brunei, especially Japan The chart shows that Vietnam's export to Japan increased from $7,537,711 in 2018 to $8,057,675 in 2019 and Vietnam's export to Brunei increased from $3,610 in 2018 to $5,081 in 2019 Secondly, two countries having tendancy to decrease are Singapore and Malaysia As can be clearly seen from the graph, Vietnam's export to Singapore decline from $1,517,426 (2018) to $1,377,989 (2019) and Vietnam's export to Malaysia drop from $1,645,031 (2018) to $1,293,840 (2019) 3.2.2.3 Vietnam's exports to countries in Oceania: Unit: USD Thousand In general, there are two trends, Vietnam's export to Australia tends to decrease slightly and Vietnam's export to New Zealand tends to increase steadily Specifically, Vietnam's export to Australia tends to decrease from $1,897,985 in 2018 to $1,848,854 in 2019 On the other hand, Vietnam's export to New Zealand increased from $328,866 in 2018 to $348,970 in 2019 26 CHAPTER 4: FINDINGS AND CONCLUSSION 4.1 Findings: The implementation of the CPTPP has helped Vietnam improve its legal framework in various fields that range from environment, labor to intellectual property rights Joining the CPTPP can help Vietnam promote growth, change the structure of the export market in a more balanced direction, bringing more opportunities for domestic businesses CPTPP is expected to promote domestic growth, which will lead to increased demand for goods, promote domestic enterprises to develop and attract more FDI inflows Taking advantage of its market advantages, CPTPP contributes to promoting exports to major markets such as Mexico, Japan, Canada, and Australia and attracting investment in industries that Vietnam needs With its advantage, Vietnam expects the market expansion of the textile, seafood and wood industries when the tax rates of these industries plummet even in 2020, and domestic and FDI enterprises can compete in new markets like Peru, Mexico and Canada CPTPP is a comprehensive agreement covering principles on trade, investment, intellectual property, The agreement will put pressure on reforming the investment and business environment, opening up many opportunities for enterprises to develop, promoting socio-economic development in Vietnam Specifically: Firstly, institutional reform, creating a favorable business environment Participation in Agreement will contribute to the reform of the institutional environment, towards international "rules of the game" This is a necessary condition for growth, providing a positive driving force for the country's development Institutional reform will help the whole society to promote competitiveness, mobilize and use the best available domestic resources and make better use of external resources The CPTPP will help encourage and promote domestic reforms in many areas such as services, customs, e-commerce, 27 government procurement, intellectual property, investment, legal matters, and marketing access market for goods, rules of origin, non-tariff measures, In addition, CPTTP is also the driving force to help promote economic restructuring; reform and rearrangement of state enterprises; promote reform and simplify administrative procedures; creating the linkage between ministries and branches to improve the competitiveness of the business environment, promote connections and cooperation between domestic and foreign businesses Secondly, creating a driving force for economic growth Some industries such as textiles, footwear and other labor-intensive industries of Vietnam will also benefit and increase exports Vietnam's fisheries sector will be more positive when countries participating in the CPTPP annually import nearly $2 billion According to the Ministry of Planning and Investment, joining the CPTPP makes Vietnam's export markets expand and take advantage of markets that Vietnam has never penetrated before such as: Canada, Mexico, Peru The results of a comprehensive global enterprise survey by HSBC showed that about 63% of enterprises in Vietnam believe that CPTPP will have a positive influence on their business operations Thirdly, multiply more opportunities for Vietnamese businesses In the CPTPP, member countries have eliminated almost all import taxes according to the road map, liberalized services and investments on the basis of complying with the laws of the host country, ensuring the management of the State This will create new business opportunities for businesses and consumer benefits of member countries CPTPP will help Vietnam boost export growth as well as change the export market structure in a more balanced direction Moreover, the CPTPP Agreement will open up many opportunities for the Vietnamese business community With tax reduction to importing countries, businesses will have new opportunities to expand the supply of products to member countries' markets The reduction of import tax for products into Vietnam will also help businesses to add new partners, diversify types of goods, 28 and expand the scale of production and business activities In addition, the Agreement will create a fair, transparent playing field and be the basis and foundation for businesses to have a sustainable development orientation; improve competitiveness, improve the quality of goods and services, the production capacity of the economy to catch up with the world's development trends, thereby participating more effectively in the global supply chain 4.2 Conclusion: Vietnam holds a proactive and vital role in boosting mega regional trade agreements including the CPTPP As Vietnam’s accession to the CPTPP, low-income countries or countries with dominant state-owned enterprises were able to participate in a high-standard trade agreement and in rulemaking In the 2017 Asia-Pacific Economic Cooperation (APEC) summit held in Da Nang, which is one of the positive contributions to the negotiations and signing of the CPTPP Vietnam brings in the opportunity for other CPTPP member countries to promote exports and business, thereby simultaneously enlarging their presence in the region, with an emerging market and strategic geographic location Moreover, Vietnam’s involvement in the CPTPP helps speeding up the negotiation of the Regional Comprehensive Economic Partnership (RCEP) and emboldening other RCEP members to play a role in the CPTPP However, there should be a more alarmed effort put on advancing domestic regulations and institutions as well as the competitiveness of state-owned enterprises It is necessary for Vietnam to push forward with much required economic ameliorations in general and to improve its industrial production structure, specifically in order to meet its commitments under the CPTPP 29 INDEX OF REFERENCE  Vietnamese: Tran Anh Son and Tran Toan Thang (2018) Impact of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership on Viet Nam  English: Petri, P., & Plummer, M (2016) The economic effects of the Trans-Pacific Partnership: New estimates Statistics from Department of Statistic and Foreign Investment Department Ministry of Planning and Investment Statistics from Trade map, Investment Map, Intracen.org, OECD, IMF, UNCTAD The Financial (2019) Report on assessment of the current status of FDI enterprises and preferential policies UNCTAD (2018) ASEAN Investment Report 2018 Vietnam Briefing (2018) Opportunities for Vietnam’s Enterprises WB (2018) Economic and Distributional Impacts of Comprehensive and Progressive Agreement for Trans-Pacific Partnership: The case of Vietnam WB (2018) CPTPP Brings Vietnam Direct Economic Benefits and Stimulates Domestic Reforms http://cptpp.moit.gov.vn/ (18/12/2020) CPTPP: Viet Nam’s commitments in some key areas 10 http://cptpp.moit.gov.vn/?page=overview&category_id=949337b7-18f7463d-8016-7c56827c143a 11 https://sites.google.com/ (18/12/2020) “Vietnam and CPTPP”, https://sites.google.com/site/ibwvietnam/vietnam-and-tpp 30 APPENDIXES https://drive.google.com/file/d/1Nt6CUq2XpU1vX4riEANg3IBxSQOsGYs/view?usp=sharing (Investment relation) 31 https://drive.google.com/file/d/1YlhdAWHB2LosU77A72RX5NC9sN2bVqt/view?usp=sharing (Trade relation) 32 33 ... Trans- Pacific Partnership (CPTPP) Part 3: Economic relations between Vietnam and countries of Comprehensive and Progressive Agreement for Trans- Pacific Partnership (CPTPP) Part 4: Findings and. .. of the research: 1.4.1 Research subjects: Economic relations (Investment and Trade) between Vietnam and countries of Comprehensive and Progressive Agreement for Trans- Pacific Partnership (CPTPP). .. Contribution of the research: This research is one of the first research conducted to analyze the economic relation between Vietnam and the Comprehensive and Progressive Agreement for TransPacific Partnership