New Leverage for Fisheries Industry

With about 220 tariff lines for aquatic products, the base tariff rate ranges from 0 to 22%. In which, most of the high tariff rates from 6-22% will be reduced to 0% as soon as the EVFTA takes effect, the rest of the tariff lines will be reduced to 0% according to the 3-7-year roadmap. The agreement will provide a new levergae for the seafood industry in this potential market.

EU - potential market

The EU is Vietnam's second largest seafood export market, behind the United States. In which, shrimp accounts for nearly 50%. Shrimp is also one of the five most popular items in the EU (behind tuna, cod, salmon and pollock). Besides, the EU is also the leading pangasius consumption market of Vietnam, the second largest market for tuna and shrimp exports of Vietnam (after the US); and ranks 3rd in Vietnam's export of squid and octopus.

According to statistics, since the beginning of August when EVFTA took effect, the number of seafood export orders has increased by about 10% compared to July 2020. By the end of September, despite the impact of the COVID-19 pandemic globally, the value of seafood production increased by 2.48%, seafood exports to the EU market had positive growth. Export turnover in September recovered more strongly with an increase of 13% to achieve US$92 million, in the first nine months cumulatively reaching US$692 million.

According to the National Agro-Forestry-Fisheries Quality Assurance Department (NAFIQAD), currently, Vietnam has about 579 enterprises exporting seafood to the EU, accounting for 72% of the total number of seafood exporters (805 enterprises). Vietnam seafood is ranked 11th in market share in the EU (behind the United States, China, Japan, Hong Kong, Korea, India, Mexico, Canada, Singapore and Taiwan).

According to Dr. Dao Trong Hieu, Department of Agricultural Product Processing and Market Development, in the next five years, if the yellow card is removed and we can take advantage of tariff preferences under the EVFTA (with a better competitive position), it is forecast that the seafood export turnover of Vietnam to the EU in the next five years will be at US$1.2-1.5 billion/year.

In addition to exports, Vietnam also imports raw seafood materials from the EU for processing and exports back to the EU market.

Addressing weaknesses

According to Dr. Phan Thi Thu Hien, Foreign Trade University, the two biggest challenges facing Vietnam's seafood exports to the EU market are the Certificate of Origin and the EU IUU Regulation which applies to 28 member countries and all other countries when they want to export seafood to the EU. This law prohibits illegal, unreported and unregulated fishing to protect marine resources. Dr. Phan Thi Thu Hien said the rules of origin for farming are not mandatory for breeders. Businesses should follow the EVFTA rules of origin. Also according to Dr. Phan Thi Thu Hien, compliance with trade regulations when exporting to the EU is very important to ensure sustainability.

Sharing this view, according to Ms. Pham Thi Thuy Linh, Institute of Fisheries Economy and Planning, Ministry of Agriculture and Rural Development, although the EU is a potential market, Vietnam's exports to the EU are mainly raw products. Deep-processing and value-added goods are still few, so it has not yet made good use of tax incentives brought about by the agreement. The EU is a big market with a large number of orders, while small Vietnamese enterprises have limited financial resources, low labor productivity, and unstable sources of raw materials for production, which can not meet the demand of many orders from the EU. Besides, the market penetration activities of Vietnamese enterprises are still passively dependent on EU partners, and Vietnam has not yet established a seafood distribution system in the EU market.

Not only that, the EU attaches great importance to technical barriers to trade (TBT), rules of origin (C/O), social responsibility, transparency of labor information and production environment. Therefore, shrimp products in particular and seafood in general must overcome four barriers: Supply chain of materials; Supply of seed for aquaculture; Market development and; Infrastructure for seafood export.

To overcome these barriers, Ms. Pham Thi Thuy Linh said that it is necessary to soon improve legal policies related to issues that still face many difficulties and problems in the implementation of the EVFTA such as: Technical barriers to trade, export rules, intellectual property, labor, environment. In addition, businesses also need to have a long-term investment plan, focusing on reorganizing production, improving the quality of agricultural products, meeting clean production standards such as Viet GAP, Global GAP. Enterprises and cooperatives producing agricultural products should pay attention to the entire value chain, production stages must be protected against risks; traceability, labels of products must be transparent, creating momentum for sustainable agricultural exports to the EU.

In addition, the representative of the Institute of Fisheries Economy and Planning also said that the Government should facilitate enterprises to effectively apply the rules of origin to enjoy tax incentives according to EVFTA; issue policies to encourage scientists inside and outside the industry to transfer research results into practical production. At the same time, the government should support the development and increase competitiveness of the aquaculture industry in the context that countries in the region are having better farming costs.

By Ha Linh, Vietnam Business Forum