Both Vietnam and Japan are accelerating negotiations for the Vietnam-Japan Economic Partnership Agreement (VJEPA), which was initiated in January 2007 and experienced three negotiation sessions. The agreement is expected to be signed sometime between now and 2008. Trade Minister Truong Dinh Tuyen told correspondents there will be a turning point for Vietnamese exporters to Japan after VJEPA is effective.
The minister said Vietnam enjoys a US$300 million a year trade surplus in trade with Japan. After the agreement is signed, the average export tariff in the Japanese market will be reduced to 2.8 per cent. Especially, according to the market opening commitments to Vietnam, Japan will cut 95 per cent of tax lines, and thousands of tax lines will be scrapped immediately.
So far, three negotiation sessions have been concluded, but there is still space between the two sides. Can the two sides conclude negotiations and sign the agreement before the end of 2008 as expected?
In late June, I had an exchange with Japanese Minister of Economy, Trade and Industry, Akira Amari. At present, Vietnam is taking final steps in negotiations with Japan to sign the bilateral trade agreement. The two are trying to wrap up negotiations before 2008.
Each year, Vietnam enjoys trade surplus of US$300 million in exporting commodities to Japan. After the agreement is reached, discrimination of Vietnamese commodities will be ended in Japan. This is a huge advantage because Japan is now a key importer of Vietnamese goods.
How do you think VJEPA will influence Vietnamese enterprises which export commodities to Japan?
Certainly, there will be a lot of influences on enterprises of the two countries. Vietnamese enterprises, especially those exporting to Japan, will enjoy significant benefits. Japan is expected to reduce its current average MFN tax rate of 5.05 per cent to 2.8 per cent in 2018. Therefore, enterprises will enjoy significant tax cuts on goods exported to Japan. On the Vietnamese side, the current average MFN tax rate of over 14 per cent will decrease to 7 per cent in 2018. Clearly, Vietnam’s tax cut is much quicker than the Japanese one, although the final rate of Japan is lower than the Vietnamese one.
Could you please talk about the correlation in tariff cuts in market opening commitments between Vietnam and Japan?
Regarding conditions for opening the market for Vietnam, Japan pledged to reduce 92 per cent of tax lines, and thousands of tax lines will be scrapped immediately. However, we will not be able to approach the Japanese market and boost exports to Japan if our trade promotion activities are weak, even though the conditions of Japan’s market opening are very favourable.
Meanwhile, Vietnam will open the market for Japanese companies, which are always very active. Japan’s import tariff is already low; thus, taxes are only reduced from over 5 per cent to 0 per cent, but Vietnam will reduce its import duties from 14 per cent to 0 per cent. This is a significant cut. However, the most important point is that Japanese enterprises are actively approaching the market. In the meantime, Vietnamese companies are forecast to be at a disadvantage with Japanese ones, because Vietnamese companies’ trade promotion activities are not very effective.
Before these challenges for Vietnamese companies, how would you advise Vietnamese firms?
Vietnam is now joining the global market. Under bilateral or multilateral market opening agreements, other countries will open their markets for Vietnam and Vietnam, in turn, will open the market for its partners. The problem is that the penetration of Vietnamese goods into foreign markets depends on various factors, even after foreign markets have opened up. The first factor is whether products are good quality and reasonably priced. The second is how to bring products to consumers. If we do not have effective trade promotion activities to bring products to consumers, we will not have the expected results. In this case, their products can enter our market but our products would not access their markets. The improvement of quality in parallel with the expansion of trade promotion activities is the key to open all markets, even the most demanding ones.
Quoc Anh
Vietnamese
