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Vietnam-Japan trade pact yet to deliver impacts
The much-touted Vietnam-Japan Economic Partnership Agreement that went into effect last month and was meant to cut taxes on 10,000 items on the exchange list between the two countries has so far failed to deliver any positive impacts on trade between the two sides. Traders would say it is the springboard for the future rather than for immediate benefits.
Imports see little change
The sales of Japanese-imported goods have seen very little positive change since the day the agreement took effect, as initial tax cuts have been small and incremental cuts are scheduled over a substantial period of time, according to domestic importers.
The director of a home appliance supplier for supermarkets talks to the Daily that tariffs on steel and plastic wares imported from Japan as provided for in the agreement still remain one to four percentage points higher than those under the normal preferential import tax rate of the Most-Favored Nation status (MFN). And this situation will stay unchanged until March 31 as the end of the current fiscal year in Japan.
Meanwhile, for steel and plastic goods imported from China, traders enjoy a tariff 5% lower than the normal tax rate but those keen on importing the same goods from Japan have to wait until March, 2012 before taxes are cut to the MFN rate.
Newly-effective preferential taxes for electronic goods from Japan are in the same boat, as the tax reduction is still minimal to give way to any noticeable discount in product prices, says Nguyen Thi Quyen, vice marketing director of Thien Hoa Electronics Center. The sale of made-in-Japan electronic items can only get better years later but not now, as the prices of the same products manufactured in Vietnam or other third countries are more competitive, Quyen explains.
High hopes on Vietnamese exports
The good news is that about 94% of domestic made-goods, mostly favorites in Japan like seafood, garment-textiles and footwear, will enjoy tax cuts in the decade-long roadmap of the trade agreement.
The bad news: we are at the very beginning
No records have been kept on the real effect of the agreement on lifting domestic export revenues of aquatic products to Japan, says Truong Dinh Hoe, general secretary of the Vietnam Association of Seafood Exporters and Processors (VASEP). However, as the economic slump bites, the appreciation of the Japan yen over the Vietnam dong will make Vietnamese-imported seafood cheaper, thus raising the competitiveness of the sector.
Seafood exporter Kisimex Co. in the Mekong Delta’s Kien Giang Province has yet to witness any positive change in seafood exports to Japan, its main foreign market, though the agreement exempted tax for its products, says Nguyen Thanh Hung, vice director of the company.
Things are more complicated for Vietnamese garment-textile exporters, as conditions apply if apparel exporters are to benefit from the Vietnam-Japan agreement. Lower tariffs can only be offered if exporters source their materials from a restricted list of countries.
According to the Vietnam-Japan Economic Partnership Agreement and the ASEAN-Japan Comprehensive Economic Partnership that took effect in December, only garment-textile materials coming from ASEAN countries and Japan enjoy tax exemptions.
However, not all garment-textile exporters can prove the origin of their materials with ease.
About 70% of the materials are imported from countries and territories in the region including Taiwan, Japan and ASEAN countries, but most of them are supplied by China.
The director of a HCMC-based garment company importing 60% of its fabric from China explains that as the economic recession hit his company, the only way to survive was to cut input costs, mostly on fabric. As the quality of Chinese-imported fabric is acceptable for its price range, it helps the company maintain orders, though the exported garment products will not enjoy a tax cut.
While the trade marriage between Japan and Vietnam has been marked by the agreement, it will take ten years to realize the benefits. According to what can be seen at the moment, the honeymoon is yet to come.
VietNamNet, SGT
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