TPP opens the door to market expansion

Export potentials 13:00 13/09/2014 499
The Trans-Pacific Partnership (TPP) agreement is a double-edged sword that brings both challenges and opportunities to the country, said experts at a seminar in Hanoi on August 16. Speakers explained that when the agreement comes into effect, tariffs on 90% of Vietnamese exports will be reduced to zero, which provides a tremendous opportunity for businesses to greatly expand into other TPP member nations markets.

This should especially benefit key export products such as garments, footwear, timber and agricultural products and provide weaker exports a chance to penetrate foreign markets of other TPP members.

Currently, Vietnamese garments imported into the US are subject to tariffs ranging from 17% to 32%. The rates will be slashed to zero as soon as the TPP comes into effect, leading many economists to believe that Vietnamese exports could see exponential growth.

Dr Vo Tri Thanh, Vice Director of the Central Institute for Economic Management (CIEM) in turn said the TPP negotiations are of critically important to Vietnam as the trade pact not only opens the doors for goods and services, but spills over and effects non-commercial issues as well.

Participating in the “huge” playground the TPP creates also means opening broader doors in the domestic market and allowing foreign companies greater access, which puts domestic businesses under mounting pressure to survive fierce competition.

Speakers at the seminar cautioned that even products now considered strong exports may weaken when faced with tougher competition.

For example, to enjoy the benefits of reduced tariffs, the garment sector must comply with strict requirements on certificate of origin (C/O). Materials for garment production must be imported from other TPP member countries or produced domestically.

Tariffs are not a barrier for seafood products, however, quarantine measures will most certainly be more burdensome and rigid, they added.

Dr Tran Du Lich said that increasing the competitiveness of domestic businesses is of prime importance. He suggested the State should create an institutional and business environment where businesses promote the highest innovativeness and creativeness to that end.

The 12 TPP member economies now account for nearly 40% of the world’s population, produce over 50% of global GDP, and include some of the fastest growing countries in the world. They are currently speeding up the negotiation process, hoping to sign the trade pact late this year or early next year.

At the seminar, experts encouraged domestic businesses to devise and implement proper strategies for improving their competitiveness to best grasp the opportunities from the expanded global marketplace created by the TPP and the challenges of increased competition it brings.

(Source VOV)

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