The Regional Comprehensive Economic Partnership (known as the RCEP), which was signed on November 15, is the largest free trade agreement in the world. While offering substantial opportunities to Vietnamese exporters, it will also make the competitive landscape even fiercer, both at home and abroad.
When the RCEP is implemented it will create a market of more than 3.5 billion consumers and total GDP of some 49 trillion USD, or 39% of global GDP. It will also become the largest free trade area in the world, with commitments on market openings in the fields of goods, services, and investment, the simplification of customs procedures, and rules of origin to facilitate trade.
It is clear, however, that several parties to the agreement share similar export products as Vietnam and may even have stronger competitive capacity. When it fully comes into effect, local enterprises will be subject to much fiercer competition.
But according to the Ministry of Industry and Trade, the commitments to which Vietnam is bound are no different from those in other trade deals the country has signed. The pressure on domestic enterprises is therefore not overly concerning.
According to insiders, lower import tariffs may result in an influx of imported goods, with Vietnam posting a trade deficit. The country’s competitive capacity, meanwhile, is currently only higher than three other RCEP signatories - Myanmar, Laos, and Cambodia. Experts have suggested closer ties be established between Vietnamese enterprises to improve the competitive capacity of every industry overall./.