Exports to Japan may soar after trade deal

The agreement, called the Association of Southeast Asian Nations (ASEAN)-Japan Comprehensive Economic Partnership, came into effect on December 1.

"The agreement creates more advantages for some of our strongest exports, but it will also raise obstacles," said Le Quang Lan, deputy head of the Ministry of Industry and Trade’s Multilateral Trade Policy Department.

The Japanese market, for example, imposes strict trade standards on country of origin and sanitary standards for imported goods, two areas that remain underdeveloped and poorly enforced in Viet Nam.

"Viet Nam will co-operate with Japan to set up a joint commission that will define quality and food safety and hygiene. Additionally, Japan will help Viet Nam set up a centre on international sanitary standards," Lan said.

Under the new agreement, the import tariff on Vietnamese garment and textile exports has dropped to zero from 5-10 per cent.

Textile and garment exports to Japan, however, remain modest. Last year’s total value was US$800 million, or only 9 per cent of the total export value of the industry.

In exchange for the elimination of tariffs, the ASEAN member countries including Viet Nam, will have to meet certain criteria on the use of materials.

Raw materials used for garments and textiles, for example, must be sourced only from Japan or Southeast Asia, including Viet Nam.

The raw material requirement also applies to leather shoes, a major Vietnamese export to Japan.

"The biggest goal of Viet Nam is not focusing on export growth to Japan, but creating an improved position in the global market by meeting the strict criteria set by Japan," Lan said.

Vietnamese agricultural exports to Japan that will be tariff-free, include ginger, garlic, durian, rambutan, apricot, canned litchi and fresh bamboo sprouts. Mushrooms, potatoes, tea, coffee, frozen fish, shrimp and crab.