Tightening Cross-border Food Export

Amid mounting concerns over sudden rising food prices triggered by illegal cross-border exportation in recent months, the Ministry of Industry and Trade and the Ministry of Agriculture and Rural Development expressed their dogged determination to deal with this matter recently.

 

Vietnam shares a long border with China and currently has commercial ties with 12 provinces, mainly in southern China, like Guangxi, Guangdong, Yunnan, Guizhou, Sichuan and Chongqing. However, cross-border trade is dealing with a lot of shortcomings.

 

Mr Nguyen Loc An, Deputy Director of Domestic Market Department under the Ministry of Industry and Trade, said cross-border trade is loosely managed partly because foreign exchange is not performed via banks but rampant “black markets.” Thus, it is necessary to tighten exchange activities to keep the lid on cross-border trade.

 

He said another difficulty arises from loopholes in payment mechanism. Contracts and billings are not required in cross-border trade with China. This method benefits merchants, but causes a loss to the State Budget.

Mr Nguyen Cam Tu, Deputy Minister of Industry and Trade, said: To control the procurement of agricultural products, State agencies and enterprises must strictly follow the Government’s Decision 80 on contract-bound agricultural product consumption, and Circular 13/2011/TT-BNNPTNT on safety of vegetation-originated foods imported into Vietnam.

 

Mr Nguyen Loc An pointed out that contracts for agricultural product export are needed to minimise risks for farmers in case of lean harvest, and prevent tax loss to the State Budget.

 

The ASEAN - China Free Trade Agreement (AC-FTA) will facilitate the penetration of Vietnamese goods into the Chinese market. According to this agreement, China will lower tariffs on Vietnamese commodities sooner than Vietnam does on Chinese goods. However, Vietnam has not effectively cashed in on this advantage. Moreover, the degree of Vietnam's tariff reduction on Chinese products according to the AC - FTA is faster than that according to WTO commitments. This will be a heavy pressure on Vietnamese goods in the domestic market.

 

On August 1, Industry and Trade Minister Vu Huy Hoang requested the Domestic Market Department make accurate reports on commodity purchase of Chinese traders in Vietnam and required relevant units to deal with illegal cross-border trading.

 

He added that China is Vietnam’s largest food consumption market; therefore, mutual trade relations are built on long-term strategic spirit and principle. However, it is still quite difficult to build up a distribution system to protect Vietnamese products, to protect the value of, the market for, and the reputation of Vietnamese products.

 

To minimise risks arising from export to China, the Ministry of Industry and Trade and the Ministry of Agriculture and Rural Development have put forth many measures, including market-based agricultural production (for both domestic and export demand) in an effort to ensure the consumption of Vietnamese products. The two ministries will send master and detailed planning to localities to guide farmers.

 

Deputy Minister Nguyen Cam Tu said the ministry has directed the provincial/municipal Departments of Industry and Trade to closely oversee the food market and strictly control food purchase for cross-border export to adopt rapid response measures.

 

“We cannot provide direct support for domestic enterprises and farmers when they purchase agricultural products, because this is contrary to international market laws and kindles a spirit of reliance among farmers,” Tu said.

 

Besides, the Ministry of Agriculture and Rural Development is stepping up the implementation of measures to increase product value, quality, output, hygiene, safety and origin.

 

The Ministry of Industry and Trade has also strengthened trade promotion activities, including market search and forecasting activities, product introduction, production orientation in a bid to bring in stable agricultural product contracts.

 

Currently, the Ministry of Industry and Trade and the Ministry of Finance are considering lifting pork export tariffs to 10 percent, from zero tax at present.