Domestic Businesses Need to Raise Awareness about SPS Regulations to Enter EFTA

EFTA was established on May 3, 1960 as a trade bloc-alternative for European states who were either unable or unwilling to join the then-European Economic Community (EEC). Today's EFTA members are Iceland, Liechtenstein and Norway and Switzerland. EFTA is not big but typically dynamic. Among EFTA members, Switzerland and Norway are potential export markets for Vietnam. On May 22 - 25, 2012, Vietnam carried out the first FTA negotiating session with the EFTA and has now concluded four other negotiation sessions. Along with the FTA negotiations, on July 3, 2012, the EFTA and Vietnam signed a memorandum of understanding (MOU) where the EFTA recognised Vietnam as a market economy. This MOU represented the recognition of the EFTA of Vietnam’s economic reform efforts, as well as the desire to promote economic and trade relations by signing an FTA. Once the FTA is signed, Vietnam’s goods will be levied lower tax rates and allowed a better market entry mechanism. This will help Vietnamese goods to enhance their competitiveness in this bloc.

 

Mr Thuc said SPS is a quarantine measure with many important principles to ensure safety and hygiene of products made from animals and vegetation, thus protecting the health of consumers. The EFTA has signed FTAs with 36 countries and this is really a good condition and opportunity for Vietnam to expand its market. According to the Agreement on a European Economic Area (EEA) between the European Union (EU) and EFTA which officially took effect in 1994, the EFTA SPS system applied is almost the same as that of EU countries, especially for goods made from animals. Therefore, to be able to export agricultural and aquatic products to the EFTA, Vietnamese enterprises must also satisfy the EU’s SPS requirements. This also means that if Vietnamese goods made from animals and vegetations are exported to the EFTA, they are also able to be circulated in the EU, and vice versa.

 

However, for the time being, Vietnam mainly exports seafood to the EU market while it finds it hard to export other animal-originated products to this bloc because of very complex procedures. The requirements for plant-originated products are also very high. In the five previous FTA negotiations, when Vietnam tried to put forward tax cut conditions, the EFTA side also expressed its goodwill and was committed to allowing simpler origin principles for Vietnam’s export. However, Mr Thuc said, "If Vietnam does not meet the criteria provided in the SPS regulations, the opportunity for Vietnam’s export is very fragile."

 

Ms Tone Matheson, an EFTA representative in charge of SPS, said, animal- and vegetation-originated products are imposed different control measures and SPS is the system that has the highest similarities between EFTA and EU. This means that once Vietnam’s goods are certified for SPS by the EU, they only need another checkpoint for free circulation in the EFTA. But, if one batch of goods is found SPS-disqualified, the shipper will have 10 more batches put under stricter examination.

 

The EU grants the SPS certifications based on trust in the examining and assessing capacity of State agencies in third countries. However, in developing countries like Vietnam, the limited capacity of State management agencies for this job is negatively affecting export performance of enterprises. To improve this situation, EU and EFTA experts will provide technical assistance for the enhancement of staff capacity at State management agencies in third countries. She stressed "This is merely the support, however. All depends on the healthiness of business and investment environment of that country."

 

Mr Tran Viet Cuong, an SPS specialist in Vietnam, said, “The fertile EU market sets very high standards from production and processing stages to distribution to ensure food quality and safety for consumers. This is both an opportunity and a challenge for Vietnamese enterprises. The opportunity is that they only need to set foot in any EU country to reach the rest of the bloc. But, the challenge is that Vietnamese companies must step up their scientific and technological application to improve quality and increase product value to meet stringent requirements of EU importers.”

 

He also recommended that Vietnamese exporters immediately contact business associations or competent authorities if they encounter any problems, to seek the best solutions and avoid unexpected damage.