Vibrant Trade Ties

In 2014, Japan was the fourth biggest trade partner of Vietnam while it ranked second in exports and third in imports of Vietnam.

 

The two countries granted each other MFN tariffs in 1999. The two-way trade turnover climbed from US$5.9 billion in 2003 to US$8.5 billion in 2005, US$10 billion in 2006, US$12 billion in 2007, and US$17 billion in 2008. However, due to global economic crisis, the bilateral trade value decreased to US$12.2 billion in 2009 but it quickly rallied to US$16 billion in 2010.

 

According to Vietnam - Japan Free Trade Agreement (FTA), the average tariff applicable to Vietnam exports to Japan will decrease to 2.8 percent in 2018. When the FTA takes effect, at least 86 percent of agriculture, forestry and aquatic products and 97 percent of industrial goods exported from Vietnam to Japan will be granted tax incentives. In turn, duties on imports from Japan to Vietnam will be slashed to around 7 percent in 2018. Seafood, agricultural products, garment and textile, iron and steel, chemical and electronic components will enjoy the biggest trade liberalisation. Within 10 years, under the agreement, Vietnam and Japan will basically complete the tax reduction roadmaps to build a bilateral free trade area. Accordingly, 94.53 percent of Vietnam’s exports and 87.6 percent Japan’s exports will be exempt from import duties.

 

Since the FTA takes effect, Japan will become an increasingly important export market for Vietnam, which expects to see a steady growth in turnover and categories of exports.

 

In 2014, Japan was the fourth largest trade partner of Vietnam with the two-way trade value amounting at US$27.612 billion.

 

According to the General Department of Vietnam Customs, in the first eight months of 2015, the total two-way trade turnover fell 21 percent year on year to nearly US$19 billion, of which Japan took US$9.7 billion, up 22 percent, accounting for 9 percent of Vietnam’s total spending on imports. Machinery, equipment and tools cost US$3.2 billion in the reviewed period, up 39 percent from a year earlier.

 

Meanwhile, Vietnam’s exports to Japan in the eight-month period of 2015 approximated at US$9.3 billion, down 6 percent year on year and equal to 9 percent of Vietnam’s total export value. Japan is a key market for Vietnam’s primary exports like garment and textile (US$1.7 billion, up 6 percent), crude oil (US$489 million, down 62 percent), and aquatic products (US$650 million).

 

According to experts, benefits that Vietnam obtains the Vietnam Japan Economic Partnership Agreement (VJEPA) and FTA are yet to meet potential. Hence, according to the Ministry of Industry and Trade of Vietnam, Vietnamese companies need proper investment to improve business capabilities, monitor goods quality standards, promote trade to better tap this important market, and take advantage of FTA pluses.