on 14 January 2019. CPTPP is considered one of the most significant “new generation” agreements because of its higher level of commitment to penetrating into the other
4.4. Potential impacts of CPTPP on Vietnam in the future
The last year of implementing the CPTPP was just a beginning for the relationships between Vietnam and other member countries. The agreement is expected to show even more enormous potential impacts on Vietnam’s economy.
4.4.1. Opportunities
Firstly, CPTPP will give Vietnam the opportunity to restructure import and export markets to a more balanced ratio because: “Vietnam is now greatly relying on the South Asia markets like China or Korea and other ASEAN countries. This is the key mission for Vietnam to achieve an independent economy.”, stated Tran Tuan Anh - the Ministry of MoIT. According to a World Bank study published in March 2018, it is forecasted that by 2030, Vietnam's exports to CPTPP countries will increase from 54 billion USD to 80 billion USD, accounting for 25% of total exports. Vietnam also aims to institutional reform
Secondly, CPTPP resulting in economic growth will also help Vietnam have more resources to improve the quality of human resources and public health. Because the economies of the CPTPP member countries are developed at a higher level than Vietnam and are complementary to Vietnam’s economy, imports from CPTPP countries without having signing bilateral any FTA with them before are largely non-competitive to domestic products. Therefore, with a reasonable tax reduction roadmap, combined with the act of improving the social security system, Vietnam can handle the social problems arising from participating in the CPTPP. In particular, since the CPTPP includes commitments on environmental protection, the process of opening the market, trade liberalization and investment attraction will be implemented in a more environmentally friendly way, making Vietnam’s economy sustainably develop.
Thirdly, joining CPTPP not only accelerates Vietnam’s integration with the local region, boost export turnover to large markets but also attracts foreign investment, thus supporting the transfer of technology and innovation activities. Vietnam needs technology to enhance its competitive advantages and technology transfer is the most important key for sustainable economic development and promotion of creative innovation. Although, in the past time, Vietnam has been involved in numerous free trade agreements, helping the number of cooperation contracts and foreign investment projects in Vietnam increase strongly for many years, at least benefiting some industries (such as information and communication). But the number of new and modern technologies transferred into Vietnam is still modest. It is partially true that some technology owners in developed countries are not willing to offer opportunities for some potential competitors but the main reason for the modest technology transferred into Vietnam is that our current regulations on technology transfer are still not optimized. Especially, there is a lack of specific regulations for the monitoring mechanism, evaluation, organization of the transfer regarding documents.
4.4.2. Challenges
Firstly, the commitment to market opening is challenging for Vietnam’s enterprises whose products have weaker competitive advantages because they have no
ability to take advantage of CPTPP. Enterprises tend to put too much of their focus on its short-term benefits (e.g.: the reduction on tariff or how to export their products to other countries) without acquiring a full understanding of CPTPP’s original rules such as the requirements for exporting products or the roadmap of the tariff reduction. In the period between 2018 to 2019, only about 40% of the provinces and cities have import and export activities with the CPTPP countries, according to MoIT. A report by VCCI also demonstrates that about 86% of enterprises knew or learned about CPTPP but only 1.86% of whom have studied thoroughly about the agreement, affecting greatly on the utilization rate.
Secondly, Vietnam may also face issues related to the competitiveness of domestic and exporting products. In terms of commodities, some types of agricultural products that some CPTPP countries have strengths such as pork, chicken are Vietnamese goods that have been produced but their competitiveness is still weak.
Fortunately, due to the US’s withdrawal, the competitiveness pressure was significantly reduced. Some industrial products that some CPTPP countries have strengths in can also cause difficulties for our production, such as paper, steel, and cars. However, it is certain to believe that the competitiveness pressure will not be considerable because at present and in the future of 10 - 15 years, our products will still mainly target the middle market segment while the products of other CPTPP countries are often aimed at high-end market segments.
Thirdly, the pressure to change the legal system to comply with the new standards of the CPTPP can also be challenging. In order to enforce commitments in the CPTPP, there will be a need to revise and amend a number of laws on trade, customs, intellectual property, labor, trade unions, ... However, Vietnam is expected to overcome this issue because the most difficult commitments, which require large enforcement resources (e.g.: the field of intellectual property), have been postponed by 11 countries after the US withdrew from the TPP. Moreover, many commitments are new but fully compatible with the Party's guidelines and policies as well as the laws of the government (e.g.: the aspect of the Government's procurement, environmental
protection, SOEs and SMEs). Therefore, the pressure to change immediately the legal system is not considerable.