Comprehensive and Progressive Trans-Pacific Partnership Agreement (CPTPP)
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership ( CPTPP ) is a new generation free trade agreement (FTA) comprising 11 member countries: Canada, Australia, Brunei, Chile, Japan , Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.
On December 30, 2018, the CPTPP came into effect for the first group of six countries that ratified the agreement – Canada, Australia, Japan, Mexico, New Zealand, and Singapore.
On January 14, 2019, the CPTPP came into effect for Vietnam.
KEY ADVANTAGES BETWEEN THE VIETNAMESE AND CANADIAN MARKETS BY PRODUCT GROUP
CPTPP members have agreed to maintain the market opening commitments of the TPP Agreement within the framework of the CPTPP Agreement. Accordingly, CPTPP members have committed to eliminating import tariffs on almost all of their respective import tariff schedules.
Canada is committed to eliminating import tariffs on 95% of tariff lines and 78% of Vietnam's exports to Canada immediately upon the Agreement's entry into force. Specifically, 100% of seafood exports and 100% of timber exports will have tariffs eliminated immediately upon the Agreement's entry into force.
Shoes
78% of Vietnam's footwear exports to Canada will benefit from a 0% tariff rate or a 75% reduction compared to the current tariff rate.
Seafood
Seafood products will enjoy a 0% tariff rate when exported to Canada.
Rice
With a 0% tariff rate, Vietnamese rice will have the potential to access and grow in the Canadian market.
Coffee, tea, pepper, cashews
These items will enjoy a 0% tariff rate as soon as the Agreement comes into effect.
Wooden furniture
Exports of indoor and outdoor furniture to Canada will enjoy a 0% tariff rate.
Textiles
The CPTPP agreement will eliminate import tariffs on textiles and garments originating from Vietnam when exported to partner countries' markets (either immediately or gradually).
For the Canadian market, tariffs on all major Vietnamese textile and garment exports will be eliminated either immediately upon the agreement's entry into force or after three years. 42.9% of export value to Canada will have a 0% tariff in the first year, and 57.1% will have a 0% tariff in the fourth year.
VIETNAM'S IMPORT TAX COMMITMENTS
Vietnam is committed to a common tariff schedule for all CPTPP countries. Accordingly, Vietnam will eliminate import tariffs on 66% of tariff lines and 86.5% of tariff lines after 3 years from the date the Agreement comes into effect. The remaining items have a tariff reduction schedule mainly from 5 to 10 years.
For certain particularly sensitive items, Vietnam has a roadmap of over 10 years, for example, beer, wine, chicken meat, iron and steel, and passenger cars with engine capacities under 3,000 cc. Vietnam applies tariff quotas (TRQ) to sugar, eggs, salt (within WTO quota limits) and used cars.
SO WHAT SHOULD WE DO?
To take advantage of these offers, we should:
For those with businesses in Vietnam, opening a representative branch in Canada is a viable option to facilitate trade. Upon opening a branch, senior management and their families can apply for work permits within a short period of 3-6 months . Children under 18 accompanying their parents can attend public schools free of charge. Furthermore, policies for legal workers in Canada, such as healthcare and other social security benefits, are also in place.
Work permits can be renewed for up to 7 years. During this time, families have more opportunities to access Canadian immigration programs.
Please contact us for advice.