CPTPP Agreement: Don't be too happy with tax reduction
There has been a bitter lesson in not taking advantage of the incentives brought by free trade agreements (FTAs). The opportunities mentioned are only potential, and whether they can be exploited or not is another matter.
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Ms. Nguyen Thi Thu Trang, Director of the WTO and Integration Center (Vietnam Chamber of Commerce and Industry - VCCI), further analyzed the advantages and points that need special attention when the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) comes into effect:
- Dissemination of information, review and transformation of commitments into regulations are urgent tasks to effectively utilize CPTPP incentives. Experience shows that it is necessary to avoid amending domestic regulations too strongly compared to commitments...
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* The Ministry of Industry and Trade said that the negotiation process has paid attention to having a suitable opening roadmap for risky industries such as agriculture or livestock. Do you think the commitments in the above fields are appropriate?
- If we compare mechanically, we can see that while the tax elimination roadmap of other countries is usually only 3-7 years, our agricultural products are enjoying a significantly longer roadmap. Chicken meat will only have its import tax eliminated after 11-12 years. Fresh pork has a tax elimination roadmap of 10 years, frozen meat also 8 years. Sugar, eggs, and salt only have their tariffs eliminated for a certain volume (quota) and the roadmap is also 6-11 years...
* However, the agricultural story is not just about taxes?
- Yes. Many countries in the CPTPP can immediately eliminate tariffs on agricultural products, but the licensing process and technical and food safety inspections are very strict and therefore can still prevent agricultural imports without using tax tools.
Therefore, protecting Vietnamese agricultural products from the adverse impacts of CPTPP is not only based on a long roadmap but is sufficient. Other measures are needed to contribute to this goal, such as strengthening effective control of imported agricultural products (from different sources, not just from CPTPP), taking advantage of permitted exceptions in the WTO to effectively support farmers...
* How do you evaluate the suspension standards when CPTPP no longer has the US?
- It must be said that CPTPP almost maintains the high standards in TPP. In fact, the suspended commitments are very few, mostly commitments related to intellectual property requirements and investment dispute settlement mechanisms. In other words, the "high standards" in TPP are still almost fully maintained in CPTPP.
CPTPP sets high requirements for investment protection and business environment reform... Therefore, we expect to see increased investment attraction in Vietnam after CPTPP comes into effect.
* From experience in implementing previous FTAs, what do you think needs to be done to avoid surprising many people when the CPTPP actually has an impact?
- In my opinion, besides popularizing propaganda, another thing that needs to be promoted is reviewing and converting CPTPP commitments into domestic law.
Remember when Vietnam joined the WTO, many regulations were amended. Looking back, there were many cases where the amendments were not consistent, leading to difficulties in application, or the amendments were too strong compared to the commitments, causing disadvantages for domestic enterprises.
Therefore, this time the review of the legal system with CPTPP commitments needs to be done carefully, and the amendments need to be made in regular and full consultation between state agencies and businesses.
The main opportunity is potential.
CPTPP brings many opportunities, but opportunities are only potential, whether or not they can be realized is completely different.
Through previous FTAs, we have had quite bitter lessons about this. For example, up to now, the rate of taking advantage of tariff incentives from FTAs by Vietnamese enterprises has only reached an average of 30-35%.
There are many reasons for this situation, notably businesses not knowing about tariff opportunities and not understanding the conditions of rules of origin to enjoy preferential taxes.
There are also reasons for complicated procedures, businesses do not know how to comply...