What Vietnam Stands To Gain From the Free Trade Agreement With Other 14 Countries
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Last Sunday, Vietnam and other 14 countries agreed to sign a trade agreement called the Regional Comprehensive Economic Partnership, or RCEP, accounting for 30 per cent of all the world’s economic activities. It is believed that the deal will help to recover the economy of the trading bloc members from the negative impact of the COVID-19 pandemic, and bring great benefits to all member countries.
Amid the COVID-19 pandemic, Vietnam was the country to host the event virtually and the RCEP was formed at the time of the annual summit of the Association of South East Asian Nations (ASEAN). It took eight years for members of the ASEAN and five of their partners—Australia, China, Japan, New Zealand, and South Korea—to sign the trade agreement. It is worth noting that this is the first trade agreement that includes China, Japan and South Korea.
Vietnamese Prime Minister Nguyen Xuan Phuc has hailed the new trade agreement: “The conclusion of RCEP negotiation, the largest free trade agreement in the world, will send a strong message that affirms ASEAN’s leading role in supporting the multilateral trading system, creating a new trading structure in the region, enabling sustainable trade facilitation, revitalizing the supply chains disrupted by COVID-19 and assisting the post pandemic recovery,” he said.
It is expected that this new agreement will reduce tariffs on trade between member countries and more beneficial than the CPTP Pacific trade deal that US President Donald Trump pulled out of shortly after entering the White House. However, Donald Trump has lost the US election 2020 with his rival Joe Biden, and President-elect Biden can renegotiate the agreement despite Trump not conceding the election.
Under the Biden-Harris administration, the US can fully enter back in regional economic networks alongside an active security role and could join the CPTP and enhance its trading partners such as South Korean and Thailand other countries in the region. The current Trump administration does not appear to engage ASEAN integration which has diminished America’s diminished relative economic influence.
After Trump launched the slogan “American First” which has a policy of forging trade deals with individual countries and after four years in the White House, the deal has proved powerful symbolic ramifications and shown commitments to multi-nation efforts toward free trade agreement as bringing future prosperity
Many economists consider that RCEP and CPTP together will offset global losses from the US-China trade war which Trump initiated. RCEP will boost supply chains across the region and the new trade deal proves to the world that ASEAN members can now play important roles and improve centring trade agreements over time.
It is expected that Southeast Asia will enjoy a significant gain of $19 billion annually by 2030 from RCEP, appealing to foreign investors, but China’s Belt and Road Initiative will be beneficial from market access by strengthening transport, energy, and communications links.
The agreement will bring both opportunities and challenges to Vietnam, as the country will face stiff competition from other member nations which has very good quality products and services. The new trade agreement could transform Vietnam into a new phrase. Other countries can apply for their membership to join the bloc and their membership will be considered by the agreement of all member nations. Eighteen months after the trade pact takes effect, other countries interested in joining the bloc can apply for their membership and will be decided by the consensus of all member nations.