RCEP Gives Greater Opportunities but Triggers Fiercer Competition

“The new cooperation framework of the RCEP Agreement will accelerate the formation of the ASEAN Economic Community 2025, from which ASEAN will become a dynamic, strong and cooperative partner for joint prosperity,” said Prime Minister Nguyen Xuan Phuc following the RCEP Agreement signing ceremony on November 15, 2020.

The signing of the deal is a pride and great achievement of the ASEAN countries and partners in laying a foundation for a new, comprehensive, long-term cooperation period, matching the new level of development and bringing benefits to all countries in the region.

The pact, signed online by all signatories, involves 10 ASEAN member countries and five partners: China, Japan, South Korea, Australia and New Zealand.

The report on challenges and opportunities from RCEP for Vietnamese businesses released by the Vietnam Chamber of Commerce and Industry (VCCI) emphasizes that, in terms of trade, RCEP is a great opportunity for Vietnam, as the market size of signing countries is huge.

In particular, this is also a not too fastidious market (except for Australia, Japan and New Zealand) which has high demand for Vietnam's strong products such as tropical agricultural products and processed foods. The RCEP production chain is characteristically almost complete for a variety of goods such as telephones, electronic products, apparels, footwear and processed foods, according to VCCI.

However, VCCI also warned that, in RCEP, many partners have similar product structures to Vietnamese and their competitiveness is stronger than Vietnam, such as Thailand, Indonesia and China.

Not only being confined to commodity export, the lifting of nontariff barriers and customs reform, the RCEP will also be a comprehensive agreement, open to the freedom of direct investment, trade in services, even telecommunications services, financial services, logistics services and electronic sales with member countries, including China.

While EVFTA and CPTPP bring Vietnam large export markets, including demanding markets where high requirements and conditions will force Vietnamese companies to improve themselves and raise product quality, RCEP is a broader market, but of lower standards, in which Vietnam must also prepare for fiercer competition.

Source: Vietnam Business Forum