Recently signed and pending implementation by individual member states, the TPP is one of the most anticipated trade developments in recent years.
For Vietnam’s exporters, the agreement is a watershed moment which will see over 18,000 total tariff reductions extending to key industries such as garments, machinery, and electronics.
Understanding TPP’s Tariff Reductions
It should be immediately noted that, unlike some multilateral trade agreements, tariff reductions have been negotiated in a bilateral manner within the TPP package – resulting in specific and individual commitments by each state to every other state within the TPP. For example, the reduction of a Canadian tariff against a good from Australia does not guarantee Canadian reductions for Vietnamese Producers of similar goods.
While individual commitments may vary, the rage of options available to most countries are constrained and enjoy a level of uniformity throughout TPP. To illustrate this, the remaining paragraphs will explore the Tariff Reduction Schedule that the US has agreed to with regards to Vietnam.
Excerpt from Vietnam Briefing’s November edition, entitled “Navigating the Vietnam Supply Chain“, which provides valuable insight into the emergence of Vietnam as a destination for China plus on manufacturing.
Vietnam: Manufacturing to remain the key driver of growth
We expect robust exports, led by strong global demand for electronics, to continue to underpin solid economic growth over the remainder of this year with GDP forecast to rise close to 8%.
GDP growth was unchanged at 4.5% y/y in Q1. Manufacturing activity surged, while the recovery in service sector activity and construction continued albeit at a more subdued pace as some localised social distancing measures were reinstated.(more…)