New Markets for Vietnamese Shrimp

New Markets for Vietnamese Shrimp

On July 7, 2004, the US Department of Commerce (DOC) announced a preliminary ruling on tax rates regarding Vietnamese and Chinese shrimp. It is an unfair ruling on Vietnamese shrimp. What will happen to Vietnamese shrimp exports to the US and what should Vietnamese managers and enterprises do?

Unjust tax rates

According to the DOC ruling, the tax rates levied on Vietnamese shrimp exporters will range from 12.11 - 93,13 per cent. Vietnam's Aquaproducts Processing and Export Association (VASEP) has discussed with lawyers ways to formulate their views and protest against the heavy and discriminate tax rates on Vietnamese shrimp. VASEP is also preparing to receive the second DOC inspection team to clarify their position on the lawsuit. The final decision of DOC will be made on November 24, 2004 and the tax rates will be applied after the judgement of ITC. VASEP is consequently preparing a presentation for ITC on whether or not Vietnamese shrimp threaten or harm the interests of the American shrimp sector.

Fierce competition in the American marketVASEP Deputy Secretary General Truong Dinh Hoe said that although the average tax rate imposed on China is higher than Vietnam, it bears no relevance to competition between the two suppliers, as China only exports The shrimp while Vietnam exports prawn to the American market. There will therefore be no competition with China. Bangladesh and India with their different kinds of products are also not competitors to Vietnam. The real competitor of Vietnamese prawn is Thailand, but the tax rates imposed on Thailand are still unknown (to be announced on July 28, 2004). If the tax rate is under 10 per cent, it will be difficult for Vietnam to compete with Thailand in the American market. As the price of Thai shrimp is higher than that of Vietnam by 5-20 cents a pound, the application of new tax rates would obviously undo this advantage.

Seeking new markets

The US remains the main market for Vietnamese shrimp. This is precisely the problem for Vietnamese enterprises and the reason that DOC has applied unjust tax rates. Mr Vo Hue Tran, director of the Coastal Economic Development Company (Cofidex- HCMC) protested, saying, "the tax rates imposed on Vietnamese shrimp by the DOC are utterly unjust. Not only for my company, which has been subjected to the highest tax rate, but even to enterprises with a tax rate of 16.11 per cent can no longer export shrimp to the American market. Last year, Cofidex exported some 47 per cent of its total export to the American market. Faced with this new situation, we shall have to turn our exports towards the Japanese market." Mr Nguyen Tin Nguong, the deputy director of Ca Mau Aquaproduct Processing and Import-Export Company (Camimex) said, "We are looking for new markets in Europe and Asia.  Exports to the American market will be reduced from 40 per cent to 30 per cent, whereas exports to Asia (mainly Japan) will increase from 30 per cent to 40 per cent. The company is also seeking new markets in Asia to ensure stable production of the Ca Mau farmers."

It remains a problem for managers and enterprises to expand their markets. It requires more promotional activities to create more opportunities for enterprises to contact clients and secure a stable foothold for Vietnamese shrimp in the world market.

• Hong Hanh