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Most signed free trade agreements (FTA) have reflected that Vietnam always run deficit trend, however, in July 2019, this trend is changing into surplus thanks to CPTPP implementation.
This is considered as a highlight of export, import and trading relationships between 10 countries enterting into CPTPP, which has come into effect from the begin of the year.
The latest data of General Department of Customs compares export and import turnover, and trade deficit of Vietnam with other 10 countries of CPTPP in the first 7 months in 2018 and that in the first 7 months in 2019 as follows:
(Unit: USD millions)
|The first 7 months in 2018||The first 7 months in 2019||The first 7 months in 2018||The first 7 months in 2019||The first 7 months in 2018||The first 7 months in 2019|
|8. New Zealand||275||309||330||326||-55||-17|
Increase of export, decrease of import
Export turnover of Vietnam in 10 other countries of CPTPP is quite good, accounting for 15.4% of total export turnover of Vietnam. Among 27 markets with over USD 1 billion export turnover, there are 6 markets coming from CPTPP
The growth rate of Vietnam’s export turnover to these markets is lower than the general growth rate (7.5% compared to 7.8%), but the increase is different from that of China (in 1991), or that in Thailand (in 1995), or that in Korea (in 2018) – at this time, exports fell or rose low, while imports increased, making trade deficit rise.
Total export increasing rate of these markets reached USD 156.5 million, among which, markets in Japan, Canada and Mexico are witnessed a quite good increase to USD 1,010 million, USD 546 million and USD 290 million, respectively.
The export of agricultural, forestry and fishery products to China in 7 months this year was difficult because China changed the import quota policy, while that in markets of 10 other countries of CPTPP reached a good level, of which Japan was ranked first, followed by Malaysia, Canada, Australia, Singapore, Mexico, New Zealand, Chile, Peru, Brunei, contributing to reduce the decline of export these producst from the Chinese market.
Import turnover of Vietnam in these markets is decreased by 2.3%, equivalent to USD 503 million, compared to the same period of the previous year. In particular, markets of Mexico, Singapore and Malaysia are witnessed a decrease of import turn over to Vietnam to USD 659 million, USD 490 million and USD 219 million, respectively, etc.
Shifting from deficit to surplus
Because Vietnam’s exports to 10 countries in CPTTP increased, while imports from here decreased, so if in the same period last year Vietnam was in a trade deficit position, then in 7 months of this year, trade surplus was quite good.
In these 10 markets, Vietnam is in a trade surplus with 5 markets and the trade surplus of each of these 5 markets are above USD 100 million, on which Canada is having the largest surplus, followed by Mexico, Japan, Chile and Peru. Notably, the trade surplus was higher than that in the same period last year, especially Japan has shifted its trade deficit to a big trade surplus.
The above developments are positive results of implementation of CPTPP. The results are more meaningful when they came out in the first months. Thus, one the one hand, Vietnamese enterprises have taken advantage opportunity of the market with reducing import tax rate to these countries. On the other hand, these are also markets that can contribute to capability of Vietnam in handling difficulties in exporting agricultural, forestry and fishery products to China.
Although Vietnam has achieved positive results, it is only the first step, therefore, we should not be subjective. Vietnam’s exports to some markets have been reduced (to USD 373 million with Australia, to USD 122 million with Malaysia); imports from some markets have been risen (i.e Australia, Canada, Peru, Brunei); trade deficit happened in some markets (such as Malaysia, Australia, Singapore, Brunei, New Zealand). Notably, Australia carried out trade surplus last year but now carries out trade deficit, while trade deficit with Brunei is increasing.
In addition, Vietnam’s export share is still low compared to the total imports of these markets. The growth rate of exports to these markets is lower than the general growth rate of the total export turnover of Vietnam, affecting the implementation of the general export growth plan, etc.