Businesses are not interested in CPTPP, Ministry of Industry and Trade submitted a series of proposals to the Prime Minister

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Textiles and garments are expected to benefit from the CPTPP. Photo: Nguyen Thanh.

Only 1 percent of CPTTP C/O is issued to Australia

The Ministry of Industry and Trade has submitted a report to the Prime Minister on the implementation of the CPTPP and proposal of solutions to boost exports to Australia.

Accordingly, besides the CPTPP, Vietnam and Australia are also members of the ASEAN-Australia- New Zealand Free Trade Agreement (AANZFTA).

As of the end of June 2019, seven months after the CPTPP officially came into effect, Vietnam has issued a total of 12,514 sets of CPTPP C/Os, with the total value of $246.13 million.

34,933 sets of AANZFTA C/Os were issued with a total value of $868.43 million. Because AANZFTA has been implemented for nine years since 2010, currently many businesses still use AANZFTA C/O instead of the CPTPP.

The Ministry of Industry and Trade assessed Australia’s market “in the total of 12,541 issued CPTPP C/Os, there are 137 sets for Australian market, with total value of $451.9 thousand (accounting for 1 percent in quantity and 1.8 percent in value).

The main commodity group that businesses applied for CPTPP C/O to Australia is the other machinery and equipment. In addition, there are a few other commodities in the wood and wooden products, kitchen appliances and bags. This shows that businesses are still used to using the AANZFTA C/O.

According to the Ministry of Industry and Trade, in CPTPP, Australia commits to eliminating 93 percent of tariff lines immediately after the agreement comes into effect. The CPTPP creates market opportunities for some of Vietnam's key export sectors such as textiles and footwear.

Australia is an important supplier of textile materials to Vietnam's textile industry. Vietnam will benefit from importing raw materials with more reasonable prices when the CPTPP officially took effect.

However, the ministry also affirmed trade relations between Vietnam and Australia will not have sudden development after the CPTPP takes effect because the AANZFTA has been implemented for nine years. The tax rates eliminated in Australia's commitment in AANZFTA are higher than those in the CPTPP. Therefore, Vietnamese businesses will most likely continue to use AANZFTA due to their habit of using the AANZFTA C/O and avoid additional resources when using CPTPP C/O.

Notably, for the self-certification of origin mechanism, although businesses have enjoyed many favourable conditions, they are still afraid that if documents are not eligible, they will not be accepted by Customs authorities of importing countries and will not enjoy incentives.

Proposes a series of solutions

Vietnam- Australia trade exchange has stably developed since from 2015 to now. Import and export turnover between the two countries increased by an average of 8.8 percent per year during 2010-2018.

According to the General Department of Vietnam Customs, in 2018, Australia is the 13th largest export partner and the 12th largest importer of Vietnam. Import-export turnover between the two sides reached $7.7 billion, an increase of more than 19 percent compared to 2017. In the first seven months of this year, the import-export turnover between the two sides reached over $4.5 billion, an increase of more than 6 percent compared to 2018.

To promote bilateral trade between Vietnam and Australia and implement the CPTPP, the Ministry of Industry and Trade proposes the Prime Minister to consider assigning the Ministry of Agriculture and Rural Development to lead and work with the Ministry of Industry and Trade, the Ministry of Foreign Affairs and other relevant agencies in product selection, promoting negotiations with Australia on opening markets for Vietnamese fruit and fishery products.

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In addition, the Ministry of Industry and Trade was assigned to work with the Australian Embassy and the World Bank to complete and put the FTA Portal into operation as a reliable address for businesses to study incentives and regulations of the agreement; regularly update technical barriers, new Australian regulations applicable to imported goods to notify businesses and associations.

The Ministry of Industry and Trade proposed the Prime Minister to assign the General Department of Vietnam Customs (the Ministry of Finance) and the General Department of Statistics (Ministry of Planning and Investment) to coordinately with it in providing and exploiting the import and export database between Vietnam and Australia and with CPTPP member countries to advise the Government in promoting trade and investment cooperation with Australia.