Vietnam-Japan Economic Partnership Agreement: Cooperation for Mutual Benefit

 

When the VJEPA is signed, it will facilitate commodity exchange, especially Vietnamese export to Japan. The export tax rates of Vietnamese commodities to Japan will decrease from 5.05 per cent to 2.8 per cent in 2018. Japan will cut 92 per cent of tax rates, eliminating over a thousand tax rates. For Vietnam, the average of MFN tax rate of 14 per cent will drop to 7 per cent by 2018. The enforcement of the agreement will have a strong impact on businesses of the two countries, especially Vietnamese businesses, as Japan is a key export market for Vietnam. Vietnamese commodities will be free from discrimination in Japan. Currently, Vietnam’s trade surplus with Japan is some US$350 million (excluding crude oil and coal). In 2007, trade turnover is expected at US$12 billion. When the agreement is signed, turnover should increase to US$18 billion and the trade surplus will be around US$1 billion.

 

However, according to Mr Nguyen Trung Dung, Deputy Head of Competition Management Department and former Commercial Counsellor to Japan, to reach agreement on all commitments, it is necessary to take care of genuine interests. Therefore, besides bilateral free trade commitments, VJEPA should solve problems relating to agriculture, human movement and sector cooperation, with the third factor complementing the first two. More specifically, Vietnamese agricultural products have export advantages in Japan, especially fresh vegetables and fruit. The biggest difficulty, however, is the stringent Japanese food safety and quality controls. The two sides have not reached agreement on quality control. This difference must be solved to increase Vietnamese exports to Japan. For instance, the two sides may agree on criteria with the assistance of equipment.

 

For instance, the first shipment this year, 700 tonnes of Vietnamese rice exported to Japan, was found in violation of Japanese food safety law, with Acetamiprid content above the limit of 0.01 ppm. This led to the Japanese decision to control 30 per cent of Vietnamese rice. With the efforts of Japanese and Vietnamese authorities, the control is not applied on 100 per cent of Vietnamese rice. In October, Vietnam won the fourth bidding to export to Japan 21,000 tonnes of long grain rice with average price of Y62,2949 a tonne (equivalent of US$547.38). Since early 2007, Vietnam has exported total of 66,050 tonnes of rice to Japan. The successful bidding has strengthened the trust of Japanese consumers as well as importers of Vietnamese rice.

 

On human movement, the two sides should consider programs facilitating migration, as Japan needs human resources while Vietnam has an abundant workforce. With good cooperation, labour export to Japan will be profitable for both sides.