Question:
What are the similarities and major differences in the commitments regarding trade in services and investment between the CPTPP and EVFTA agreements?
Answer:
– Similarities:
- Regarding the level of market access in certain specific sectors: Both the EVFTA and CPTPP have a higher level of market access compared to the WTO in some sectors such as telecommunications services, financial services, distribution services, and transport services. Among these services, there are varying degrees of commitment between the two agreements:
- Distribution services: Both agreements have a higher level of commitment compared to the WTO in terms of eliminating the economic needs test (ENT) requirement after 5 years from the entry into force of the agreement. However, concerning the ENT commitment, in the EVFTA, Vietnam reserves the right to apply non-discriminatory planning and zoning measures, while a similar reservation is not present in the CPTPP.
– Differences:
| Content | EVFTA Agreement | CPTPP Agreement |
| Commitment Form | – Both parties construct specific commitment schedules through a positive-list approach (meaning they list the sectors and sub-sectors with market access commitments). The specific commitment schedules in the EVFTA must adhere to the standstill principle (meaning that if domestic policies allow more market access than the committed level, future policy changes should not be less favorable than the commitments at the time the agreement enters into force). | – Countries establish commitment schedules using a select-drop approach (meaning they list the sectors and subsectors restricted in terms of market access). Additionally, countries commit to the “ratchet principle,” which means they can only adjust and change policies in a more favorable direction than what was previously applied. Vietnam has a transition period of 3 years before applying this principle. |
| Finance Services | – The EVFTA has a higher level of commitment when it commits to consider allowing EU credit institutions to increase their foreign ownership to 49% of charter capital in 02 joint-stock commercial banks (excluding BIDV, Vietinbank, Vietcombank, Agribank) in Vietnam within 5 years from the entry into force of the agreement. | – Commitments are less extensive compared to the EVFTA. |
| Transportation Services | – For cargo consolidation services and empty container repositioning services, immediately upon the agreement’s entry into force, we allow international sea transport service providers from the EU or EU members to perform these services on the Quy Nhon – Cai Mep route. After 5 years, we will allow the repositioning of empty containers on all routes.- Concerning dredging services, we allow EU businesses to establish joint ventures with up to 51% ownership to provide these services in Vietnam.- Regarding ground handling services at airports, we commit that after 5 years from the opening of the private sector, EU enterprises can establish joint ventures with Vietnamese partners, with foreign capital not exceeding 49%, to bid for providing these services. Three years later, the foreign ownership restriction will increase to 51%. | – Commitment content is less extensive compared to the EVFTA. |
| Scope of Goods | – We maintain the distribution of rice and sugarcane products. Regarding alcoholic beverages, we have specific commitments not to discriminate in production, importation, and distribution of alcohol, allowing EU businesses to operate under existing licenses and requiring only one license to carry out import, distribution, wholesale, and retail activities. | – We have excluded rice and sugarcane from distribution services reservations. |
