US trade war with China to strengthen Vietnam’s competitiveness

04:47' PM - Friday, 19/10/2018

Vietnam has free trade agreements with Canada, Japan and Mexico (through Comprehensive and Progressive Agreement for Trans-Pacific Partnership - CPTPP), and plans to sign an FTA (free trade agreement) with the EU. These will be advantages in the US - China trade war.

US President Donald Trump has threatened to impose tax on all import goods from China. In reply, China stated it would not conduct negotiations under pressure, and the second largest economy in the world has taken moves showing that it is ready for a long-term trade war with the US.

Determined to force China to compromise and carry out reforms, Trump is now planning a new strategy – becoming friends with everyone but China.

USMCA, the amended NAFTA (North American Free Trade Agreement) of three countries – the US, Mexico and Canada — sets a big barrier for Beijing with the provision that prevents Canada and Mexico from signing FTAs with non-market economies.

In the context of the trade war between the two largest economies in the world, alternative markets, including Vietnam, are a good choice
Textiles & garments and footwear production activities have begun leaving China and are heading for other developing countries where labor and energy costs are lower.

Chinese enterprises have joined the relocation campaign

Analysts believe that with Trump’s latest strategy, Vietnam’s advantages will be bolder.

While China still doesn’t have FTAs with the US, the EU, Canada, Japan and South Korea, Vietnam has agreements with nearly all of these countries. Vietnam is one of the countries that made big efforts to revive the TPP, and has the right to approach Canada, Japan and Australia, the members of CPTPP.

Vietnam also has FTAs with South Korea, which was signed in 2015. The economic relationship between Vietnam and South Korea is getting closer with more South Korean investment into Vietnam.

Vietnam also puts a high hope on the FTA with the EU which will remove the tariff barrier and bring opportunities to Vietnamese enterprises to penetrate the EU market.

In recent years, Vietnam has been one of the most active countries that make contributions to the expansion of global trade. In 2017, Vietnam’s trade on GDP reached 200 percent, the highest level among the countries with more than 50 million people recorded in the World Bank’s data.

The director of a textile & garment company said he had received more and more orders, believing that CPTPP and EVFTA (EU-Vietnam FTA) will help Vietnam have bigger competitive opportunities than other countries, including China. - VNN -

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