VCN - The EU is the second largest seafood export market of Vietnam, after the US. The Free Trade Agreement between the European Union (EU) and Vietnam (EVFTA), signed in Ha Noi on June 30, 2019 will create opportunities for deep access between Vietnam and the EU market of 28 member countries, in which seafood products are evaluated to benefit.
|Canned tuna and fish balls, EU’s tariff quotas for Vietnam are respectively 11,500 tons and 500 tons. Photo: T.H.|
Reduce tax to 0%
According to the Vietnam Association of Seafood Exporters and Producers, in the EVFTA, as soon as the Agreement comes into effect, nearly 50% of tariff lines have a basic tax rate of 0-22%. Most of high tax at 6-22% will be reduced to 0% (about 840 tariff lines). About 50% of the remaining tariff lines with a base tax rate of 5.5-26% will return to 0% after 3 to 7 years. Particularly canned tuna and fish, EU’s tariff quota for Vietnam is 11,500 tons and 500 tons, respectively.
Specifically, after the EVFTA agreement comes into effect, some processed products which have a relatively high basic tax rate (20%) will be reduced immediately to 0% such as oysters, scallops, squid, octopus, clams. In addition, most frozen squid and octopus products with basic tax rates of 6-8% will be reduced immediately to 0%, other products such as surimi are reduced from 14.2% about 0%, swordfish from 7.5% to 0%.
For shrimp products, frozen tiger shrimp (HS 03061792) is entitled to a tax reduction from the base rate of 20% to 0% as soon as the agreement comes into effect. Other shrimp products follow a 3-5 year schedule, particularly shrimp processing has a 7-year tax reduction schedule. For pangasius products, the roadmap for 3-year tax reduction, smoked fish only has a 7-year roadmap. Frozen tuna products get a tax reduction of 0% right away, except for frozen tuna loins that need a 7-year roadmap and canned tuna products with a 0% tax rate of 11,500 tons.
The EU accounts for over 17% -18% of total seafood export value of Vietnam. In particular for shrimp products, EU accounted for 22% of Vietnam’s export share, pangasius accounted for 11%, seafood products accounted for 30 -35%.
In addition to the basic benefits of import and export taxes, participating in new generation FTAs such as CPTPP and EVFTA, Vietnamese seafood will have the opportunity to expand export markets, increasing competitiveness compared to competitors without FTAs such as India, Thailand; attract foreign investment, improve production technology and product quality; create motivation for market opening, attracting the attention of businesses on both sides; conditional on participating in the regional supply chain thanks to the investment movement of multinational corporations; be ensured a more stable and transparent business and institutional environment by improving appropriate regulations and policies according to FTA terms.
According to Truong Dinh Hoe, Secretary General of Vietnam Association of Seafood Exporters and Producers, there will be new challenges for Vietnam’s seafood industry when participating in the EVFTA such as conditions on technical barriers and quality standards, rules of origin are tighter, there are more complicated and new rules, while our products compared to FTA partner countries are less competitive in price.
In order to take advantage of the CPTPP and EVFTA as well as other FTAs such as import and export taxes and other opportunities, as well as avoid risks, limit the disadvantages caused by challenges, first of all aquatic enterprises need to grasp and apply flexible and honest rules of origin of FTAs (note that goods must meet rules of origin specified for each FTA); finding and developing raw materials in the country and in FTA partners; make the most of tariff preferences. Enterprises should pay special attention to implementing and meeting regulations, standards on labor and environment, issues related to sustainable development - these are requirements in new generation FTAs such as the EVFTA and CPTPP. Enterprises need to strengthen cooperation, attach importance to link to improve productivity, quality, good control of food safety and hygiene; actively seek directions to cooperate with foreign partners, technological innovation, participate in global supply chains.
Enterprises need to know which sectors Vietnam really has advantages when exporting to Europe. According to experts, Europe requires very high quality of goods as well as good product traceability. Therefore, if enterprises are not prepared and do not comply with standards to export goods to the EU, goods cannot be exported. While EU imports into Vietnam are reduced, it will create more competition for Vietnamese goods. Currently, EU is withdrawing gold card for seafood products of Vietnam. Although the Government, Ministry of Agriculture and Rural Development, seafood catching and purchasing enterprises are making great efforts to remove yellow cards. Recently, the EU warned that if Vietnam does not change, it is possible to apply the red card. In order to remove the yellow card in seafood exports, much effort is needed, for example, Thailand has to handle yellow card removal for 5 years.
According to Pham Hong Hai, general director of HSBC Vietnam, bilateral trade between the two markets has increased more than 20 times over the past two decades with the annual trade value of nearly 50 billion euros. The European High Commissioner estimates that Vietnam's exports to Europe will grow by about 18%, according to calculations that will expand Vietnam's trade surplus with Europe.
Strong commitments in the Agreement will help open more export markets for Vietnam, especially textiles, agricultural and aquatic products, and wood products.
Besides the benefits, there are many strict requirements for goods origin for products imported into Europe. Currently, only large-scale enterprises and FDI enterprises are able to meet the autonomy of raw materials sources in compliance with the rules of origin of the Agreement. In addition to the need for enterprises to develop themselves internally, the Government’s guidelines to help provide information and raise awareness for businesses about this agreement are very necessary, such as development planning for supporting industries, guidelines on Vietnam's commitment to EVFTA, what businesses need to do, specifically environmental commitment, protection of intellectual property rights, goods origin.
Besides, radical administrative reforms to remove import and export procedures for enterprises, perfecting the legal framework to meet labor and environmental conditions and appropriate intellectual property International and European standards should be considered a priority.
By Le Thu/ Huu Tuc