A recent World Bank report provides an in-depth analysis of how RCEP may affect the economic environment of its member countries, including Vietnam.
Here, the Vietnam briefing outlines why and how Vietnam, among other middle-income countries, could benefit the most from the RCEP.
The Regional Comprehensive Economic Partnership (RCEP) Agreement came into force on January 1, 2022. The countries covered by the RCEP account for about one-third of the world’s GDP and world population and one-fourth of the world’s exports and imports. If implemented successfully, it could have a significant impact on the world economy, not just Vietnam.
Estimates of the Economic and Distribution Impact of the Regional Comprehensive Economic Partnership The World Bank (WB) White Paper has created a baseline and four alternative scenarios for estimating the economic and distribution impact of RCEP in Vietnam.
The baseline reflects the business-general conditions prior to the implementation of the RCEP, where the tariffs of previous agreements, including the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP), have been implemented in parallel with the US. China trade war.
Then, to determine the impact of RCEP on the Vietnamese economy, the four alternative policy situations described in detail below are compared with this baseline.
Four alternative policy situations consider the effects of different policies to measure the impact of RCEP. These policies can range from tariffs, and non-tariff measurements (NTMs) to trade cost policies.
According to UNCTAD, NTM is a policy measure, separate from the general tariffs, which can have a potential economic impact on the international trade of goods. Technical requirements, export subsidies, minimum import prices, and environmental and health compliance requirements are just a few examples of NTM.
At Baseline, between 2020 and 2035, average tariffs imposed by Vietnam fell from 0.8 percent to 0.2 percent, while face-to-face Vietnam tariffs fell from 0.6 percent to 0.1 percent.
In the most optimistic scenario (Scenario 4), where all benefits are applied, Vietnam has the highest gain among all RCEP member countries. Vietnam’s income level increased by 4.9 percent compared to Baseline, higher than other countries, where income levels increased by 2.5 percent.
Despite the increase in exports and imports for all RCEP member countries, Vietnam is expected to experience the highest increase in exports at 11.4 percent. Similarly, Vietnam’s imports also increased significantly at 9.2 percent compared to 7.2 percent in the Philippines.
This article was first produced by VietnamBriefing which is produced by Dejan Veins & Associates. The company supports foreign investors across Asia from the office Around the worldIncluding China, Hong Kong, Vietnam, Singapore, IndiaAnd Russia. Readers can write [email protected]