Assoc Prof Dr Tran Dinh Thien, director of the Vietnam Economic Institute said that to enjoy preferential tariffs from the TPP, export commodities should obey the rule of origin when exporting to the market.  

Under the TPP’s rule of origin, the yarn used in the garment and textile sector should be originated from TPP members. However, almost all Vietnamese material inputs for the garment and textile sector have been imported from non-TPP nations, which make it difficult for Vietnamese businesses to benefit from the agreement, said Dr. Thien.

Although Vietnam has joined the WTO for six years, businesses are not yet active in the global playground. With its limited members, the TPP has put forth comprehensive commitments, which require businesses to take advantage of opportunities and reduce risks in the challenging playground.

When the agreement is signed, local businesses will have an opportunity to import a diversified source of materials at cheap prices, and high quality machinery and equipment. However, they will face strong rivals in terms of capital, technological knowhow, management capacity and experience in production and business operations.

Tran Kim Lien, President of Management Board of the National Seed Joint Stock Company (Vinaseed) said that the Vietnamese market will have a lot of opportunities but also challenges since commodities from TPP members are more advantageous in term of quality, origin, service and price.

In fact, local businesses, especially businesses in the agricultural sector are operating on a small scale, which have posed a big challenge for Vietnam when joining the TPP, said Ms Lien.

According to Nguyen Thi Thu Trang from the WTO Centre under the Vietnam Chamber of Industry and Trade, when joining TPP, Vietnamese businesses will enjoy a substantial tariff reduction from 92%-95% but they will have to improve their product quality to overcome technical barriers.  

As the TPP is still under negotiation, businesses should study the rule of origin and tariff rates in the context of market development trends in the world.

There is no denying that the TPP agreement will have a strong impact on Vietnam’s business environment and that businesses will have to follow the roadmap for market expansion, devise suitable plans for production and investment and gain a leg on competition in the regional chain of supply.