Vietnam to drop up to 98% of tariffs after joining TPP
Vietnam to drop up to 98% of tariffs after joining TPP
Vietnam will commit to a common tariff for all the countries participating in the Trans-Pacific Partnership trade agreement, with 65 to 98 percent of tax lines will be dropped after the TPP takes effect and for 10 years after that, according to the Ministry of Finance.
The remaining items will take longer than the 10-year roadmap for tax exemption, or will have a tariff rate quotas (TRQ) mechanism applied, which gives a lower tax rate for imports entering within the quota and a higher tax for those above the quota, the ministry said.
The information was provided by the ministry in a press conference on Monday to analyze the point in the line of import duties that will be reduced or eliminated, as well as the simplification of administrative procedures in the field of finance following Vietnam’s commitments to join the TPP.
The TPP deal, which aims to liberalize commerce in 40 percent of the world's economy, was finalized following many sessions of negotiations in Atlanta on October 5, and is now pending approval by lawmakers in all the 12 TPP countries, which include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the U.S. and Vietnam.
Imports into Vietnam that will not be subject to duties when the free trade deal comes into force include agricultural products like live animals, animal feed, some dairy products, cereals, rice, leather and leather products, rubber and rubber products.
The list also covers other industrial products like plastics, pharmaceuticals, pesticides, chemicals, minerals, some types of paper, textile material, leather shoes, cotton, all kinds of textile products, fertilizers, perfumes, and cosmetics.
The groups having a tax exemption roadmap from the 4th year onward include bakery products, tea and coffee, corn, watches, household goods, sewing machines, generators, jewelry, construction materials, milk, machinery and equipment, plastics and plastic products, electronic products, among others.
Another group, which will see tax elimination from the 6th year forward, consists of vegetable oils, vegetable preparations, and some rubber products.
From the 8th year on, bicycle parts and motorbikes, some automobile components, confectionery, seafood preparations, animal fat and vegetable oils, vegetables, steel, bicycles, and some specialized vehicles will enjoy the tax drop.
The group with the longest roadmap to tariff elimination, from the 10th and 11th year onward, includes meat of all kinds, alcohol, sugar, eggs, salt, oil, automobiles, steel, some car parts, steel billet, and tires.
Regarding financial services, the commitments in the field of insurance and securities will promote investment opportunities and contribute to promoting the development of the financial services market in Vietnam.
Currently the TPP members are completing necessary technical and procedural reviews to prepare for the formal signing, which is expected in early 2016, the finance ministry said.
The ministry added that the TPP countries are committed to widely opening the doors for Vietnamese exports, removing 78-95 percent of import tariff lines once the agreement comes into force.
The remaining items will have a roadmap to repeal tax from five to 10 years, except for some sensitive products which will only be exempted from taxes after 10 years, or will be subject to the TRQ mechanism, the finance ministry noted.
Many major export goods of Vietnam to the TPP markets, such as agro-product, fisheries, garments-textiles, footwear, furniture, electrical and electronic goods, and rubber, will enjoy a zero percent tax rate as soon as the agreement takes effect, or after 3-5 years.
