Guidebook on the labour and environment provisions of the CPTPP

The Project at A Glance

Viet Nam ratified the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on 12 November 2018 and the agreement came into force for Viet Nam on 14 January 2019. The CPTPP is a global mega trade deal and comprises the following countries: Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Viet Nam. The eleven countries recorded a combined Gross Domestic Product (GDP) of approximately USD 11.7 trillion in 2021 and accounted for approximately 15 per cent of global trade flows in the same year. Several other countries have applied to join the CPTPP including the United Kingdom, China, Taiwan, Ecuador and Costa Rica. The Republic of Korea and Thailand have also expressed interest in joining the Agreement.

International Economics Consulting Ltd. (IEC) assisted the Multilateral Trade Policy Department (MTPD) of the Ministry of Industry and Trade of Vietnam in developing a simple guide aimed at explaining the obligations arising from the labour and environment chapters of the CPTPP. The guide explains how the provisions from these chapters impact Vietnamese businesses and outlines the various measures that both the public and private sectors need to undertake to comply with obligations that arise under the Agreement. The guide will be published in English and Vietnamese.

What We Found

The CPTPP features among the new generation of free trade agreements (FTAs) and goes beyond improving market access conditions and preferences. Instead, the CPTPP equally focuses on promoting inclusive and environmentally friendly trade between the various countries party to the Agreement. It requires countries to reaffirm their commitments to trade and sustainable development.
Both the labour and environment chapters introduce higher standards than those currently applicable in Viet Nam. Provisions in the labour chapter can be categorised into four main areas namely:

the adoption and maintenance of laws and regulations aimed at protecting internationally recognised labour rights
the improvement of transparency
the facilitation and encouragement of public engagement and cooperation
The establishment of a dispute settlement mechanism

The provisions in the environment chapter largely mirror those in the labour chapter, especially when it comes to public participation and dispute resolution. The environmental provisions in the CPTPP can also be categorised into four main areas namely:

Environmental Protection in specific areas
Public participation
Voluntary mechanisms and cooperation
Dispute resolution

Our Strategy and Impact

The primary responsibility for implementing the provisions from the labour and environmental chapters of the CPTPP lies with the Government. It must devise a clear and effective strategy to ensure that all obligations are met and that all relevant institutions have the necessary resources and capabilities to operate effectively. The private sector can nonetheless play a key role in the implementation of the labour and environment chapters. The study provided multiple recommended actions for the private sector across the institutional, regulatory, cooperative, public participation and consultative frameworks. For instance, at the institutional level, we recommended the establishment of a Public-Private Partnership framework to promote the effective implementation and utilisation of the CPTPP.

Our Core Solutions

Understanding the sustainability provisions in FTAs is important for businesses as they seek to import or export from certain markets. At IEC, we provide our clients with a detailed analysis of the key impacts of new trade agreements on their operations and competitiveness through an assessment of tariff, and non-tariff tariff barriers, provisions on rules of origin, customs efficiency, the effectiveness of transport networks, and sustainability provisions, among others. We can help assess the opportunities in different markets, determine the feasibility and viability of projects, and benchmark the wider ecosystem to support business growth.