In our last international trade brief, we discussed the implementation of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) as between Canada and several other countries. In this international trade brief, we explain the implications of the CPTPP's implementation in Vietnam, Canada's largest trading partner in the Association of Southeast Asian Nations (ASEAN) region since 2015.
On January 14, 2019, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) was implemented in Vietnam, following the December 30, 2018 implementation by Canada, Australia, Mexico, New Zealand, Japan and Singapore, as discussed in our earlier international trade brief. This occurred in advance of the inaugural meeting of the CPTPP Commission held in Japan on January 19, 2019.
Vietnam has a population of 94.5 million people and has a nominal gross domestic product of US $247.43 billion. It has been Canada's largest trading partner in the Association of Southeast Asian Nations (ASEAN) region since 2015, with Canada exporting nearly $750 million per year in goods and nearly $100 million in services to Vietnam and importing approximately $4.7 billion in goods and $100 million in services from Vietnam. Historically, Canada's top five exports to Vietnam have been agricultural products, seafood, metals and minerals, fertilizers and industrial machinery, and Vietnam's top five imports into Canada have been electronic machinery and equipment, textiles, industrial products, footwear and seafood. Vietnam is a rapidly emerging economy, with GDP growth of over 6% in 2018.
The CPTPP evolved from the Trans-Pacific Partnership (TPP), which was a comprehensive regional trade agreement negotiated between 12 countries bordering the Pacific Ocean including the United States (U.S.). However, on the heels of being inaugurated into his Office in January 2017, U.S. President Donald Trump issued an executive order unilaterally terminating the U.S.'s involvement in the deal. As the TPP required ratification by at least six states that together accounted for more than 85% of the GDP of all signatories, the TPP could not proceed without the U.S. involvement.
The TPP was revived as the CPTPP by the remaining 11 countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The CPTPP incorporates, by reference, large portions of the TPP agreement, with the exception of some provisions relating to intellectual property and investor-state dispute settlement (specifically concerning "investment agreements" and "investment authorizations"), which were previously important demands for U.S. participation in the TPP.
With Vietnam's adoption, the remaining countries that have yet to to do so are Brunei, Chile, Malaysia and Peru. Once fully implemented, the CPTPP will create a vast Pacific-rim trading bloc made up of almost half a billion consumers and representing 13.5% of the global GDP.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.