ABSTRACT:

Vietnam is one of the biggest fishery suppliers for the European Union. Especially, the EU-Vietnam Free Trade Agreement (EVFTA) which came into effect on August 1, 2020 is expected to significantly strengthen the competitiveness of Vietnam’s fishery products in the EU market. Hence, it is essential for Vietnamese businesses to take advantage of opportunities brought by the EVFTA to boost their fishery exports to the EU in the coming time.

Keywords: EVFTA, fishery export, competitiveness.

1. Preferential import tariffs for Vietnam’s fishery products in the EVFTA agreement

The EVFTA commits to give many preferential import tariffs for Vietnam’s seafood products, with the roadmap shown in the Table. In particular, the tariffs on most raw shrimp (fresh, frozen, chilled) to the EU will be reduced from base rate of 12-20% to 0% right after EVFTA taking effect; processed shrimp products will have a seven-year tariff reduction road map while primary competitors such as Thailand, India, Indonesia and Ecuador have current rate respectively of 12%, 4,2%, 4,2% and 12% because of without FTA.

Moreover, there will be nearly 50% of the tariff lines of the most product with high tax rate of 6-22% (such as oyster, scallop, squid, octopus, clam, processed abalone, frozen tiger shrimp, etc.) will be reduced to 0%; about 50% of the remaining tariff lines with the base tax rate of 5,5-26% (such as shrimp, catfish, tuna products, etc.) will be reduced to 0% after 3-7 years. Particularly, canned tuna and surimi (fish ball) applies tariff quotas are 11,500 tons per year and 500 tons per year, respectively.

Table: Tariff reduction roadmap in EVFTA

for some primary products of Vietnam

Product

Tax reduction roadmap[1]

Shrimp

HS03: EIF or 3,5-year roadmap

As soon as EVFTA comes into effect, export tax rate of some Vietnam’s shrimp products shall reduce to 0%.

+ Raw shrimp HS code 03061100 (frozen green lobster, frozen HOSO, DP black tiger shrimp; fresh frozen PD shrimp, ice-chilled blue lobster, slipper lobster (whole, frozen, sawn…) from the current level of 12.5%;

+ Shrimpt product HS code 03061710 (frozen PD tiger shrimp, frozen HOSO whole shrimp, tiger shrimp shell on), frozen/fresh tiger shrimp, frozen tiger prawn, frozen fresh HLSO tiger shrimp, IQF giant tiger shrimp, frozen meat shrimp…) from the current 20%;

+ Shrimp HS code 03061791, 03061792, 03061793, 03061799 from the current 12%;

+ Shrimp HS code 03061794 from the current 18%.

HS16: 7 years

After 7 years from the entry into force of the Agreement: shrimp HS code 16052110 (paste shrimp) and shrimp HS code 16052190 (other shrimp) from 20% to 0%.

Shutchi catfish

The 3-year roadmap, except for smoked fish is 7 years.

Tuna

HS03: EIF or  3, 5, 7-year roadmap

+ According to the commitment in EVFTA, Vietnam’s fresh and frozen tuna (except for frozen tuna loin and fillet HS0304) going to the EU market have been fully exempted from custom duties since August 01, 2020;

 + For tuna, the EU will eliminate tariffs for fresh and frozen tuna, except frozen minced and fillet tuna (HS code 030487), over 3 years, from base tax rate of 18%;

 + The tariff for steamed minced and fillet tuna (materials to produce canned tuna), currently at 24%, will be scrapped over seven years.

HS16: TRQ with canned tuna (11.500 tons)

Particularly for canned tuna processed products (such as canned tuna in canned oil, canned bags, fish products in the canned tuna family…) the EU will exempt Vietnam from the tax rate of 11,500 tons/year

Crab

3-year roadmap

Squid, octopus

EIF or 3-year roadmap

Other fishery products

TRQ with surimi (HS1604.20.05)

Source: Vietnam Ministry of Industry and Trade (2020)

In order to benefit from tariff preferences under the EVFTA, the products must be qualified as originating products. Criteria of origin in EVFTA is pure origin: those were born and raised within territory of an EU Member State or Vietnam.  

Thus, Vietnam can access a huge seafood consumption market with 27 member states (The UK left the EU on 31st January 2020), a population of over 500 million people, a total GDP of over 15,000 billion USD, accounting for about 22% of the world’s GDP, the EU will be a big and potential market. Moreover, the average income per capita of the EU members is quite high in comparison to the world, and they prefer to use seafood products for food and health purposes, due to the superiority of this type of product: delicious and tonic. According to the statistics from the International Trade Center (ITC), in 2019, the EU imported 55.66 billion USD. Vietnam ranked 6th among the foreign markets supplying seafood to 28 countries (including the UK) of the EU, accounting for 2.45% of the EU’s total seafood imports in 2019. In ASEAN region, Vietnam is the largest supplier market to the EU, in the Asia, Vietnam is second only to china (Figure 1). Therefore, the elimination of tariffs on most of Vietnam’s products exporting to the EU, including seafood, will create an important advantage for Vietnam in competing with other competitors in the EU market. EVFTA is expected to help Vietnam’s seafood exports to grow by about 2% in the period 2020-2040   

Figure 1. The main seafood suppliers to EU-28 in 2019

the_main_seafood_suppliers_to_eu-28_in_2019

Source: Vietnam Ministry of Industry and Trade (2020)

2. Some results since the EVFTA comes into force

The general report of the Ministry of Industry and Trade recorded that the number of Vietnamese seafood exporters to the EU market increased sharply after the EVFTA took effect. Particularly, before August 1, 2020, the number of businesses participating in seafood export to the EU is 370. In which, the number of enterprises participating in seafood export to the EU every month is about under 200 enterprises per month. But after that, the number of enterprises participating in seafood export to the EU has increased to over 200 enterprises per month. Preliminary estimated in 2020, there are 409 Vietnamese enterprises exporting seafood to the EU. Most of these businesses are reputable and have good supply capacity (The Hoang, 2021).

According to data from the General Department of Customs, Vietnam's seafood export to the EU increased immediately after the EVFTA took effect (Figure 2). However, in November and December 2020, output decreased slightly compared to the same period in 2019. The main reason was that EU seafood importers actively reduced the amount of seafood imported for the holiday because of being afraid of the negative impact of Covid-19. Besides, reducing seafood inventory was also a solution to cut costs. This resulted in a decrease in Vietnam's seafood exports to the EU. In addition, the reason also came from the Vietnamese side when the seafood production eligible for export to the EU during this period was not high because of the impact of the storms.

Figure 2. Vietnam’s seafood export to the EU in period 2019-2020

vietnams_seafood_export_to_the_eu_in_period_2019-2020 In 2020, despite the positive impacts from EVFTA has come into effect, seafood export to the EU still decreased by 8.8% in volume and 6.21% in value compared to 2019, estimated at 205.9. thousand tons with the value of 947.89 million USD, accounting for 10.18% of the volume and accounting for 11.29% of the seafood export value of Vietnam. The UK's withdrawal from the EU in 2020 also made the EU market no longer in the group of markets with seafood export value of over 1 billion USD in 2020.

Vietnam's seafood products exported to the EU are quite diversified and items creating the biggest foreign currency value are shrimp worth over 500 million USD; tuna species worth 128 million USD; shutchi catfish and yellowtail catfish worth 123 million USD, clam species worth 55 million USD; frozen fish worth 39.4 million USD; squid species worth 31.8 million USD and surimi worth nearly 10 million USD respectively.

Export statistics show that when EVFTA comes into effect, shrimp, clam, tuna and squid are the items that have benefited most from EVFTA's tariff preferences.

3. Challenges

However, it is also not easy to take advantages from the EVFTA. Fishery is a manufacturing industry which heavily depends on nature. Vietnam is currently ranked 3rd in the world in aquaculture production after China and India, but the impact of climate change, drought, saltwater intrusion, marine environmental incidents ... makes the harvest not as expected, the output is not enough to meet the processing capacity. The scale of Vietnamese enterprises is small while capital is limited, management skills are not high enough, still being confused in market access and there is no propaganda and promotion strategy.

Moreover, the proportion of raw products of the enterprise is still high, enterprises pay little attention to building and protecting product brands, sometimes even have to "wear" foreign brands, pity to sell products at a loss, and difficult to compete in the EU market.

On the other hand, in order to enjoy tariff and non-tariff preferences in Vietnam-EU trade, Vietnamese products must meet the rules of origin that raw materials for the production must be cultivated and harvested within Vietnam’s terriroty. Because domestic raw materials only provide about 40-45% of the processing capacity; up to billions of USD of seafood raw materials are imported annually while the domestic material supply system is idyllic, scattered and difficult to trace the origin, making quality control inherently difficult, and therefore, more difficult to meet the above requirement.

Some of the EU's measures even have higher standards than the WTO agreements. In addition to the EU SPS regulations, Viet Nam’s businesses also need to meet the specific regulations of large retailers and wholesalers.

Meanwhile, according to enterprises’ feedbacks, the application of commitments in EVFTA in exporting seafood to the EU market still faces many difficulties, especially the implementation of documentary and certification regulations still makes confusion. Specifically:

- C/O form Eur1: Confused at applying in the business community and within the EU member states themselves.

- C/O: Take long time to be issued because it relates to the certification under the IUU regulation.

- The application of HS codes is also difficult since enterprises are confused at declaring which code and which code under the agreement is not accepted by the importing country.

4. Some suggested solutions

In order to take advantage of opportunities from EVFTA and boost Vietnam's seafood exports to the EU market, it is necessary to pay attention to implementing some of these following solutions:

4.1. For the Government of Vietnam

- Promote the establishment of national standards, regulations, brands and trademarks. Develop and replicate the issuance of production area codes, traceability to meet the competitiveness in the trend of international integration. Along with that, it is necessary to promote the simplification and modernization of issuing certificate of origin (C/O).

- Strengthen the management and inspection to ensure the sanitary and epidemiological quality of exported aquatic products.

- The authorities need to continuously organize seminars, issue guidance, and disseminate knowledge and scientific information about fishing and aquaculture on mass media to improve the seafood exporters’ awareness of non-tariff trade barriers of the EU and his member countries.

4.2. For Vietnamese enterprises

- In order to further improve the competitiveness of seafood exports and create an increasingly solid position for Vietnamese seafood products in the EU market, enterprises need to make efforts to proactively research the market and the laws, especially changes in EU regulations, to fully and accurately access information. Failure to update information regularly will cause businesses to fall into a passive position and face high risks.

- Develop new products based on research results of consumer tastes, especially housewives; factors related to human health; market capacity;  control of food quality, hygiene and safety according to technical standards, take advantage of the traditional retail system, information and communication system; brand building and protection; update the EU information on the relating fields, in the media, at all opportunities; connect to EU businesses.

- In the context of the Covid-19 pandemic, the trend of seafood consumption and import in the EU has changed. Consumers refer to seafood products for home consumption which are easy to store, to process, convenient and with low average prices. These criteria are suitable for frozen, canned, dried and processed fish products such as fish ball; frozen shutchi catfish; frozen small to medium sized shrimp and black tiger shrimp. Vietnamese enterprises need to pay attention to the production and processing of these products.

- Enterprises need to know and understand thoroughly the rules of product origin; coordinate well with the seafood growers and fishermen in compliance with the rules of origin.

- Prepare conditions for overcoming anti-dumping, anti-subsidy and trade safeguard measures. In addition to the SPS and TBT requirements, the EU market is still able to continue applying trade remedies such as anti-dumping and anti-subsidy.

- Satisfy food hygiene and safety requirements right at the production facility (includes ensuring facilities and production processes according to HACCP standards). In addition, seafood processors and exporters need to understand some of the EU’s general regulations on hygiene rules for foods of animal origin, on allowed residues of certain substances in fishery products.

- Organize production in a closed chain with quality control; cut down on intermediaries; not scramble to buy domestically and to export raw products.

 

REFERENCES:

  1. Vietnam Ministry of Industry and Trade. (2020). Export information to the EU market - Fisheries industry. Hanoi: Industry and Trade Publishing House.
  2. Vietnam General Department of Customs. (2021). Vietnam's merchandise import and export landscape in December 2020 and whole year 2020. Hanoi: Vietnam General Department of Customs.
  3. Vietnam Association of Seafood Exporters and Producers (VASEP). (2019). Seafood market report in Europe in 2019. Ho Chi Minh City: VASEP.
  4. European-American Market Department, Vietnam Industry and Trade Information Center, Vietnam Ministry of Industry and Trade. (2020). Vietnam - EU Trade Specialist: Utilizing commitments in EVFTA Agreement has recorded initial successes. Hanoi: Vietnam Industry and Trade Information Center.
  5. The Hoang (2021). The number of seafood exporters to the EU increased sharply since EVFTA. Retrieved from: https://baodautu.vn/so-luong-dn-xuat-khau-thuy-san-sang-eu-tang-manh-khi-co-evfta -d138818.html

 

TẬN DỤNG HIỆP ĐỊNH EVFTA TRONG XUẤT KHẨU THỦY SẢN VIỆT NAM SANG THỊ TRƯỜNG EU

NGUYỄN THỊ HOÀI THU

Học viện Chính trị Công an Nhân dân

TÓM TẮT:

Việt Nam là một trong những đối tác cung cấp thủy sản lớn nhất cho khu vực EU. Đặc biệt, sau khi Hiệp định Thương mại tự do Việt Nam - EU (EVFTA) có hiệu lực, tính cạnh tranh của các sản phẩm thủy sản Việt Nam tại thị trường này sẽ tăng lên. Do đó, các doanh nghiệp Việt Nam cần tận dụng cơ hội từ Hiệp định EVFTA để đẩy mạnh xuất khẩu thủy sản vào thị trường EU trong thời gian tới.

Từ khóa: EVFTA, xuất khẩu thủy hải sản, năng lực cạnh tranh.

[Tạp chí Công Thương - Các kết quả nghiên cứu khoa học và ứng dụng công nghệ, 

Số 10, tháng 5 năm 2021]