Vietnam – Japan Relations The economy of Vietnam Vietnam – a country locates in South East Asia which has the area of 329,560 sq km. With the history spans over 4000 years, Vietnam’s identity has been shaped by long-running conflicts with foreign forces. The Socialist People’s Republic of Vietnam was founded in 1954 and unified in 1976 after the Vietnam War. Since 1986, Vietnam has embarked on the course of “D? i m? i” (Renovation Policy) – the comprehensive economic renovation which aims to eliminate the subsidy-based, bureaucratic, centrally-planned mechanism and develop a socialist-oriented multi-sector market economy.
Over that period, the economy of Vietnam has experienced rapid growth. Twenty years of liberal economic reforms have brought sweeping changes and foreign investment to a nation characterized by increasing industrialization and a reduction in poverty. Nowadays, Vietnam is in the period of integrating into the world’s economy, as a part of globalization. Vietnam became a full member of ASEAN on 28 July 1995, entered Asia-Pacific Economic Cooperation (APEC) in November 1998 and has participated ASEAN Free Trade Area (FTA).
On November 11, 2007, Vietnam officially became the World Trade Organization’s 150th member after 11 years of preparation, including 8 years of negotiation. The intention of Vietnam in accessing to WTO was to provide an important boost to the country’s economy, to ensure the continuation of liberalizing reforms and create options for trade expansion. However, serious challenges also come after become a member of WTO, requiring Vietnam’s economic sectors to open the door to increased foreign competition.
At present, Vietnam has established diplomatic relationship with over 179 countries all over the world (The World & Vietnam Report – Ministry of Foreign Affairs). Although Vietnam’s economy, which continues to expand at an annual rate in excess of 7 percent, is one of the fastest growing in the world, the economy is growing from an extremely low base, reflecting the crippling effect of the Vietnam War (1954–75) and austerity measures introduced in its aftermath. Vietnam – Japan relations History
Early contacts until 14th – 15th century There was no historical record to recite exactly when the Japanese started trading with Viet Nam. Vietnamese historians only knew that Chinese merchants traded with the Viet a couple hundred years before the Japanese. According to an archaeological dig in Kyushu, a Vietnamese ceramic with the inscribed date of 1330 was revealed but it is unknown how the fragments arrived there. As time goes on, in the early 16th century, contact between Japan and Vietnam came in the form of trade.
Because of the expansion in trading of Japan, many countries’ ports in South East Asia such as Siam (Thailand) and Malaysia were visited by the Japanese red seal ships. Vietnamese records show that there were already hundreds of Japanese traders residing in the area where Lord Nguyen Hoang opened the port of Hoi An in the early 17th century. They also established a Japanese district named Nihonmachi in Hoi An so as to handle the influx of traders.
Vietnamese silk, sugar, spices and sandalwood were popular trading goods to Japanese silver, copper and bronze back in those days because of their huge profit when brought to Japan. The two countries enjoyed a warm degree of friendship. Leaders of both countries exchanged amicable letters and gifts with each other. Lord Nguyen Phuc Nguyen even married his daughter, Princess Ngoc Khoa to Araki Shutaro, an eminent Japanese trader. Japanese traders often donated money to the locals and were well treated. Many settled and assimilated into their new surroundings.
However, trade restriction was place between South East Asia and Japan when Tokugawa became aware of the nation’s overexploited silver and copper in 1685. Modern times Japan invaded Vietnam in September 22, 1940 and began constructing military bases to strike against the Allies in South East Asia. Japanese troops remained in Vietnam until they surrendered to the Allies in 1945 when World War II officially ended. Japan had consistently encouraged a negotiated settlement at the earliest possible date during the Vietnam War of the 1960s and 1970s.
Before the hostilities ended, Japan had made contact with the North Vietnam and had reached an agreement to establish diplomatic relations in September 1973. Following the unification of North Vietnam and South Vietnam into the Socialist Republic of Vietnam, Japan opened an embassy in Hanoi. When the Vietnam War ended on April 30, 1975, in accordance with the treaty, the Japanese government began to provide Official Development Assistance (ODA) in 1977. Unfortunately, the rise of problems with Cambodia saw a freeze in this support over a 14-year period from 1978 – 1991.
Vietnam then became isolated in the international community. However, the ASEAN nations, Australia, and France as well as Japan continued diplomatic efforts. A resolution to the Cambodian conflict would be found with the involvement of the United Nations. Vietnam’s stance during the long period of negotiations for the resolution to this Cambodian conflict was extremely important. Resolution of shifting to “Doi Moi” policies which was passed at the 6th National Meeting of the communist party of Vietnam in December 1986, was decisive.
Following the October 23, 1991 Final Act of the International Paris Conference on Cambodia among the Cambodian parties, Indonesia (as co-chair with France), and the five permanent members of the United Nations Security Council, Japan promptly established diplomatic relations and ended economic restrictions with Cambodia and Vietnam. In November 1992, Tokyo offered Vietnam US$370 million in aid. Later, Vietnam joined ASEAN in 1995 and the establishment of the ASEAN Plus Three consultations in 1997, which include China, Japan, and South Korea.
These nations share a place in the Southeast Asian economy and security framework. Today, Japan is Vietnam’s top economic partner, annual ODA to Vietnam exceeds 100 billion yen, despite the weakening of the Japanese economy and growing tensions over the budget. Since 1995, among countries around the world providing support to the developing countries, Japan provides to Vietnam the greatest amount of support being given to a single country. The two countries have granted each other the MFN status since 1999 and Japan has become one of the biggest trading partners of Vietnam.
With regard to foreign direct investment, Japan now ranks third among countries and territories investing in Vietnam. In 2002, the two sides’ high level leaders agreed to build the Vietnam-Japan relations along the line of “reliable partnership and long-term stability”. The two sides have set up a dialogue mechanism at various levels in all political, economic, security and defense areas. The two countries concluded the Agreement on Investment Promotion and Protection in November 2003. Japan is the largest ODA donor of Vietnam in the 1992-2006 periods.
In 2007, it pledged $US890 million in aid for the country, a 6. 5 percent increase from the 2006 level of $US835. 6 million. Japan’s long-term assistance program for Vietnam focuses on five key areas of human resource development and institutional building, building and upgrading of transportation and electricity projects; agriculture and rural infrastructure development; development of education, training and healthcare; and environment protection. Free Trade Agreement Program Summary
An FTA is an agreement between two countries or regional groupings to eliminate or reduce tariffs and other barriers on trade in goods and services. Exports from non-members will find out that they will be discriminated against. The pursuit of FTAs is occurring worldwide and Japan is not an exception. Japan hopes to energize its economy by freeing up trade in goods and services, as well as to better compete with China for influence in Asia — objectives that seem to support U. S. interests. However, Japan’s FTA program to date has not been robust enough to have much impact.
The biggest constraint on moving forward on FTAs of Japan is agriculture. While some progress is being made in cutting tariffs on food items that serve small markets, highly protected rice and beef markets are not being offered for liberalization. Moreover, in the absence of a substantial farm reform program that would make liberalization of these products easier, many Japanese decision-makers hope protectionist pressures will go away over time with an aging farmer population that is shrinking and increasingly part-time.
Japan’s FTA program, assuming the current cautious and defensive course persists, is likely to have varied effects on U. S. interests. On the one hand, it is likely to provide a positive, yet small, boost to increasing Japan’s role in the economics and political economy of East Asia. Japan – Vietnam Economic Partnership Agreement The two sides began discussing on the free trade agreement in January 2007. Exports from Vietnam to Japan in 2007 touched US $6. 14 billion while imports from Japan matched with nearly an equivalent amount of $6. 2 billion. On 25th December 2008, Japan and Vietnam signed an economic partnership with a promise to cut tariffs on some 92 percent of goods and services traded between the two nations within a decade. The agreement is said to be strengthen the mutually beneficial economic collaboration between our two countries by facilitating freer flows of goods, services and investments. Under the new agreement, Vietnam will get duty-free access to the Japanese market for shrimp, durian and okra, among other farm and marine products.
Japan will be able to send duty-free its auto parts, steel and electronic goods for assembly in Vietnam, particularly parts that require high skill and have to be brought from Japan, Japanese officials said. On 2nd October 2009, the Vietnam- Japan Economic Partnership agreement came into effect. From the beginning of October 2009, Vietnam commits to cutting 2,586 tax lines while Japan pledges to cut 7,220 tax lines. Major Vietnam-made exports to Japan enjoy import duty rates of 0% from October 1 include garments and textiles, furniture, shrimps and products made from shrimps, electric cables, computers, durians and flowers and so on.
Aquatic, textile and garment, and leather shoes products are three main Vietnam-made exports to Japan. With the signing of the agreement, bilateral trade is projected to reach a very high figure in the next few years. References Communist party of Vietnam (1986) “6th National Congress Documents”, Thegioi Publishers, Hanoi. The 2008 world factbook, Vietnam people 2008-http://www. theodora. com/wfbcurrent/vietnam/vietnam_people. html Owen, Norman G. , Chandler, David The emergence of modern Southeast Asia (p. 107). University of Hawaii Press, 2005.
ISBN 0824828410, “Japan early trade coin and the commercial trade between Vietnam and Japan in the 17th century”. Luc, Thuan. Retrieved on May 08, 2009 – http://www. charm. ru/coins/vn/nagasaki. shtml Agreement between Japan and the Socialist Republic of Viet Nam for an Economic Partnership – Ministry Foreign of Affairs of Japan –http://www. mofa. go. jp/region/asiapaci/vietnam/epa0812/index. html Asia Regional Trading Center, Trade and Investment – Japan- Vietnam Economic Partnership Agreement http://aric. adb. org/fta. php? id=146&ssid=3&title=JapanVietnam%20Economic%20Partnership%20Agreement%20