CPTPP overview with impact on

companies and business in Vietnam

AmCham Manufacturing Committee | 10 July 2019
1

Importing into
Vietnam
Using CPTPP Tariffs
Requirements

 CPTPP Originating Goods

 Movement of goods between member countries

 HS code

How Vietnam’s tariff elimination will proceed

 For Vietnam many tariffs will be eliminated over a 21 year schedule

 Tariff preferences also available for exports

 Goods with tariffs phased out over time for Vietnam include: Meats and
seafood, dairy, eggs, vegetables, nuts, fruits, tea, coffee, spices, grains, oils,
prepared foods, beverages, alcohol and tobacco, petroleum, toiletries,
construction materials, rubber, textiles, stationary, housewares, furniture,
precious metals, bicycles, appliances, machinery, vehicles and motorcycles.
CPTPP Tariff vs. other FTAs

SINGAPORE
No. HS code Description MFN WTO ATIGA ACFTA AKFTA VKFTA AJCEP VJEPA VN-EAEU FTA AIFTA AANZFTA CPTPP
Petroleum oils and oils obtained from
bituminous minerals (other than crude)
and preparations not elsewhere specified
or included, containing by weight 70 % or
more of petroleum oils or of oils obtained
2710.12.11 20 20 20 * 10 * * 20 * * 10
from bituminous minerals, these oils
being the basic constituents of the
preparations, other than those containing
biodiesel and other than waste oils of
1 RON 97 and above
Compound plasticisers for rubber or
3812.20.00 3 0 0 0 0 0 0.5 0 0 0 0
2 plastics
Gearing, gearbox, clutch and other
8714.10.40 32 0 13 * 32 45 10 * * 15 24,7
3 transmission equipment and parts thereof

JAPAN
No. HS code Description MFN WTO ATIGA ACFTA AKFTA VKFTA AJCEP VJEPA VN-EAEU FTA AIFTA AANZFTA CPTPP

8714.10.40 Gearing, gearbox, clutch and other 32 0 13 * 32 45 10 * * 15 24,7

1 transmission equipment and parts thereof

Flat-rolled products of iron or non-alloy

steel, of a width of 600 nm or more, clad,
7210.41.11 plated or coated with zinc (not 25 0 15 * 15 * 12 8.2 * 10 8.1
electrolytically), of thickness not
2 exceeding 1.2 mm
Knitted swimwear fabrics of polyester and
6005.38.10 polybutylene terephthalate in which 12 0 15 0 0 0 1 2 7.5 0 0
3 polyester predominates by weight
CPTPP Tariff vs. other FTAs

MEXICO
No. HS code Description MFN WTO ATIGA ACFTA AKFTA VKFTA AJCEP VJEPA VN-EAEU FTA AIFTA AANZFTA CPTPP

Electronic calculators capable of

operation without an external source of
8470.10.00 electric power and pocket-size data 0 0 0 0 0 0 0 0 0 0 0
recording, reproducing and displaying
1 machines with calculating functions

8714.10.40 Gearing, gearbox, clutch and other 32 0 13 * 32 45 10 * * 15 24,7

2 transmission equipment and parts thereof

Flat-rolled products of iron or non-alloy

steel, of a width of 600 nm or more, clad,
7210.41.11 plated or coated with zinc (not 25 0 15 * 15 * 12 8.2 * 10 8.1
electrolytically), of thickness not
3 exceeding 1.2 mm

CANADA
No. HS code Description MFN WTO ATIGA ACFTA AKFTA VKFTA AJCEP VJEPA VN-EAEU FTA AIFTA AANZFTA CPTPP
1 0301.99.19 Live fish 20 0 0 0 0 9 11 3.3 10 0 0
2309.10.10 Preparations of a kind used in animal 7 0 0 0 0 0 1 0 0 0 0
2 feeding

8714.10.40 Gearing, gearbox, clutch and other 32 0 13 * 32 45 10 * * 15 24,7

3 transmission equipment and parts thereof
CPTPP Tariff vs. other FTAs

NEW ZEALAND
No. HS code Description MFN WTO ATIGA ACFTA AKFTA VKFTA AJCEP VJEPA VN-EAEU FTA AIFTA AANZFTA CPTPP

Buttermilk, curdled milk and cream,

yogurt, kephir and other fermented or
0403.10.99 20 0 0 0 0 9 11 0 0 0 2.3
acidified milk and cream, whether or not
concentrated or containing added sugar
or other sweetening matter or flavoured
1 or containing added fruit, nuts or cocoa.

0703.20.90 Onions, shallots, garlic, leeks and other 20 0 0 0 0 6 7.5 3.3 0 0 10

2 alliaceous vegetables, fresh or chilled.

Flat-rolled products of iron or non-alloy

steel, of a width of 600 nm or more, clad,
7210.41.11 plated or coated with zinc (not 25 0 15 * 15 * 12 8.2 * 10 8.1
electrolytically), of thickness not
3 exceeding 1.2 mm

AUSTRALIA
No. HS code Description MFN WTO ATIGA ACFTA AKFTA VKFTA AJCEP VJEPA VN-EAEU FTA AIFTA AANZFTA CPTPP
2704.00.10 Coke and semi-coke of coal 3 0 0 0 0 0 0 0.5 0 0 13
1
2704.00.20 Coke and semi-coke of lignite or of peat 3 0 0 0 0 0 0.5 0.5 0 0 13
2 2523.30.00 Aluminous cement 32 0 50 20 20 * * 17.5 * 3 0

Flat-rolled products of iron or non-alloy

steel, of a width of 600 nm or more, clad,
3 7210.41.11 plated or coated with zinc (not 25 0 15 * 15 * 12 8.2 * 10 8.1
electrolytically), of thickness not
exceeding 1.2 mm
Tariff elimination in the short term (1 – 5 years)

© 2019 Baker & McKenzie. All rights reserved

Tariff elimination in the medium term (1 – 10 years)

© 2019 Baker & McKenzie. All rights reserved

Tariff elimination in the long term (1 – 21 years)

© 2019 Baker & McKenzie. All rights reserved

2

Exporting to the
CPTPP and impact of
the agreement in
other countries
Tariff elimination schedules
Time frame for 2019 tariff Goods with a multi-year tariff phase out schedule
Country tariff
elimination rate year (note: most tariffs are immediately eliminated)

Maximum 4
Polymers, tires, floor coverings, pipes, steel, woven fabrics,
Australia Years Year 2
textiles, footwear, and used cars.
(2021)

Maximum
Livestock, agricultural goods, prepared meals, sugars, baked
Canada 12 Years Year 2
goods, dairy, tobacco, textiles, footwear, and vehicles.
(2029)

Livestock, meats and seafood, nuts, grains, seeds, fruits,

Maximum
coffee, oils, prepared foods and beverages, alcohol and
Japan 21 Years Year 2
tobacco, motor oil, leathers, wood products, silk and lace,
(2038)
footwear and metals.

Maximum Year 2 (Year Agricultural products, coffee, animal fats, sweeteners, dairy
Mexico 16 Years 1 with products, wines, textiles, some household goods, tools and
(2033) Vietnam) motorcycles.

Maximum
New Zealand 7 Years Year 2 Textiles and clothing, polymers, wood products and wire.
(2024)

Maximum
Tariffs None
Singapore 1 Year  
eliminated
(2018)
Other countries
Australia
 Benefits
 Elimination of all tariffs on industrial products1
 Expected annual benefits of [AUD] $15.6 billion by 20301
 Elimination of tariffs on [AUD] $12.7 billion dutiable exports1
 Private foreign investment expected to increase1

Top Imports
Other countries
Canada1 2 3
 Benefits
 Elimination of tariffs for fish and seafood2
 Elimination of tariffs for Forest and value-added wood products within 15
years2
 Industrial goods tariffs eliminated within 10 years2
 Suspension of TPP articles concerning intellectual property1
 GDP gains estimated at U.S. $4.2 billion1
 Effects
 Canadian pork exports to Japan catching up to the U.S.3
 Beef exports to Japan tripled to 3,545 tonnes in January3
 Increases might slow if U.S. and Japan make an agreement3

Top Imports
Other countries
Japan1 4
 Benefits
 Obtains a leading role in the Asia-Pacific economy and diplomacy1 4
 Has more leverage to negotiate a bilateral U.S.-Japan FTA1 4
 Expected overall growth of U.S. $71 billion1

Top Imports
Other countries
Mexico1 5
 Benefits
 New market access opportunities for over 700 agricultural and
industrial products1
 Should see positive trade from Japan and Southeast Asia5
 Expected double-digit trade growth for beverage industry as beer
grows in demand5
 Effects
 Cross-border delays at U.S.-Mexico border could offset trade gains5

Top Imports
Other countries
New Zealand6 7

 Benefits
 Annual tariff savings of $222 million 6
 Exporters no longer disadvantaged by other FTAs 6
 Tariffs on kiwifruit and wine eliminated 6
 Tariffs on apples to be eliminated within 11 years 6
 Tariff reduction/elimination for dairy, forestry and fish products 6
 Effects
 Beef exporters recover lost market share in Japan 7

Top Imports
Other countries
References
1Christofer Corr, THE CPTPP ENTERS INTO FORCE: WHAT DOES IT MEAN FOR GLOBAL TRADE?, Publications & Events, WHITE &
CASE (2019) https://www.whitecase.com/publications/alert/cptpp-enters-force-what-does-it-mean-global-trade (last visited June 6, 2019).
2Government of Canada, OVERVIEW AND BENEFITS OF THE CPTPP, GOVERNMENT OF CANADA (2019) https://international.gc.ca/trade-
commerce/trade-agreements-accords-commerciaux/agr-acc/cptpp-ptpgp/overview-apercu.aspx?lang=eng (last visited June 6, 2019).
3Naomi Powell, CANADIAN PORK EXPORTS TO JAPAN CATCHING UP TO THE UNITED STATES UNDER CPTPP, CALGARY HERALD
(2019) https://calgaryherald.com/news/economy/canadian-pork-exports-to-japan-catching-up-to-the-united-states-under-cptpp/wcm/ebeb158b-
345d-4ac0-8be7-af3e687519f4 (last visited June 6, 2019).
4 Eunseo Kim, The CPTPP and Its Implications for Japan, The Diplomat (2018) https://thediplomat.com/2018/05/the-cptpp-and-its-implications-
for-japan/ (last visited June 6, 2019).
5 Hailey Desormeaux, BORDER DELAYS, CAPACITY CRUNCH IMPACT MEXICO TRADE, AMERICAN SHIPPER (2019)
https://www.americanshipper.com/news/border-delays-capacity-crunch-impact-mexico-trade?autonumber=848578&source=main-
feed&taxonomy=secondary_shipping (last visited June 6, 2019).
6 New Zealand Foreign Affairs & Trade, COMPREHENSIVE AND PROGRESSIVE AGREEMENT FOR TRANS-PACIFIC PARTNERSHIP , New
Zealand Foreign Affairs & Trade, GOVERNMENT OF NEW ZEALAND (2019) https://www.mfat.govt.nz/en/trade/free-trade-agreements/free-
trade-agreements-in-force/cptpp/cptpp-overview/ (last visited June 6, 2019).
7Pattrick Smellie, NZ BEEF EXPORTERS RECOVER LOST MARKET SHARE IN JAPAN AS CPTPP KICKS IN , NEW ZEALAND HERALD
(2019) https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12235133&_sm_au_=iVV7JR3PHjM2RkRF (last visited June 6,
2019).
8Maryla Maliszewska, Zoryana Olekseyuk & Israel Osorio-Rodarte, ECONOMIC AND DISTRIBUTIONAL IMPACTS OF COMPREHENSIVE
AND PROGRESSIVE AGREEMENT FOR TRANS-PACIFIC PARTNERSHIP: THE CASE OF VIETNAM, WORLD BANK GROUP (2018)
http://documents.worldbank.org/curated/en/530071520516750941/pdf/124022-WP-8-3-2018-9-59-18-CPTPPreportMarch.pdf (last visited June
6, 2019).
9SEAFOOD EXPORTS TO CPTPP MEMBER COUNTRIES UP 15 PER CENT, FISH INFORMATION & SERVICES (2019)
https://www.fis.com/fis/worldnews/worldnews.asp?monthyear=&day=27&id=103001&l=e&special=&ndb=1%20target (last visited June 6, 2019).
INITIAL CPTPP GAINS WITH MORE TO COME, VIETNAM NET GLOBAL (2019) https://vietnamnet.vn/en/business/initial-cptpp-gains-with-
10

more-to-come-529895.html?_sm_au_=iVV7JR3PHjM2RkRF (last visited June 6, 2019).

3

Rules of Origin
CPTPP I Rules of Origin

Promote the
Key factor to inter-connection
determine if Complicated between
goods are structure to contracting
entitled to address higher states in
preferential accuracy formulating a
treatment complete supply
chains

19
 CPTPP I Rules of Origin
 Stricter Origin Requirement

3 Different Change Tariff Classification (CTC)

Origin
Determination Regional Value Content (RVC)
Methods Production Process Requirements

Product
Applied to all commodities at 6-digit HS codes
Specific Rules

Constraints the utilisation of a limited number of material

sources as a sourcing structure may no longer work for all
products

20
 CPTPP I Rules of Origin
 Incentives for higher value-added production

Different 4 RVC Formulas:

Caculation Focused Value, Build-Down, Build-Up, and Net
Formulas
Cost (for automotive goods only).

21
 CPTPP I Rules of Origin
 Incentives for higher value-added production

Build-Down
Build-Up

RVC = x100
RVC = x100

ATIGA

22
 CPTPP I Rules of Origin
 Incentives for higher value-added production

Build-Down
Build-Up

RVC = x100
RVC = x100

RVC Threshold
RVC Threshold for
for Build-down
Build-downisisset
setatata apercentage
percentagepoint that
point is
that
is 10%
10%higher
higherthan
thanthat
thatofofBuild-up
Build-up

TPPapplies
TPP appliesaanominal
nominal 10% amount
amount for
foradded
addedvalue.
value.
As
Assuch,
such,the Build-down
the Build-downmethod
methodis more favourable
is more for goods
favourable of which
for goods of
actual
which added
actual value
added is higher
value thanthan
is higher 10%.10%.

23
 CPTPP I Rules of Origin
 Incentives for higher value-added production

Focused Value Build-Down

RVC = x100 RVC= x100

RVC
RVC Threshold
Threshold for
for Focused
Focused Value
Value is
is set
set at
at a
a percentage
percentage point
point that
that is
is 10%
10% higher
higher than
than that
that of
of
 Build-down.
Build-down.
Focused
Focused Non-Originating
Non-Originating Materials
Materials normally
normally share
share the
the same
same 4-digit
4-digit HS
HS code
code with
with the
the Good.
Good.

Minimizing overhead costs by lowering the number of non-originating materials to be tracked.

Promote the use of more input materials classified in headings or chapters which are different from that of the
finished products

This
Thismethod
methodencourages
encouragesvalue-intensive production
value-intensive activities
production rather
activities than
rather
assembly
than assembly works.
works.
24
 CPTPP I Rules of Origin
 Enforce an intra-regional supply chain

Each Party shall provide that production undertaken on a non-originating material in the
territory of one or more of the Parties by one or more producers may contribute toward
the originating content of a good for the purpose of determining its origin, regardless of
whether that production was sufficient to confer originating status to the material
itself.

Allows any added value of the production undertaken on a non-

originating material in TPP members to be added to value of the
finished goods as originating content.

A competitive regulations as compared with other FTAs (e.g.

ATIGA)

25
 CPTPP I Rules of Origin
 Accommodate favourable RVC calculation

Originating materials Non-originating materials

Allows the inclusion of 'non- Allows the deduction of ‘non-

manufacturing' costs to the value manufacturing’ costs from the
of such materials, value of the materials, if
(i.e. freight, insurance, packing; duties, documentary evidence is
taxes and customs brokerage fees; cost available.
of waste and spoilage, etc)

A more advantageous calculation as compared with other FTAs

(e.g. other FTAs use CIF price for both originating and non-originating
materials)

Encourage the documentation and terms of delivery (FOB vs CIF)

26
 CPTPP I Rules of Origin
 Overall Impacts

A more complicated structure as compared to other ROOs requires

more diversified source of supply.
Various advantages (i.e. accumulation principles, flexible RVC
calculation) encourage the formation of a complete supply chain
among TPP members.

27
Questions
 Tran Ngoc Trung

+84 24 3936 9619

[email protected]

Rachelle Komarnisky

+84 28 3520 2676

[email protected]

© 2019 Baker & McKenzie. All rights reserved

www.bakermckenzie.com