CPTPP is here!!!
/The big news for the past few days (years?) was the CPTPP coming into effect in Vietnam (14 days after the other ratifiers). Anyone following Vietnam knows that The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (easily abbreviated into the tongue-twister CPTPP) is a big trade agreement between a bunch of mid-sized countries that hug the Pacific (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam). Only 7 countries have ratified it so far, mainly the more developed ones. President Obama wanted this to be his signature Asian trade deal, but it didn’t happen in time and then President Trump cancelled it.
The Vietnamese are very excited, of course.
According to calculations by the National Centre for Socio-Economic Information and Forecasting under the Ministry of Planning and Investment, the CPTPP would boost Việt Nam’s GDP by US$1.7 billion and exports by more than $4 billion by 2035, up 1.32 per cent and 4.04 per cent respectively.
So this is big news for the country. A couple of points:
Some of the countries are scared that Vietnam’s low labor costs (which are not as low as we had suspected - we discussed this in our first post on Jan. 2, 2019, scroll way down to read it) will allow Vietnamese companies to eat their lunch. Malaysia, which has not ratified the treaty, probably has some big problems. Other ASEAN countries may also get left behind.
The US, in my opinion, totally missed the boat on this. There are already concerns about US wheat exports, because both Australia and Canada will now more easily export to Japan (which imports 5m tons of wheat a year equating to $1.5bn in 2017). Japan was the #2 destination for US wheat in 2018. There are going to be lots of other products like this. Trump has said that he would like to sign an agreement if he can get better terms, but that seems unlikely at this time.
We could see investments in Vietnam in order to improve company’s exports to these countries, especially if they are from a country subject to high tariffs. China, which already invests a lot in Vietnam, will likely take advantage of this where possible.
Vietnam probably needs to education its businesses on how better market their exports in these countries, especially as they try to increase the value add, or it will be stuck exporting raw materials or adding just enough value for foreign companies to meet the local content rules.
Crab news!!!
Another piece of news that I found very exciting was this: Crabs caught in UK picked in Vietnam due to staff shortage
Basically, with Brexit, there aren’t enough local workers to pick through cooked crab. So the crab company will cook the crab then freeze it and send it to Vietnam where they will pick it and send it back. So you could be eating “local” crab that has made a 20,000 journey! Take that locavores.