The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is expected to come into force in early 2019, which will open up numerous opportunities for Vietnamese garment-textile sector.
According to the Vietnam Textile and Apparel Association (VTAA), the industry could access many markets with huge potential, including those with which Vietnam has yet to sign free trade agreements (FTA). Under the CPTPP, import tariff on most products will reduce to zero over the course of seven years, which will help businesses achieve high economic efficiency and increase competitiveness.
Garment-textile firms will be also able to make use of raw material supply and learn about production technology and management skills from CPTPP member countries. To realise an annual export growth of 10%, the sector needs to make best use of markets of member countries of the trade deal.
The pact will provide new opportunities for businesses in both export and import. For example, currently Vietnamese apparel makers have to rely on materials imported from China, Japan and the Republic of Korea. With the CPTPP, enterprises could import material from other CPTPP countries such as wool from Australia.
In order to capitalize on opportunities presented by the CPTPP, enterprises will need strong support from State management agencies. On their part, the enterprises must spare no effort to penetrate into the markets, first of all by studying thoroughly their target markets. They should also invest in modern machines and sharpening skills for workers.
The original Trans-Pacific Partnership (TPP) was signed by 12 countries in February 2016 but US President Donald Trump pulled his country from the deal upon taking office in January 2017. The remaining 11 countries, namely Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, continued to sign the pact and renamed it the CPTPP in March 2018 in Chile.
The pact, which delivers a strong message against the protectionism in the world, is expected to boost economic growth, create more jobs, reduce poverty and improve the quality of life for people in member countries.
The deal will create one of the world’s largest free trade blocs with a combined market of 499 million people and GDP of around US$10.1 trillion, accounting for 13.5% of the global GDP.
More than 2,000 foreign businesses from 16 countries and territories worldwide have invested some US$15.75 trillion in Vietnam’s garment and textile sector so far, according to the VTAA. The total textiles and garment import turnover of the CPTPP member countries exceeded US$53 billion in 2017.
Vietnam earned over US$4.8 billion from exporting textiles and garments to the other CPTPP member nations in 2017, making up 9.07% of the market share.