RCEP will bring many opportunities for businesses

Production of clothes for export at Dong Tien Joint Stock Company in Amata Industrial Park

The World's Largest Agreement

After 8 years of negotiation, the RCEP Agreement was finally signed and entered into force. Although many countries in RCEP and Vietnam have signed separate free trade agreements, businesses still look forward to RCEP because it opens up a large market, facilitates trade to expand cooperation, manufacturing, exporting and forming new supply chains.

RCEP is considered the largest agreement in the world because there are 15 participating countries, including 10 ASEAN member countries and 5 ASEAN partner countries, namely Japan, Korea, China, New Zealand, and Australia. The GDP of the RCEP region is about US$26.2 trillion, accounting for 30% of global GDP and becoming the largest free trade area in the world.

Thus, within the next 20 years, RCEP will eliminate at least 92% of import tax lines between the signatories of the agreement and establish common rules for trade, intellectual property rights and e-commerce. In addition, RCEP will bring other advantages to businesses such as: cutting costs, time in exporting goods to countries that have signed agreements, and businesses do not have to fulfill separate requirements of each country.

Mr. Vu Duc Giang, Chairman of Vietnam Textile & Apparel Association assessed: “The effective RCEP will create more opportunities for Vietnam's textile and garment industry to expand exports to countries in the region. At the same time, Vietnamese textile and garment enterprises can also import raw materials at preferential prices to serve production and export to markets outside the member countries to increase their competitiveness. Therefore, Vietnam's textile and garment industry has set a target by 2022, reaching an export turnover of US$42.5-43 billion, partly based on the advantages brought by the RCEP Agreement.

Deeply join in the global supply chain

The countries participating in RCEP also expect that the agreement will promote trade in the group to develop strongly to contribute to the economic recovery of countries in the context of the Covid-19 pandemic. According to the commitment schedule, the countries participating in the agreement will eliminate 30-100% of tariff lines for goods as soon as RCEP comes into effect. In which, the rate of tariff elimination of Vietnam is 90.3% for ASEAN countries; 89.6% for Australia and New Zealand; 86.7% for Japan and Korea, and 85.6% for China. Besides, this agreement will also reduce non-tariff barriers to trade between member countries such as: reducing customs procedures, quarantine of goods, reducing barriers on technical standards.

Ms. Nguyen Thi Thu Trang, Director of the Center for WTO and Integration under the Vietnam Chamber of Commerce and Industry said: “In the short term, it is difficult for RCEP to create a big boost for Vietnam's exports because most countries in the group have signed free trade agreements with our country and reduced tax lines further. However, in the long run, RCEP will create a new supply chain in the region and Vietnam will become a link in that supply chain, so exports will increase. As exports along the supply chain increase, Vietnam will reduce the risk of being subject to trade remedies.”

Enterprises participating deeply in integration, expanding production and export also mean step by step becoming an important link in the global supply chain.

                                                                                             Vi Quan