The possibility of new economies joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), including the UK, China, or Taiwan, is putting more pressure on Vietnam to address its institutional challenges in implementing the deal and remain competitive.

Overview of the conference. Photo: Hai Yen

“The majority of existing CPTPP members are more of complementary rather than competing directly with Vietnam, but the story would be different should China or Taiwan join the trade bloc.”

Economist Pham Chi Lan gave the assessment at a conference discussing the country’s implementation of the CPTPP from a law-making perspective today [November 10], stressing the necessity for Vietnam to boost its institutional capabilities for greater economic competitiveness.

“It is imperative for Vietnam to soon finalize a market-based economy and improve the legal system to better utilize preferential treatments in FTAs that Vietnam is a part of, including the CPTPP,” Lan said.

According to Lan, regional countries such as Thailand and the Philippines may also seek entry to the CPTPP, “competition would no doubt become fiercer than ever,” she warned.

Hoang Quang Phong, Vice President of the Vietnam Chamber of Commerce and Industry (VCCI), noted the CPTPP, which has been effective for nearly three years in Vietnam, was the first high-standard and new-generation free trade agreement (FTA) that the country has ever joined and has direct impacts on the domestic legal institutions.

“Unlike many previous FTAs, the work of amending, supplementing, and developing new domestic legal regulations to ensure compatibility with commitments is a task of paramount importance in the implementation of the deal,” Phong said.

“In fact, it can be said that the CPTPP is the first agreement after the WTO that requires Vietnam to carry out law-making activities to implement such wide-ranging commitments,” he continued, adding a significant part of this was implemented in the period 2019-2020, with new, revised/supplemented documents issued in many areas, at different legal levels.

Phong stressed the importance of summarizing the implementation process of law-making activities that are in line with commitments in the CPTPP, saying such a process would draw direct lessons for Vietnam as the country pushes for the realization of the more challenging content of the deal.

“The policy implications from that can be a useful guideline for law-making activities to implement new-generation, high-standard FTAs in the future,” he said.

Sharing Phong’s view, Charles Thursby-Pelham, First Secretary of the Australian Embassy in Vietnam noted a comprehensive review of the law-making process will be a useful source of information for State agencies, VCCI, associations, and each enterprise to look at the benefits of this agreement.

“This will be a valuable foundation for the next steps of the implementation of CPTPP, as well as FTAs in general,” he said.

Production of electronic products at Katolec Vietnam in Quang Minh Industrial Park, Hanoi. Photo: Pham Hung

The necessity to go beyond commitments

An assessment of VCCI shows that there are a total of seven Laws, six Decrees, and six Circulars that need to be revised or built to ensure the compatibility of the legal system with Vietnam’s commitments in the CPTPP.

The VCCI's reviewed a total of 11 legal documents issued to implement the CPTPP commitments with immediate effect and four documents drafted to prepare for the implementation of the CPTPP commitments in the period of 2019-2021.

Nguyen Thi Thu Trang, director of the WTO Center and Integration under the VCCI, noted all eleven documents (including two Laws, two Decrees, and seven Circulars, implementing 63 groups of CPTPP commitments on trade in goods, intellectual property, public procurement, and labor) ensure the compliance with the Vietnamese Constitution (constitutional), proper authority, order, and formality (legal), and are basically in harmony, not in contradiction to other provisions in the relevant legal system (uniformity in the legal system).

In terms of compatibility, most of the provisions in these legal documents are compatible with the transposed CPTPP commitments, Trang said.

“Some regulations even exceed committed standards, are implemented at a higher level than the one required or ahead of schedule [mainly related to the bidding process for the CPTPP package],” Trang added.

During the process of preparation for the implementation of CPTPP’s scheduled commitments, Trang said all drafts of four legal documents (three Laws and one Decree to implement 11 groups of CPTPP commitments with schedules in the 2022-2024 period on the market opening of goods, intellectual property, and labor) are compatible with CPTPP commitments.

To further improve the implementation of the CPTPP as well as Vietnam's newly signed/effective FTAs, Trang called for the review of compatibility with FTA commitments and building law-making plans to be carried out in a more inclusive, cross-sectoral, transparent manner and in full consultation with stakeholders.

In addition, the drafting of legal documents should be done as soon as possible, even from the time the FTA is officially signed without waiting for ratification, she noted.

She said the drafting agencies should pay special attention to consulting businesses and affected stakeholders, meanwhile, related information should include not only the draft but also explanatory documents.

But more importantly, the transposition of FTA commitments needs to be carried out beyond their objectives, not only to fulfill the "promises" with FTA partners but also to develop legislation to meet the internal needs in the process of FTA integration, Trang concluded.

Tran Huu Huynh, Chairman of the VCCI International Trade Policy Advisory Committee supported the view by saying Vietnam should aim higher than just looking at current commitments.

“The fiercer global trade landscape means there is no other way for Vietnam to stay competitive, but to build a legal framework beyond commitments to improve the business environment and support businesses to integrate effectively,” he concluded.