CPTPP AND VPA/FLEGT AGREEMENTS:

The Impacts on Viet Nam’s Wood Export

Contents
Introduction.....................................................................................3

Literature Review............................................................................5

Objectives.........................................................................................7

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Abstract

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 Introduction
Vietnam has around 14.4 million hectares of forested land constituting 41.2
per cent of its total land area. Vietnam’s location also facilitates good
integration and trade across Southeast Asia, Asia Pacific and the wider world.
Opportunities of wood export are further enhanced with new free trade
agreements such as The Comprehensive and Progressive Trans-Pacific
Partnership (CPTPP) in 2018.
Originating from the Trans-Pacific Partnership Agreement (TPP), after
The United States decided to withdraw from the agreement, the remaining 11
countries met and decided to change its name to the Comprehensive and
Progressive Agreement for Trans-Pacific Partnership (CPTPP) in November
2017. The agreement was officially signed in March 2018, keeping almost all
of TPP's commitments. The total GDP value of CPTPP countries is about
10,000 billion USD, accounting for 13% of global GDP. China, the UK and
South Korea are also considering joining CPTPP.
Wood and Wood Products (W&WP) trade between Vietnam and other
countries in CPTPP has a high growth rate. In 2018, the total export value of
Vietnam W&WP to regional markets reached over 1,626 billion USD,
increases by 14.6% in comparison with 2017, accounting for 18.3% of the
total export value of the country. Exports to Japan hit a record high, 1,119
billion USD, up 12.16% compared to 2017. It was followed by Australia with
a value of $ 174.05 million, up 14%. Canada ranked third with a value of
155.89 million USD.
Starting in 2011, after 6 years of negotiation, Vietnam and the European
Union (EU) have officially signed a Voluntary Partnership Agreement on
forest law enforcement, forest governance and trade in forest products.
(VPA / FLEGT) on October 19, 2018 in Belgium. This is a legally binding

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trade agreement aimed at improving forest governance and promoting trade in
legal timber and timber products exported from Vietnam to the EU market.
The EU is Vietnam's fourth largest export market. The value of exports to the
EU has always remained stable and increased slightly in recent years.
In 2018, the export of W&WP to the EU reached 759.07 billion USD, an
increase by 3.0% compared to 2017. The EU has always been an important
W&WP export market of the wood industry because most corporations
exporting to the EU are Vietnamese businesses.

This study aims at estimating the impact of the CPTPP and VPA/FLEGT on
Vietnam's wood industry in comparison with a scenario of non-
implementation of the agreement, and analyze the opportunities and challenge
to this industry after these two agreements are being implemented.
Qualitative methods are used to analyze the impact of the CPTPP and
VPA/FLEGT on Vietnam's export of wood. This research adopts tariff
elements as the main policy instrument in the country’s bilateral and
multilateral commitments to trade liberalization to consider their effects on
Vietnam's wood export. On the other hand, updated data on growth, GDP,
exports, tariffs and exchange rates are used and the latest progress in the
negotiating and signing of the CPTPP’s commitments is also taken into
consideration.

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 Literature Review
Theoretically, the review of domestic research has shown that a number of
researches mention FTAs impacts on the economy and especially the exports
of Vietnam.
According to Opportunities and challenges when implementing new
generation Free Trade Agreements - ThS. Tran Thi Bich Nhan, ThS. Do Thi
Minh Huong, The Comprehensive and Progressive Agreement for Trans-
Pacific Partnership (CPTPP) compared to traditional FTAs has new contents
such as investment, competition, public procurement, e-commerce, and
providing technical assistance to developing countries ... In "new generation"
FTAs, most import goods will have tariffs eliminated; in terms of trade in
services and investment, the commitments are higher than the WTO.
For the CPTPP, according to the World Bank's forecasts, by 2030, it will
increase GDP by 1.1%. According to a World Bank study, when CPTPP is
implemented, Vietnam's economic growth in 2030 is expected to increase by
3.5%, exports increase by 6.9%, imports by 7.6%. CPTPP will contribute to
boosting exports of goods to major markets such as Japan, Australia, Canada,
and Mexico; at the same time, attract foreign investment into industries and
fields that Vietnam is in need of development. The CPTPP is also open to
other countries to join, such as Korea, Taiwan, Indonesia, Thailand and the
Philippines. This helps Vietnam access a large market, supporting growth.
Tomoo Kikuchi, Kensuke Yanagida and Huong Vo (2018) used a static CGE
model to estimate the impact of different Mega-RTAs including EVFTA,
TPP, CPTPP, RCEP, and FTAAP. This paper pointed out that Vietnam is
found to be more adversely affected by the US withdrawal from TPP than
other economies in the region. CPTPP increases real GDP by 6.5% (USD
10.0 billion). Maria,Rodarte Paper say that the implementation of EVFTA
and CPTPP the GDP increase would reach to 3.2 percent. Exports with

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EVFTA and CPTPP would increase to 16%, lifting 0.2-1.2 million out of
poverty.
All of these papers focus on the impact of CPTPP on economy as a whole
such as the GDP growth when CPTPP takes effect and how the economy as
well as society could benefit from this free trade agreement: attract more
foreign investment, close gender wage gap,... 
As newly being implemented in 2018, the is no proper study about how
VPA/FLEGT affect wood export.
Moreover, there is no study that does research on the impact of CPTPP and
VPA/FLEGT on the export of timber and timber products in Vietnam. Thus,
this paper aim at estimate the benefit that these two agreements bring to wood
industry and challenges that we have to deal with.

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 Methodology
With this topic, the research part will be based on qualitative basis, associated
with logical perception, often considered to talk about the ways of collecting
and analyzing data based on understanding. This is an approach to explore,
describe and explain based on the means of investigating experience,
perception, motivation, behavior, intentions, attitudes. Qualitative research is
therefore often focused on social processes and does not rely on the social
constructs of quantitative research.
Approach:
Theoretical basis of the wood processing and export industry will be used as a
research foundation on the current situation of wood and wood products
export and import in the wood and wood product processing and exporting
enterprises. Vietnam is under the impact of 2 major agreements CPTPP and
VPA / FLEGT. From there, the topic gave an assessment of the development
of the Vietnamese wood industry in general as well as the impact of the two
agreements of CPTPP and VPA / FLEGT on the domestic wood industry in
particular, analyzing the score. strengths, weaknesses, general assessment of
current trends and shortcomings to be able to point out opportunities and
challenges facing the wood industry in Vietnam in the context of being
affected by the CPTPP and VPA / FLEGT.
Research methods, techniques used:
 On the basis of the methodology of dialectical materialism and
historical materialism, the topic uses the research methods of synthesis,
analysis, interpretation, inductive, comparison to achieve research
objectives. The topic selected research based on data sources,
secondary data from previous studies, reports of ministries, branches
and international organizations, ...
 The specific methods and techniques used are as follows:

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 Analyze, evaluate and concretize the requirements on import and
export of wood and wood products together with relevant regulations
specified in the CPTPP Agreement;
 Case study, trends and shortcomings for Vietnam's wood industry
based on the market share of wood and wood products and exports, as
well as the proportion of Vietnamese exports and imports;
 Assessment and overview of opportunities and challenges for
Vietnam's wood industry through statistics and reports by ViFores,
Forest Trends, FPA Binh Dinh, BIFA, FAWA