Vietnam Utilizes CPTPP to Enter Canadian Market
Advantages from CPTPP
Ontario's Ministry of Economic Development, Job Creation and Trade on October 24 coordinated with the Vietnam Trade Office in Canada to organize a preliminary workshop to review five years of implementing the Comprehensive and Progressive Agreement for Trans-Pacific Partnership ( CPTPP), promoting trade and investment in Vietnam.
At the conference, Vietnamese Ambassador to Canada Pham Vinh Quang said that Vietnam and Canada are members of CPTPP, a trade bloc representing 500 million people with a GDP of about CAD13.5 trillion (US$9.7 trillion).
This brought new opportunities for economic, trade and investment relations between the two countries. By taking advantage of Free Trade Agreements (FTAs), especially the CPTPP and the currently negotiated ASEAN-Canada FTA, the two sides can utilize the full potential of this vibrant region and create a foundation for shared growth and prosperity.
President of the Association of Chinese Canadian Entrepreneurs Yvonne Chan also said that there are many opportunities for Canada and Vietnam to cooperate together, especially taking advantage of Vietnam as a gateway to enter ASEAN.
Vietnam, as an active member of ASEAN, is at the center of a rapidly integrating region with more than 680 million consumers. The ASEAN Economic Community is a large market with diverse opportunities in many fields.
Commercial Counselor of Vietnam Trade Office in Canada Tran Thu Quynh said Ontario is a province that contributes up to 40% of Canada's GDP and is also home to large corporations and investment funds.
"Through the conference, Canadian corporations and investment funds will pay more attention to Vietnam and through Vietnam to access the ASEAN market," Quynh said.
Since CPTPP took effect, the Vietnam Trade Office in Canada said that Vietnam's export turnover to Canada increased nearly 60%, from US$3.8 billion in 2018 to over US$6 billion in 2021.
According to Tran Thu Quynh's assessment, among the member countries of CPTPP, Vietnam is the country that has best utilized the agreement to enter the Canadian market.
Accordingly, with the competitive advantage of enjoying preferential import taxes (tariff reduction up to 94%), Canadian businesses are increasingly interested and have a better awareness of Vietnam's products and production capacity.
In the purchasing strategies of Canadian businesses, Vietnam is emerging strongly thanks to the factor "stable, predictable and cheap."
“In the opposite direction, Vietnamese businesses are also increasingly taking advantage of FTAs to explore foreign markets, shown by the increasing rate of businesses understanding the CPTPP and using the C/O form CPTPP over the years," Tran Thu Quynh said.
Improve export capacity into market
According to the Vietnam Trade Office, in addition to Vietnamese products that have strengths in the market, such as textiles, garments, and footwear, since the CPTPP, many domestic industrial products such as wooden furniture, lighting, toys, sports equipment, iron and steel, rubber products, plastics, aluminum, and glass have high growth rates.
However, the Canadian market is a high-standard market, with many competitors, not only from within the CPTPP bloc but also businesses from South America.
Geographic distance, high standards, high advertising costs to penetrate the market, and high shipping prices are all factors that make it difficult for Vietnamese businesses to compete and penetrate the market.
Tran Thu Quynh said small-scale businesses have difficulty accessing the market because they do not have enough capacity to ensure supply.
Canadian consumers' awareness of the quality of Vietnamese products is still low.
To better utilize the CPTPP and improve export capacity into the Canadian market, the Vietnam Trade Office in Canada recommends that businesses need to understand the market, learn about local tastes and regulations, improve quality, and standards, and expand production scale.
In addition to ensuring price competitiveness, businesses need to pay attention to rules of origin, environmental values, and fair trade in business, ensuring stable supply.
Tran Thu Quynh said that taking advantage of FTAs and CPTPP particularly is not just about utilizing tax incentives to promote short-term exports.
Businesses need to target bigger opportunities such as connecting production, investment, technology, and brands between the two countries to create higher value chains.
They need to pay attention to the opportunities to participate in government procurement, government bidding, and PPP cooperation abroad that CPTPP brings.
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