RCEP to benefit key Vietnamese exports due to flexible rule of origin

This assessment was shared by experts during a conference held on March 24 by the Integration Support Center and the Ho Chi Minh City Export Processing and Industrial Zones Authority (HEPZA).

Dao Xuan Duc, HEPZA deputy head, said amid the COVID-19 impact coupled with the growing rise of protectionism globally, the trade pact can be considered to be the new growth engine for international trade.

With commitments set out to open markets for goods, services, and greater investments, whilst simplifying customs procedures and establishing rules of origin to facilitate greater trade and reduce barriers, the RCEP is anticipated to constitute the world’s largest trading area. This will ultimately serve to accelerate the development of regional and global value chains, thereby promoting further economic development among ASEAN countries.

Tran Ngoc Binh, head of Ho Chi Minh City’s Import and Export Management Division, said under the terms of the trade pact, several key Vietnamese exports, especially textiles and agricultural products, will be able to enjoy numerous benefits when penetrating some markets, including Japan and the Republic of Korea.

Under the RCEP, Vietnam is able to import fabrics from any country, and complete Made-in-Vietnam products enjoy tax incentives when they are shipped to the Japanese market.

Nguyen Anh Duong, head of the General Research Department under the Central Institute for Economic Management (CIEM), noted the signing of the RCEP indicates that member states are committed to liberalising trade in goods, services, and investment, towards achieving the ultimate goal of stronger co-operation and fairer development.

Duong outlined that the RCEP bloc makes up a dynamic area featuring a newly-growing middle class, and that over the course of the next three years, the region will be home to approximately 150 million people who have a high-to-middle income. This demographic will be capable of forming new consumer trends that are in contrast to previous generations, with a specific focus on smart-technology devices and high-quality products.

Therefore, it can be judged that the enforcement of the RCEP can serve to boost exports and national income for participating countries, while simultaneously encouraging members to commit further in the value chain.

Despite these positives, the trade deal also entails a number of challenges. Vietnam records a trade deficit with several RCEP member countries, including Australia, New Zealand, and Japan, thereby posing risks of lawsuits.

Experts advised local enterprises to study, compare, and choose suitable agreements for them to enjoy the highest benefits as they have greater options for export markets.

They emphasised the need to develop plans in order to boost export capacity, meet technical standards, and regularly update trends on non-tariff measures as a means of taking full advantages of the incentives that various FTAs Vietnam has signed can bring.