To:

- Ministries and central authorities;
- The People’s Committees of provinces and cities.

Under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Ratchet Principle, also known as the principle of “no backwardness”, is an important principle applied to market opening in the service-investment sector. This principle is prescribed in clause1c Article 9.12 Chapter 9 (Investment) and clause 1c Article 10.7 Chapter 10 (cross-border trade in services). This principle applies to all measures specified in Appendix I on the List of measures incompatible with the primary obligation of the chapter on Investment and Chapter on Cross-border trade in services (also known as List of non-confirming measures-NCMs).

The Ratchet principle means that countries have the right to unilateral amendments[1] to the contents that have been reserved in the NCM List in a more favorable way but they are not entitled to withdraw the amended contents after being amended. Countries participating in the CPTPP Agreement have agreed to give flexibility to Vietnam to be able to implement this principle after 3 years since the Agreement officially came into effect in Vietnam.

Thus, after the CPTPP agreement officially had come into force with Vietnam on January 14, 2019, the Ratchet principle will be officially applied to Vietnam in the service and investment sector from January 14, 2022. Thus, Ministries, central and local authorities are required to pay attention in promulgating, amending or implementing legislative documents and policies or issuing licenses for investment and service provision activities, especially for contents related to countries participating in the CPTPP Agreement to ensure conformity with the orientation of management and development of the service and Investment sector in Vietnam and avoid disputes with service providers or foreign investors.

Due to the importance of this issue, the Ministry of Industry and Trade would like to inform you of the above contents to understand and pay attention to the formulation and amendment of legislative documents or issuance of licenses in the service and investment sector for investors and service providers from member countries of the CPTPP Agreement.

For more details, please contact WTO and Trade Negotiation Department, Multilateral Trade Policy Department, Ministry of Industry and Trade at: 024.2220.5420 / 024.2220.5415, email address: wto_mtpd@moit.gov.vn.

Thank you for your cooperation./.

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PP. MINISTER
DEPUTY MINISTER




Tran Quoc Khanh

[1] Amendments herein include de jure or de facto amendments. For example, if a legislative document is amended in a more favorable way than that in the commitment, it is the more favorable de jure amendment; however, if a license is granted or a measure is taken in a more favorable way than that in the commitment, it is the more de facto amendment. The Ratchet principle is only applied to countries participating in the CPTPP Agreement.

Công văn 2538/BCT-ĐB năm 2022 về lưu ý nguyên tắc Ratchet trong cam kết dịch vụ và đầu tư của Hiệp định Đối tác Toàn diện và Tiến bộ xuyên Thái Bình Dương đã có hiệu lực đối với Việt Nam do Bộ Công thương ban hành