09:20 | 16/04/2018 Trade
(VEN) - Vietnamese businesses have not taken full advantage of the many benefits provided by trade agreements with Japan, especially in terms of tariff preferences, according to participants at a recent seminar in Ho Chi Minh City. The seminar, sponsored by the Ministry of Industry and Trade, focused on Japanese market information and related import regulations.
The Japan-Vietnam Economic Partnership Agreement (JVEPA) and the ASEAN-Japan Comprehensive Economic Partnership Agreement (AJCEP) were both designed to boost business between the two countries.
Under VJEPA, in force since October 1, 2009, Vietnam will abolish 90.64 percent of tariff lines by 2026, and Japan will abolish almost 94.53 percent of its tariff lines within 10 years. Japan has committed to reduce its average tax on industrial products – a major Vietnamese import – to 0.4 percent by 2019. Meanwhile, Vietnam’s textile and garment exports to Japan have benefitted from a zero (0) percent tax (down from seven percent) since VJEPA took effect.
Vietnam’s leather and footwear exports to Japan also enjoy a zero percent tax for 5-10 years, while seafood exports will enjoy a 1.31 percent tax starting in 2019, down from 5.4 percent in 2008. Shrimp and crab exports to Japan have been exempt from customs tax since 2009.
While AJCEP offers less attractive tariff preferences than VJEPA, its rules of origin for Vietnamese businesses trading with the Japanese market are more favorable.
However, Vietnamese enterprises haven’t effectively utilized preferences offered by these two agreements, said former Vietnamese Trade Counselor to Japan Nguyen Trung Dung. In 2017, Vietnam’s exports to Japan only accounted for 2.75 percent of Japan’s import value, he said. Japanese business representatives at the seminar said a number of their Vietnamese partners had not satisfied their product quality and production mode requirements.
Providing an example of these shortcomings, Shiotani Yuichiro, General Director of the AEON TOPVALU Vietnam, a large importer of Vietnamese goods, said Vietnamese tuna is popular in Japan, and Japanese importers always pay more for it than for tuna products from other countries. However, due to substandard catching and preservation methods, Japan has occasionally had to halt tuna imports from Vietnam, he said, advising Vietnamese enterprises to improve their methods. As part of its trade agreements, Japan requires inspections of factories and employment practices to ensure child and forced labor is not used, Shirani Yuichiro said.
Former Vietnamese Trade Counselor Nguyen Trung Dung said Japan has licensed only white and red dragon fruit, mango, and banana imports from Vietnam, while other Vietnamese agricultural and seafood products need to meet strict preservation standards and maximum residue limit (MRL) regulations if they are to reach the Japanese market.
Dung suggested that Vietnam establish an analytical center and provide financial assistance for businesses to have their products tested in terms of food hygiene and safety. The government should strengthen negotiations with foreign partners to remove barriers, and attract Japanese investment in farm produce production for exports, Dung said.