Trade pact with Japan to open door wider for Vietnamese exports

Thanh Nien | September 18, 2008

Trade pact with Japan to open door wider for Vietnamese exports

A free trade agreement between Vietnam and Japan will bring new opportunities for Vietnamese products to enter the Japanese market thanks to lower tariffs, a senior official says.

Phan The Rue, head of the Vietnamese delegation at the Economic Partnership Agreement (EPA) negotiations, says the agreement, when signed, will help increase revenues from many goods exported to Japan.

Tax rates imposed on some Vietnamese goods like garments and textiles will be reduced immediately while agricultural products will enjoy lower tariffs in the next five or 10 years.

Tropical fruits and some processed agricultural products are currently unable to enter the Japanese market due to both tariff and food safety barriers, but under the EPA these products will have a better chance, he says.

But Japan is very strict about allowing rice, pineapples and some seafood products from other countries to enter its market as it wants to protect its agriculture sector, which is highly developed but accounts for a small part of the whole economy.

The agreement will also allow Vietnamese nurses and orderlies to become guest workers in Japan. However, as there is no school in Vietnam to train nurses and orderlies to Japanese standards, Japan may need to help Vietnam open such schools, Rue says, expecting Vietnamese workers to be sent to Japan within a couple of years.

With a large population of elderly people, Japan is a market with great potential for Vietnamese paramedical staff but they will have to compete with others from the Philippines and Indonesia, he says.

Mitsuo Sakaba, Japanese Ambassador to Vietnam, says Vietnamese nurses can receive the same treatment as their peers from the Philippines if they pass Japanese language examinations.

Opening up markets for industrial products is an issue that was left unresolved at the eighth round of the EPA negotiations in Japan last month.

Rue says Japan proposed Vietnam open up its car and steel market but Vietnam wants to protect its domestic industries.

Vietnam should grant preferential tax rates to car components that it cannot produce now or in the near future, Sakaba says.

Japan does not expect Vietnam to be able to manufacture automobile engines soon and thus tariffs on engines should be lowered, he adds.

One of the benefits that Japan will enjoy under the EPA is that its steel products, spare parts and materials will attract lower tax rates. Moreover, it will be easier for products made by Japanese businesses in Vietnam to penetrate other Asian markets - Myanmar, Laos, Cambodia and India, Rue says.

Consumer goods produced in Japan, however, may find it hard to enter the Vietnamese market because the goods are often too expensive for most local consumers with average incomes.

Rue says the EPA will help increase import-export turnover between Vietnam and Japan in the future and urge Vietnamese exporters to take advantage of the agreement when it is signed.

The import-export turnover between the two countries hit US$12.5 billion in 2007, a 26.1 percent year-on-year rise, Vietnam News Agency reports.

The Japan-Vietnam EPA negotiations were initiated during Prime Minister Nguyen Tan Dung’s visit to Japan in October 2006.

At previous rounds of the EPA negotiations, the two sides focused on expanding markets for each other’s exports. Vietnam wanted Japan to reduce import taxes on its agricultural products, while Japan asked Vietnam to lower tariffs on industrial commodities, particularly motorbikes and cars.

After the eighth round of the EPA negotiations in Japan last month, Rue said he expected existing disagreements to be resolved at the ninth round, which began Wednesday in Hanoi.

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source: Thanh Nien