CPTPP not proving a hit across the board

Garment industry has faced difficulty in taking tariff preference from CPTPP. Photo baodautu.vn

A year since the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) came into effect, Vietnam had seen strong growth in exports to some CPTPP member countries, but not all.

In 2019, export value surged by 28.2 per cent year on year to US$3.86 billion to Canada, 26.8 per cent to $2.84 billion to Mexico, 20.5 per cent to $1 billion to Chile and 40 per cent to $350 million to Peru.

Vietnam had a slight increase at 1.1 per cent in export value to Singapore and faced export value reduction to some other CPTPP countries, such as Australia (down 12 per cent to $3.5 billion) and Malaysia (down 3 per cent to $3.3 billion).

Vu Tien Loc, Chairman of Viatnam Chamber of Commerce and Industry (VCCI), said the first impact of the CPTPP for Vietnam was to accelerate reform in institutions, meeting requirements of the global economy and trade.

However, in a VCCI survey of 8,600 local enterprises, up to 70 per cent of them had little knowledge of the CPTPP.

This survey has also pointed out that 84 per cent of the enterprises lacked information about the commitments in the free trade agreement.

Meanwhile, textile, footwear, fisheries and wooden products were considered commodities that would have a lot of opportunities to boost exports thanks to tariff rules in the agreement, but it hasn't turned out that way.

Le Tien Truong, general director of Vietnam National Textile and Garment Group (Vinatex), said the textile and garment industry has not taken full advantages from the CPTPP to increase exports because of issues meeting rules of origin in the agreement.

This agreement requires certification on local origin from yarn onward to enjoy preferential tariffs, while the domestic textile and garment industry annually imports about 99 per cent of cotton and 80 per cent of fabric for its production, he said.

According to the Import-Export Department, in 2019, the textile and garment industry spent $13.3 billion on fabric imports, up 4 per cent year on year, $2.4 billion on yarn imports and $2.6 billion on cotton imports.

The industry achieved a total export value of $39 billion in 2019, lower than expected.

Vu Duc Giang, chairman of the Vietnam Textile and Apparel Association (Vitas) admitted importing input materials has made local producers struggle to take advantage of free trade agreements like the CPTPP.

Giang was quoted by Dau tu (Investment) newspaper as saying that the biggest challenge for the textile industry was input materials, because it still has to import materials for annual production.

The industry needs the Government’s help to build industrial clusters on production of materials for the textile and garment industry, he said.