CPTPP: Advantages and challenges

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is one of the biggest free trade agreements, having 11 signatories comprising Australia, Canada, Japan, Malaysia, Vietnam, New Zealand, Singapore, Mexico, Chile, Brunei Darussalam, Peru, which are located in the Asia-Pacific region. The establishment of CPTPP is to ease tariff and non-tariff barriers in trade and investment among member countries. Also, CPTPP is considered as a measure to simplify regulations and to implement common standards in terms of foreign investment protection and intellectual property.
Since the day of March 08th 2018 when the 11 countries signed on the CPTPP at Santiago of Chile, CPTPP has been officially valid that is counted from the 30th of December 2018 for Australia, Canada, Japan, Mexico, New Zealand and Singapore, and from the 14th of January 2019 for Vietnam (Lexology, 2019)[1].
Carrying advantages in trade, investment (such as boosting exports, strengthening high additional-value commodities export, encouraging SMEs integration into global value chain, etc.), CPTPP has been expected to fasten domestic reforms regarding to such various services as telecommunication, finance, temporary integration of services providers, customs, e-commerce, environment, investment, intellectual property, legal affairs, market access, government procurement, goods origin rules, non-tariff methods, etc. With the membership of the countries which are located in the strategic geopolitical area and owning emerging economies in Asian region, CPTPP has been playing a key role in strengthening cooperation between its member countries and big counterparts, particularly groups considering shifts of investment, establishment, and operation of manufacturing bases grounded on thoroughly calculations with regards to capital, profit, and effectiveness of their foreign markets assessment and expansion.
Besides advantages, there are challenges. In Vietnam, for instance, infrastructure, commuting connections, logistics, etc. has been in limitation while domestic companies’ capacity to join the global value chain, particularly SMEs’ one, has not yet met demands and requirements of the integration process. To add, the manufacturing industry of Vietnam has not yet fitted to regulations of CPTPP, notably the agreement’s rules on goods origin. Challenges have come to the state budget at both central and subcentral levels due to cut-offs and elimination of import taxes regulated at the CPTPP. Moreover, competition has been increasing among the member countries of the CPTPP in terms of investment and export that challenges domestic companies, particularly the SMEs and state-owned companies. Indeed, according to CPTPP, all state-owned companies have to meet transparency in operation and information provision (Vietnam Investment Review, 2019)[2]. Also, in the framework of CPTPP, competition with foreign companies puts pressure on state-owned enterprises in receiving and enjoying preferences from the state on which they are grounded. For sure, such state - owned enterprises have to handle pressure to be innovative in the way of operation, management and evaluation of their business./.

[1] Vietnam Investment Review, “SOE divestment a priority in CPTPP era”, 07/4/2019, https://www.vir.com.vn/soe-divestment-a-priority-in-cptpp-era-65586.html,

[2] Lexology, “The CPTPP Enters into Force: What does it mean for global trade?”, 21/01/2019, https://www.lexology.com/library/detail.aspx?g=9941ebd7-a3f8-4630-bc65-c483931f81ba
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