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RCEP is considered one of the most important agreements with ASEAN, which opens the largest free trade area in the world.
After 8 years of negotiations, the Regional Comprehensive Economic Partnership (RCEP) has been approved by 15 countries, including: Brunei, Malaysia, Singapore, Vietnam, Cambodia, Indonesia, Laos, Myanmar, the Philippines, Thailand and Japan. Edition, New Zealand, Australia, China, Korea, signed on the morning of November 15.
“While Covid-19 disrupted the global supply chain, a protection trend is emerging, the RCEP was signed to mark an important milestone in the economic integration of negotiating countries,” said the Minister of Industry and Commerce. Tran Tuan Anh stood out after the ceremony.
RCEP, with the participation of 15 members, will create a market of 2.2 billion people, equivalent to 26.2 billion dollars, creating the largest free trade region in the world. Thanks to the commitment to open markets for goods, services and investments, rules of origin in the geographic area of the RCEP and trade facilitation measures, this FTA will provide opportunities to develop chains. new offer.
The Agreement also establishes long-term and stable export markets for ASEAN countries in the context of recent supply chain instability. The implementation of RCEP also creates a binding legal framework in the region on trade policy, investment, intellectual property, electronic commerce … and creates a fair playing field in the region.
As a Thai company in Vietnam, the leader of the retail system MM Mega Market Vietnam said he was very excited by the news about RCEP. Ms. Tran Kim Nga, the company’s director of foreign affairs, commented: “Vietnam can be one of the countries that receives many benefits from RCEP.” The reason is that most of the countries participating in the agreement need to import products that belong to Vietnam’s strengths, such as agricultural and aquatic products.
“Import standards in the agreement are not too strict, consumer tastes between countries are quite similar, so trade is favorable,” he said. On the other hand, RCEP is also open to logistics services, e-commerce, making goods reach consumers between countries easily.
RCEP was signed online today 11/15. Image: Giang Huy.
According to Ms Thu Trang, Director of the WTO Integration Center and VCCI, thanks to the harmonization of the rules of origin within the RCEP, exports from Vietnam can increase their ability to meet the conditions of tax incentives. Therefore, increase exports in this region, especially in markets such as Japan, Korea, Australia, New Zealand …
“In previous FTAs, many Vietnamese products are exported because they use raw materials imported from outside the FTA that do not meet the origin requirements to enjoy tariff preferences,” he said. Now China, South Korea and the countries that are the main source of raw materials are all in the RCEP, which raises the problem of the rules of origin so that exported goods can enjoy preferential tariffs from the RCEP. finished.
But besides the opportunities and challenges for Vietnam from the RCEP agreement are not small.
The first is the pressure of competition in goods. According to the Ministry of Industry and Commerce, many RCEP partners have similar product structures to Vietnam, but their competitiveness is stronger. Currently, the quality and value-added content of most Vietnamese products remain modest.
This pressure takes place not only in the export market but also in the domestic market. According to Ms Thu Trang, when the domestic market must also open under the RCEP, goods with a similar product structure will flow to Vietnam. Vietnamese products must compete directly with imported RCEP products, especially from China.
China is seen as one of the main challenges facing the participating countries of the RCEP. With the advantage of cheap and abundant goods, this economy of one billion people can damage the livelihoods of people in other countries. This is considered one of the main reasons why India, in November last year, decided to withdraw from the RCEP.
New Delhi has repeatedly expressed concern that the RCEP, an agreement to reduce tariff barriers, will flood Chinese products with the Indian market. Meanwhile, Indian products do not guarantee similar access in China, increasing the trade deficit. In 2018, India’s trade deficit with China was “huge”, nearly $ 58 billion out of a total of $ 95.5 billion.
Meanwhile, the Vietnamese are very fond of foreign products. MM Mega Market representative said, products from Korea, Japan, Thailand … are very interested in eye-catching packaging, good quality, reasonable price. Packaged items such as confectionery, instant noodles, milk, cereal, or frozen foods.
“Young consumer groups have strict requirements, they are willing to experiment with new products, they are increasing, the demand for imported goods will also increase strongly in Vietnam in the next time,” Ms Nga said.
Second, Vietnamese products continue to rely heavily on imported sources, While the possibility of improving its position in the value chain, the level of participation in world trade in services is modest.
However, experts believe that these challenges should not be overly concerned. As for ASEAN countries, according to Trang, goods imported to Vietnam from this region have enjoyed a tax rate of 0% with almost the entire tariff since 2018. The degree of dependence on foreign raw materials, especially Especially from China, ASEAN countries are not as heavy as Vietnam. Therefore, the RCEP hardly changes its advantage by taking advantage of the new agreement’s tariff preferences over existing FTAs.
“If there is any risk from ASEAN to Vietnam’s domestic market, that risk could have occurred for 3 years, without waiting for the RCEP,” he said.
With Chinese sources, RCEP does not bring any more advantages for Chinese products in Vietnam from a rules of origin perspective compared to the existing ASEAN-China agreement (ACFTA). Although he admitted that in addition to origin there is also the risk of increasing imports due to increased purchases of raw materials from China to produce export goods and take advantage of tariff preferences in the RCEP, Trang said that this will not necessarily lead to the situation that “floods” the domestic market.
The reason is that for many manufacturing industries, if it is possible to choose a source other than China, the company has long chosen to enjoy tariff preferences under other FTAs.
“With the degree of liberalization and strong market opening of existing FTAs, the domestic market and businesses have moderated, not to the point of not being able to catch the strong RCEP wind,” said Ms Trang.
See more Chart on RCEP – World’s Largest Free Trade Agreement here.
Therefore, according to Ms Trang, Vietnam’s biggest challenge in RCEP is not much different from previous FTAs. Here’s how to seize opportunities, so that companies understand RCEP’s special opportunities and then take them effectively. “The challenge is not new, but the solution is not easy,” he said.
The difference in the challenge with other FTAs, if any, is that direct competition in the RCEP will be more complicated in both the domestic and the export markets. For example, in Japan, before RCEP, China did not have any FTAs, while Vietnam had 3. Therefore, after RCEP, Chinese products will enjoy preferential treatment in Japan, so Vietnamese products will also have to subject to fiercer competition in this country’s market.
“Although exporting companies are expected to have an advantage in RCEP, they must be ready to prepare for a new competitive situation,” emphasized Ms Trang.
According to the VCCI representative, there is no fear of overlap when 7/15 members including Brunei, Malaysia, Singapore, Vietnam and Japan, New Zealand, Australia join the RCEP and the Comprehensive Partnership and Trans-Pacific Progress (CPTPP) Agreement.
“Adding a FTA is adding a priority path in trade with the same partner. These paths are not mutually exclusive, the path that is appropriate to our level and needs will follow, ”Ms. Trang said.
Minister Tran Tuan Anh said the RCEP was built to be suitable even for some underdeveloped ASEAN countries. Therefore, the economic space is larger, the population is larger, but the RCEP still has flexibility for participating countries.
While admitting that the CPTPP standards are higher, Minister Tuan Anh said that for countries that have joined the agreement like Vietnam, this is an advantage, because there are no additional costs for the RCEP requirements. “On the contrary, we benefit when RCEP partners meet their commitments,” he emphasized.
Phuong Anh
