Door to EU market wide open for Vietnamese aquatic products

The EU has always been the second-largest market of Vietnam's aquatic export. When the Vietnam - EU Free Trade Agreement (EVFTA) takes effect, aquatic exports to the EU are expected to grow robustly.
Marine fish for export in Bac Lieu Province. (Photo: SGGP)
Marine fish for export in Bac Lieu Province. (Photo: SGGP)

The EU is one of the largest aquatic import markets in the world, spending 23-25 million euros each year to import more than 9 million tons of aquatic products. Spain, France, Germany, Italy, and the UK are the main import markets with the annual aquatic import value exceeding US$1 billion.

Over the past many years, the EU has accounted for more than 17 percent of Vietnam's total seafood export value, making it the second-largest export market for Vietnamese aquatic products. Of which, shrimps and shrimp products accounted for 22 percent of the proportion of Vietnam's shrimp exports; pangasius fish and pangasius fish products accounted for 11 percent of the proportion; other seafood products accounted for 30 percent-35 percent of the proportion. The Vietnam Association of Seafood Exporters and Producers (VASEP) said that after the EVFTA comes into effect, the fishery industry will have 840 tax lines reduced, especially up to 50 percent of the tax lines, which are currently subject to the tax rate of 22 percent, will be reduced to zero percent. In the next three to seven years, about 50 percent of the remaining tax lines, from 5 percent to 26 percent, will be cut to zero percent. According to the VASEP, processed products, such as oysters, scallops, squid, octopus, clams, oysters, and processed abalone, will have many advantages because their tax rates, which are at a high level of about 20 percent, will be lowered to zero percent; most of the frozen squid and octopus products whose tax rates are from 6 percent to 8 percent will be reduced immediately to zero percent; other products like surimi will decrease from 14 percent to zero percent, swordfish from 7.5 percent to zero percent.

The most popular item in the European market is shrimp, and frozen black tiger shrimp will have more advantages when the import duty will be cut from 20 percent to zero percent right after the agreement becomes effective. Pangasius fish products are also the commodity that enters the EU most with a three-year tax reduction schedule; as for smoked fish, the tax reduction route will be seven years. Import tariffs on frozen tuna products are reduced to zero percent immediately, except for frozen tuna loins with a 7-year tariff reduction scheme. As for canned tuna, earlier, Vietnam merely exports to the EU about 3,000-4,000 tons each year, now with the EVFTA commitments, the tariff quota to the EU will be up to 11,500 tons per year. Similarly, fish ball products were allowed to export only a few dozen tons per year, now the quota is raised to up to 500 tons per year.

Mr. Truong Dinh Hoe, General Secretary of the VASEP, analyzed that previously, Vietnamese seafood exported to the EU market could not compete with products of its competitors because of high tax rates and high-cost prices. Now the country has the advantage in tax rates, but it should be noted that the EU is also the market where inspection and supervision on food safety, quarantine testing, and traceability are extremely strict for seafood products. Therefore, enterprises need to proactively strengthen control on the quality of goods, follow the market to get appropriate contracts, focusing on short-term contracts. The EVFTA currently focuses on the standards on labor and the environment, and the issues related to sustainable development. In the long term, Mr. Truong Dinh Hoe recommends that enterprises should actively seek and strengthen cooperation in the supply chain to improve quality and develop the source of raw materials, but at the same time, they must control food safety. In the context that Vietnam has controlled effectively the Covid-19 pandemic, many foreign corporations will shift their investment into the country. This is also an opportunity for exporters to expand their search for foreign partners to improve production technology and increase product quality. Thereby, the domestic manufacturing plants can meet the standards of many other choosy countries.

With the EVFTA, the door for Vietnamese seafood products to enter the EU is wide open. The problem is that whether Vietnamese enterprises meet the technical barriers and strict rounds of testing on quality standards. Mr. Phung Duc Tien, Deputy Minister of the Ministry of Agriculture and Rural Development (MARD) emphasized that seafood producers should not only focus on the EVFTA but also improve the production quality to ensure technical barriers, meeting all fastidious markets. If the products are of good quality, it is unnecessary to worry about the market. In the past six months, seafood exports to the EU decreased by 35 percent over the same period due to the impacts of the Covid-19 pandemic. According to the Agro Processing and Market Development Authority under the MARD, If Vietnamese enterprises make good use of opportunities when the EVFTA takes effect, it will help the fishery industry to grow rapidly, and the seafood exports are expected to reach a growth of over two digits by the end of the year.

Mr. Truong Tien Dung, General Director of Saigon Seafood Company: Concerns about the illegal, unreported and unregulated yellow card

The EVFTA will open up great opportunities for exporters. The company is exporting to many countries in the EU, at the same time, many importers have contacted the company to make orders to prepare for the EVFTA, but at present, the company cannot expand production, because there are still problems related to the yellow card on IUU fishing. The fishermen need to seriously implement IUU fishing to remove the yellow card warning, which also helps exporters to reduce costs and increase competitiveness in the export markets.

Mr. Truong Vinh Thanh, Deputy General Director of Sao Mai Group: Creating conditions to export deeply-processed products

Although Vietnamese pangasius fish does not compete with many other countries, there is an excessive supply of pangasius fish due to mass production. For associated farms, the export companies buy pangasius fish at stable prices. For non-associated farms, the exporters will not purchase. Therefore, farms need to link with exporters to secure consumption. It is forecasted that in the third quarter of this year, the market will flourish because European countries are fighting against the pandemic well, so business activities have started to reopen. Another difficulty of exporters is that with the EU market, Vietnamese exporters still depend on the importers so they have not gained the initiative in orders. Besides, for processed products with a 3-7-year tariff reduction scheme, during this period, export enterprises need to invest more in modern production technology to produce deeply-processed products. Moreover, pangasius fish exports to the EU market are very large, the Government needs to support the construction of a center to promote Vietnamese seafood products in this market to conquer the market of processed products.

Mr. Tran Dinh Luan, Director General of the Directorate of Fisheries under the MARD: The advantages of a long coastline

For tuna, the tax rate will be zero percent so it is very advantageous. Tuna is always a high-class product, imported heavily by many EU countries. Currently, many countries participate in the protection of environmental resources, especially marine resources, so the fishing of marine products is strictly controlled.

Vietnam has the advantage of a long coastline with lots of seafood, especially tuna. However, Vietnam is still trying to get the European Commission to remove the yellow card warning. Once this problem has not been resolved, Vietnam's tuna export orders will bear more costs, making it difficult for Vietnamese tuna to compete with other countries’ when the EVFTA is implemented.

Mr. Duong Nghia Quoc, Chairman of the Vietnam Pangasius Association: Building a stable market

Currently, many Vietnamese enterprises are vying with each other to buy and sell pangasius fish, so the price of pangasius fish is not stable. Because of that importers have continuously lowered prices, then farmers will suffer the most severe losses. For other countries, the export market price must be ratified by the association. If the price is low, the association along with the State will not sell immediately but support farmers to reserve pangasius fish while waiting for a good price to sell. Therefore, the government should issue regulations on governing the export prices so that farmers do not have to worry about the price uncertainty. Moreover, enterprises need to carry out traceability to ensure consistency, quantity management, quality, and cost price.