To estimate the economic and distributional impacts of RCEP in Vietnam, the WB constructed a baseline and four alternative scenarios.

The baseline reflects the business-as-usual conditions, where the tariff schedules of previous agreements, including the most recent CPTPP, have been implemented, in parallel with the US-China trade war.

In the baseline, between 2020 and 2035, the average trade weighted tariff imposed by Vietnam declines from 0.8% to 0.2%, while the tariffs faced by Vietnam are reduced from 0.6% to 0.1%.

“In the productivity kick scenario, where a productivity shock is included, Vietnam has the highest gains of all RCEP member countries," the WB reported.

Real income increases by 4.9% relative to the baseline, higher than the gains for the bloc as a whole, where real income increases by 2.5%.

“Trade also increases the most in this scenario, with exports expanding by 11.4%,” according to the WB. In the baseline, real income in Vietnam is expected to grow more than 112% between 2020 and 2035.

In the scenario where only the tariff reduction is implemented, the impact on Vietnam’s economy is negligible.