Summary of Vietnam's commitments in the Vietnam-Japan Economic Partnership Agreement (VJEPA)

31/05/2013    817

The Vietnam-Japan Economic Partnership Agreement (EPA) was negotiated in 2007. After 9 official negotiation sessions, the two sides signed the VJEPA on December 25, 2008. This Agreement took effect on October 1, 2009. Like the AJCEP, this is a comprehensive economic agreement on trade in goods, services, investment and economic cooperation.

1. Commitments in Trade in Goods

* The general commitment level

Within 10 years since the implementation of the Agreement, Vietnam committed to liberalize about 87.66% of trade turnover and Japan committed to liberalize 94.53% of trade turnover. At the end of the tax reduction roadmap - after 16 years of implementation of the Agreement, Vietnam committed to liberalize 92.95% of trade turnover.

* Commitment list

Vietnam's schedule of commitments includes 9,390 tariff lines (based on AHTN 2007), in which includes the schedule of reductions with 8,873 lines. The remaining lines are tariff lines of CKD automobile and tariff lines without elimination, specifically:

- Tariff elimination list: Vietnam committed to eliminate tariffs for 75.2% of tariff lines within 10 years, in which eliminate tariff for 27.5% of lines as soon as the Agreement came into force and eliminate tariff for 40.3% of tariff lines after 10 years of implementation of the Agreement (in 2019). In 2021, 2024 and 2025 (after 12 years, 15 years and 16 years of implementation of the Agreement) committed to eliminate 0.1%, 14.9% and 0.8% of tariff lines respectively. 

Thus, in the whole roadmap of tariff reduction, the number of tariff lines which are eliminated tariffs accounts for about 91% of the tariff lines in the entire Schedule.

- Normally sensitive list: accounts for 0.6% of tariff lines, maintains at the base tax rate and is reduced to 5% in 2024/2006.

- High sensitive list: accounting for 0.8% of tax lines, maintains a high tax rate (is reduced to 50% in 2025).

- List without tariff elimination: tax rates maintain at base tax rates in the whole roadmap, accounts for 2% of tariff lines, or maintains at base rates and is negotiated after 5 years of implementation of the Agreement, accounts for 0.02%.

- Exclusion list: accounts for 4.6% of tariff lines.

Statistics on Vietnam's list of commitments in the EPA

Classification 

Rate of turnover (%)

Tariff elimination list

Within 10 years

87,6

Within 12 years

2,00

Within 15 years

2,8

Within 16 years

0,5

Total

92,9

Sensitive list - without tariff elimination

Taxes are reduced to 5% in 2023

0,5

Taxes are reduced to 5% in 2026

1,8

Taxes are reduced to 50% in 2024

0,1

The tax rate remains the base tax rate

3,2

The tax rate remains the base tax rate and is renegotiated after 5 years

0,0

Total

5,6

Exclusion list

No commitments

1,5

CKD Automobile list

No commitments

0,0

Total

100

The above classification list is analyzed according to data in Vietnam's Schedule of Commitments based on AHTN 2007 and import turnover from Japan in 2008

* Commitment in tax rate:

Vietnam's tariff reduction roadmap in the EPA Agreement starts in 2009 and ends in 2026. The tariff of goods is cut down to 0%, mainly in 2019 and 2025. In terms of commodities, items which are eliminated tariff are mainly industrial goods.

Looking at the scatter board of tariff lines with tariff elimination by sector, it can be seen: in 2009 (the year the Agreement took effect), there are about 2,586 tariff lines eliminated tariff, of which industrial products accounts for about 94.5%, the rest is agricultural products. After 10 years of implementation of the Agreement (in 2019), about 6,996 tariff lines will be eliminated, of which industrial products accounts for about 90.1%. By 2025, the total number of tariff lines which are eliminated will be up to 8,548, industrial goods accounts for 95.1% of the tariff lines. The tariff lines which are eliminated are focused on electrical machinery, mechanical machinery, chemicals, metals, garment and agricultural products.

Vietnam’s scatter table of the number of tariff lines to be eliminated by sector in the EPA Agreement

Sector

2009

2019

2025

1. Agriculture

134

592

157

2. Fish and fish products

6

45

262

3. Oil and gas

-

9

9

4. Timber and timber products

86

426

502

5. Garment and textile

59

893

1378

6. Leather and rubber

23

167

899

7. Metal

281

863

601

8. Chemicals

696

1280

965

9. Transport equipment

85

222

360

10. Mechanical machinery

220

628

731

11. Electrical machinery and equipment

709

1.160

1.283

12. Minerals

54

274

1.129

13. Other manufactured goods

233

437

272

Total

2.586

6.996

8.548     

The tax rates applied for each period in the Vietnam-Japan Special Preferential Import Tariff (EPA) are mostly cut with gradual reduction model from the base tax rate or with a separate reduction model for the tariff lines on the sensitive list (applies the base tax rate in the whole roadmap, reduces from the base tax rate to 5% (2024/2026) or 50% (2025)…. the average rate applied to the whole EPA Schedule for each year in the roadmap tends to decrease.

2. Commitments in Trade in services

In general, the level of detailed commitments given by Vietnam in VJEPA is almost no different from the WTO accession commitments. There is only a difference in the general provisions of the service chapter in the VJEPA Agreement, in which there are some new points related to the definitions, the level of competitive protection (in telecommunications service ....)

3. Commitments in the labor field

Apart from commitments under the WTO, the two sides agree to accept business guests, receive nurses if they meet the conditions required by the law of the host country for a period of 3 years and can be extended.

In addition, Japan also accepts:

(1) Granting a preferential interest rate ODA loan for Vietnam to train 200-300 Vietnamese nurses per year in Japan and allow Japanese nurses to work for a long time (up to 7 years) in Japan;

(2) Supporting the development of a skills accreditation system for Vietnam, including nurses and midwives; supporting in building a certification system for nurses and midwives;

(3) Within 1 year from the signing of the EPA, Japan will resume labor movement negotiations with Vietnam to improve market access conditions for nurses, midwives and other professions.

Thus, in the FTAs that Vietnam participates in, labor commitments are mainly related to mode 4, movement of natural persons (Mode 4) in trade in services. The negotiation and the level of commitments are generally based on WTO commitments with a small number of additions. The results achieved in the labor movement negotiations in general are still very modest, and the implementation of commitments has still faced many challenges.