Opportunities from RCEP for exporting Vietnamese goods to China
- Opportunities from harmonized rules of origin, increasing the choice of preferential tariffs when exporting to China
Compared to the existing FTA between Vietnam and China (ACFTA), RCEP brings the advantage of harmonized rules of origin - an important condition to enjoy preferential tariffs. Specifically, RCEP allows the accumulation of materials originating within the bloc from all 15 RCEP member countries, so that businesses' goods can meet the rules of origin to take advantage of preferential tariffs under the Agreement more easily than under ACFTA (rules of origin only allow to accumulate materials from ASEAN and China).
In fact, most RCEP member countries (China, Korea, Japan, ASEAN countries) are Vietnam’s main sources of raw materials, so the ability of goods to meet RCEP’s rules of origin is higher, the rate of taking advantage of preferential tariffs in RCEP is also expected to be better than ACFTA.
RCEP is not exclusive but takes effect in parallel with ACFTA, which helps Vietnamese businesses have more choices of preferential tariffs/rules of origin in a beneficial way for businesses. For example, preferential tariffs under ACFTA are higher than RCEP, but the ability to meet rules of origin under ACFTA is more difficult than RCEP, in this case, businesses can choose rules of origin and enjoy preferential tariffs under the RCEP - the most beneficial option for businesses.
- Opportunities from reducing non-tariff barriers
The RCEP agreement has many commitments on simplifying customs procedures and facilitating trade, on creating favorable conditions for recognition of equivalence of SPS measures, encouraging recognition of TBT conformity assessment, etc. These commitments help limit unnecessary trade barriers between Vietnam and China, thereby making it easier for Vietnamese goods to enter the Chinese market.
- Opportunities from reducing costs and improving competitiveness
Thanks to the advantage of harmonized rules of origin within the region, Vietnam can import raw materials that Vietnam does not have a competitive advantage in production from RCEP member countries at better prices. Therefore, the products will have greater price competitiveness in the Chinese market.
In addition, RCEP also includes many commitments on services and institutions that can help manufacturing and exporting enterprises save production costs and improve competitiveness. For example:
- Commitments to opening markets for services supporting production such as finance, telecommunications, logistics, etc will create higher competition in these fields and give opportunities for manufacturing enterprises to access these services with better quality and more reasonable prices, thereby reducing service costs in product prices.
- Commitments to promoting a competitive environment, modern trade methods, and business support (competition, e-commerce, small and medium-sized enterprises, etc.) will create conditions for manufacturing businesses, especially small and micro enterprises to improve their competitiveness and better access to customers.
In addition, throughout RCEP, commitments are made to achieve liberalization, equality, transparency, and facilitation of trade and investment among member countries. These commitments help Vietnam's business and legal environment become more favorable, reduce costs and time for enterprises, and make production and import and export activities more convenient and easier.
In addition, to a certain extent, Vietnamese companies have an advantage over many other RCEP countries in complying with their high standard commitments without paying additional fees. This is because Vietnam has met stricter rules when implementing other new generation FTA with standards equal to or even higher than RCEP, such as the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP) or the EU – Vietnam Free Trade Agreement (EVFTA), while other RCEP countries (some ASEAN member countries) will face greater cost pressure to comply with higher standards when doing business with the Chinese market. Therefore, it is expected that Vietnamese goods will have a greater competitive advantage compared to some RCEP member countries.
Source: Center for WTO and International Trade
