After nearly half a year Vietnam signed the Vietnam Japan Economic Partnership Agreement (VJEPA) with Japan, laying the groundwork for exempting taxes for 92 per cent of the two-way trade venue in a 10 years’ time. However, most importers and exporters with Japan do not take full advantage of VJEPA. On May 18, the Ministry of Industry and Trade has organised a workshop to instruct the implementation of VJEPA commitments for 500 Vietnamese business representatives.
Thousands of tax lines scrapped
Minister of Industry and Trade Vu Huy Hoang said the contents of the agreement have broad coverage from trading of commodities to intellectual property. The common spirit of this agreement is to form a favourable legal framework to accelerate multifaceted economic cooperation between Vietnam and Japan.
According to the commitments, as many as 2,586 tax lines will be removed immediately after the enactment of VJEPA, accounting for 28 per cent of a total of 9,390 lines committed. After 10 years (in 2019), an addition of 3,717 tariff lines will be scrapped, bringing the total to 6,302 lines or 67 per cent of committed lines.
On the contrary, within 10 years, Vietnam will apply 0 per cent tax on 87 per cent of commodity value exported from Japan to Vietnam. Vietnam will cut and remove more than 8,873 tax lines at the end of the roadmap (in 2025), or some 96 per cent of the total tax lines to be applied. Vietnam will steel protect products of its advantage and only import products necessary for domestic investment and production, especially machinery, equipment and technology.
Both sides are concerned about the movement of natural person, especially the cooperation in sending health workers to Japan. According to the agreement, Japan will grant ODA capital to train 200 - 300 Vietnamese nurses for the Japanese market. After training courses, nurses will be recruited to work in Japan for seven years. This is a completely new content in Vietnam’s relations with the nations.
In addition, Japan also pledged to assist Vietnam to build world-class nurse training establishments and help Vietnam to measure levels and capabilities of health workers, especially nurses and nurse’ aids. Moreover, Japan also committed to discuss a broader movement of natural person within a year.
As regards intellectual property, commerce and service, their mutual commitments will not be higher than Vietnam’s commitments to the entry to the World Trade Organisation (WTO).
Major preferences
Regarding industrial goods, 90 per cent of commercial value will be exempted from taxes immediately following the enactment of the agreement. As much as 97 per cent of commercial value will be subjected 0-5 per cent while Japan only accepts this tax rate on 90 per cent of commercial value in trade with other regional nations like Malaysia and Thailand. Thus, Vietnam holds high tax vantage in competing with regional nations in making inroads into the Japanese market.
A representative from the Multilateral Trade Policy Department under the Ministry of Industry and Trade said the highest advantage VJEPA brings in is preferences for farm produce, garments and textiles. Japan vowed to exempt taxes for 83.8 per cent of commercial value of Vietnamese agricultural products within 10 years, the highest rate of Japan for ASEAN countries. Vietnam pledged to grant best rates in 24 tax lines to Vietnam. According to mutual commitments, there will be 23 out of 30 Vietnam’s agricultural, forest and aquatic products with highest export values to be exempted taxes immediately or in 10 years.
Particularly, Japan will subject 12.8 per cent tax on 100 tonnes of honey a year and will increase the tax-free volume by 50 tonnes each year, 0 per cent of tax on durians, gradual tax cuts on pepper and sweet maize in 5-7 years, gradual reductions to 0 per cent on coffee and tea in 15 years and 0 per cent on several kinds of fruits. Many kinds of Vietnamese seafood will be levied 0 per cent taxes.
Japan will consider removing the ban on Vietnamese fresh fruits like dragon fruit. This is a chance for Vietnamese fruits to penetrate into the Japanese market. Besides, Japan also has a high demand for pork, processed foodstuff, fresh meat, fresh fruits, mechanical products and household plastic products.
Japan will assist Vietnamese garment and textile supporting industries. This is an important content to increase the added value for Vietnamese garments and textiles exported to Japan in particular and other nations in general. The two countries will consider ODA grant for garment and textile projects in Vietnam.
The Vietnam Japan Economic Partnership Agreement (VJEPA) will make a major turning point for enterprises of the two nations. When Vietnamese enterprises export their products to Japan, theirs will not be discriminated. This is a significant advantage because Japan is a key export market of Vietnam.
Huong Ly
Vietnamese
