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Utilizing TPP to boost trade cooperation with the United States

VIETRADE - “Vietnam and the United States are being on the critical stages of negotiation to reach Trans-Pacific Strategic Economic Partnership Agreement (TPP, which will create promising opportunities in collaboration among enterprises between the two countries”, said Mr. Do Kim Lang – Deputy Director of Vietnam Trade Promotion Agency (VIETRADE) at the workshop “Vietnam – the United States trade relations and TPP: Major Prospects and Challenges” held by VIETRADE on 18th November 2014 in Hanoi.

 

Prospects and Challenges

Lang underlined that trade relation between Vietnam and the United States recently had developed significantly with two-way trade growth of over 20% in 20 years.

The statistics of General Department of Vietnam Customs showed that in the first 9 months of 2014, the total revenue of bilateral trade between Vietnam and the US reached 25,5 billion USD, up 23% compared to same period last year. The US, therefore, has become the trade partner of Vietnam with the highest growth among those of Vietnam. In this relation, Vietnam keeps its position as trade surplus. 

 

Regarding to trade cooperation prospects between Vietnam and the US, Mr. Nguyen Hong Duong – Deputy Director General of America Market Department (Ministry of Industry and Trade) stated that the US has been and shall be the most important export market of Vietnam with steady export growth. It has enormous potentials for Vietnam’s export products as the export revenue of Vietnam just accounted for 0,98% of  total import revenue of the US.

 

However, Duong said that restructuring of Vietnam’s export products had been simple, the value addition in products had been still low but any adequate measures were not taken. Besides, regarding to general trends, there have been more barriers arising in the US market such as antidumping practices, technical barriers during manufacturing process. As a result, Vietnam enterprises would face with big difficulties and challenges in coming times.

 

The TPP Agreement’s Opportunities

According to Duong, the TPP shall bring great opportunities for Vietnamese goods in the US because it is a “vast” importer, as well as goods trading between the two countries were not directly substitute but mutual complementary ones.

 

Discussion at the Workshop, Ms. Marybeth Turner – economic expert, the United States Embassy in Hanoi presented an overview of the TPP as well as the significance of the agreement for the Vietnam economic growth.

 

Turner also said that the TPP aimed at eliminating all tariffs and non-tariffs barriers in investment and trade. The TPP is bringing together some of the largest and fastest growing economies across the Asia-Pacific – developed and developing alike – into a single trading community that represents approximately 40% of global GDP. For Vietnam, the TPP is expected to help Vietnam business (i) to achieve deeper market penetration in terms of Vietnam export goods, especially garments, seafood, footwear and wood products to the US market; (ii) to gain closer access to new markets for new Vietnam products, for example auto parts, processing seafood; and (iii) to attract investment flows from the USA and others countries into Vietnam. The TPP also helps Vietnam take advantages of regional economic integration trend, promote upper rank of Vietnam in international, and strengthen relationships with key partners. She also showed that the US imposes tax up to 35% on canned seafood; however, when TPP is signed, import tax of this product shall reduce to 0%.

 

Along with the benefits from trade cooperation, the TPP also is considered as credible vote for Vietnam. The TPP shall makes Vietnam different with others developing countries which are attracting foreign investment flows.

 

Accessing the TPP’s market would increase advantages for investors in moving equipment, infrastructure to TPP's members. Turner estimated Vietnam will enjoy US$28 billion revenue from TPP's members.

Taking advantages of TPP

Mr. Stuart Schaag – Commercial Counsellor, the United States Embassy in Hanoi advised that Vietnam business should understand HS System of the US in order to indentify the demand of the American market as well as competitors in their field. If Vietnam products is raw materials – input of manufacturing process, firstly Vietnam business should contact associations of such sectors/products. Almost all of type of sectors/products have associations and the members of those associations would be the potential partners for Vietnam business.

 

Schaag also shared with Vietnam business some of experiences about looking for potential customers. He said that the enterprises should actively participate in trade exhibitions & fairs in the US to reach potential clients and have a chance to become a link of retail chain in this market. Vietnam enterprises could also become a supplier according to the US buyers’ standards by making their efforts to meet the criteria indicated in the Manual of “Supplier for the US’s trade partners”.

 

In addition, he noted that the enterprises preparing to export into the US should do market research meticulously to understand clearly the general development trend of the market. Besides, the enterprises need to map out medium and long-term strategies, identify the right time to penetrate market as well as marketing – strategies. At the same time, they should find and select a professional transport company which understands clearly in regulations and licences, taxation, import fees, standards, and certificates of the US.



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