Main commitments

In April 2005, the ASEAN-Japan Comprehensive Economic Partnership Agreement (”the AJCEP Agreement”) started negotiations and has been signed by the ASEAN Member States and Japan from March to April 2008, came into force in December 2008 and covers trade in goods and services, investment, and economic cooperation.

In December 2008, the AJCEP Agreement entered into force On August 1 2020, the First Protocol to Amend the AJCEP Agreement entered into force among Japan and the 5 ASEAN Member States. The Protocol adds the provisions concerning Trade in Services and liberalization and facilitation of Investment. The AJCEP Agreement is the Japan’s first multilateral Economic Partnership Agreement (“EPA”).

This is a comprehensive agreement in many areas, including trade in goods, services, investment and economic cooperation. The AJCEP Agreement will also strengthen economic ties between ASEAN and Japan and create a larger, more efficient market with more opportunities in the region.

Objective of the AJCEP Agreement

To strengthen the economic partnership between Japan and the ASEAN Member States, the AJCEP Agreement liberalizes and facilitates trade in goods and trade in services between Japan and the ASEAN Member States, promotes cooperation in the economic field.

The elements in the AJCEP Agreement

- Trade in goods: Tariff elimination or reduction (adoption of a common concession system in which tariff elimination and reduction (concessions) between Japan and the ASEAN Member States are applied equally to each of the signatory nations), safeguards, customs procedures, etc.

- Rule of origin: Certification of origin of products (adopting a common rule of origin to be applied equally among the signatory nations and also regulating the aggregate of rules of origin in Japan and ASEAN region (allowing parts and semi-finished goods, etc., manufacture and other signatory nations to be deemed manufactured internally), issue of certificates of origin, etc.

- Sanitary and phytosanitary (SPS) measures: The rights and obligations related to sanitary and phytosanitary measures based on the agreement on application of SPS measures concluded between the signatory countries are reaffirmed, and a subcommittee is to be established for exchanging information, facilitating cooperation, etc.

- Trade in services: National Treatment, Market Access and Transparency, etc.

- Investment: Fair treatment and full protection, prohibition of expropriation without proper compensation, dispute settlement procedures, etc.

- Economic cooperation: Agreement on review and action on cooperation in 13 areas, namely procedures related to trade, business environment, intellectual property, energy, information and communication technology, human resources development, small businesses, tourism and customer service, transport and logistics, agriculture, fisheries and forestry, environment, competition policy and other areas in which mutual agreements are reached among all signatory nations.

- Resolution of disputes: Procedure for resolving disputes emerging from interpretation and application of the EPA, etc.

Regarding the specific tariff reduction schedule, the Agreement stipulates:

Vietnam's schedule of commitments in AJCEP includes 9,390 tariff lines (based on AHTN 2007), which includes the reduction schedule for 8,771 lines. The remaining lines are 57 lines for vehicles CKD and non-committed tax lines (562 lines), specifically:

– List of tariff elimination: Vietnam commits to eliminate tariffs for 62.2% of tariff lines within 10 years, of which tariffs will be eliminated right after the Agreement comes into force for 26.3% of tariff lines, tariff elimination after 10 years of implementation of the Agreement (in 2018) for 33.8% of tariff lines. In 2023 and 2024 (after 15 years and 16 years of implementing the Agreement) commit to eliminate 25.7% and 0.7% of tariff lines respectively.

In the last year of the roadmap (in 2025), the number of tariff lines to be eliminated accounted for 88.6% of the tariff lines in the Schedule of Commitments.

– Normally sensitive list (SL) accounts for 0.6% of tariff lines, maintained at the base tax rate and down to 5% by 2025.

– The Highly Sensitive List (HSL) accounts for 0.8% of the tariff lines, maintaining a high tax rate (reduced to 50% by 2023).

– The list of non-removal tariffs, the tax rate remains at the base rate in the whole schedule (C), accounting for 3.3% of the tax lines.

– The exclusion list accounts for 6.0% of the tariff lines.

Vietnam's tax reduction schedule in the AJCEP Agreement begins in 2008 and ends in 2025. Commodities s are reduced to 0% in 2018, 2023 and 2024. Most of items are eliminated on mainly industrial goods. The number of tariff lines to be eliminated focuses on electrical machinery and equipment, mechanical machinery, chemicals, metals, textiles and agricultural products.

Japan's commitment schedule for Vietnam

As of April 1, 2015, Japan has eliminated tariffs on 923 lines of agricultural products from Vietnam. By 2019, another 338 agricultural tax lines will be eliminated. For industrial products of Vietnam, most of them are entitled to the tax rate of 0% as soon as the Agreement comes into effect, such as electronic components, machinery, equipment, telephones, computers, household electrical appliances, plastic products, paper...

By the end of the schedule by 2026, Japan committed to eliminate 96.45% of total tariff lines for products originating from Vietnam, focusing mainly on agricultural and aquatic products, textiles, shoes, furniture, electronic components...

ASEAN and Japan first established informal dialogue relations in 1973, which was later formalised in March 1977 with the convening of the ASEAN-Japan Forum. Since then, significant progress has been made in all areas economic cooperation.

Japan’s strong commitment to support ASEAN Community building is evident through its initiatives and support for many concrete and mutually beneficial activities. ASEAN robust economic growth has also contributed to the strengthening of relations with Japan.

The Framework for Comprehensive Economic Partnership (CEP) between ASEAN and Japan was signed by the Leaders of ASEAN and Japan on 8 October 2003 in Bali during the ASEAN-Japan Summit. Under this Framework Agreement, all the Parties had committed to a CEP between ASEAN and Japan, to strengthen economic ties, create a larger and more efficient market with greater opportunities and larger economies of scale, and enhance attractiveness to capital and talent, for mutual benefit.

Following the signing of the Framework Agreement, negotiations on the ASEAN-Japan CEP (AJCEP) Agreement was commenced in April 2005, and after 11 rounds of negotiations, it was substantially concluded in November 2007.

Agreement on Comprehensive Economic Partnership among Member States of the Association of Southeast Asian Nations and Japan, 2008

Annex 1 - Schedules for the Elimination or Reduction of Customs Duties