Trans Pacific Partnerhip
The Trans Pacific Partnership (TPP) free trade agreement will account for 800 million people, a third of world trade, and nearly 40% of the global economy. It will offer unprecedented access to multiple markets, eliminate tariffs and tackle a range of non-tariff barriers that restrict trade growth.
Trade and Transport hub - section on Trade Agreements
Source: Maersk Vietnam Trade Report
Finding the right balance
The next phase of Vietnam’s economic development revolves around a 12-country multi-lateral trade agreement known as the Trans Pacific Partnership (TPP).
“The TPP is a great opportunity for Vietnam to increase its global competitiveness, especially in the textile and garment industry which will enjoy zero percent tax compared to the 17-35% tax today,” says Nguyen Thi Ngoc Bich, General Director of Maersk Line Vietnam & Cambodia.
The partnership means that as well as benefitting from Vietnam’s low production costs, textile and garment manufacturers will also enjoy preferential tariffs on imports. This has already led to an increase in foreign investment from textile manufactures in countries including China, Japan, South Korea, and Taiwan, eager to take advantage of the anticipated TPP benefits.
While the Trans Pacific Partnership creates many opportunities for Vietnam, when it comes to reducing dependence on imported materials, the trade agreement potentially causes limitations. For preferential tariffs to be in place and costs reduced, imported materials must originate from TPP nations.