The Trans-Pacific Partnership (TPP), the trade agreement between 12 Pacific Rim countries signed on 4 February after many years of negotiations, will significantly boost Vietnam’s seafood exports, according to economists.
Two of Vietnam’s most important seafood importers, Japan and the United States, are signatories of the agreement. Together, they imported shrimp and tuna from Vietnam worth nearly USD 1 billion (EUR 0.9 billion) in 2015 and it is predicted that this will increase by 15 percent in 2016.
The signing of this agreement comes hot on the heels of the conclusion of negotiations for an EU-Vietnam Free Trade Agreement (FTA) which was reached on 2 December 2015. The EU is likely the third-largest importer of Vietnamese seafood, with primary imports including pangasius as well as shrimp.
Neither agreement has been ratified yet, but there don’t appear to be any serious obstacles to prevent them from coming into official effect soon.
These agreements have been reached at a propitious time, as the Vietnamese seafood industry needs all the help it can get. Total seafood exports earned the country USD 6.7(EUR 6.2) billion last year, dropping by nearly 15 percent compared to 2014.
Vietnamese seafood exporters faced many difficulties and challenges in 2015, according to Vietnam Association of Seafood Exporters and Producers (VASEP) President Ngo Van Ich.
“We must look back and work together to build a comprehensive strategy,” he said in a statement on the association’s website.
Ich added that this year, the free trade agreement with the EU will officially take effect, and the signing of the TPP agreement will facilitate Vietnam boosting seafood exports to Pacific Rim markets. (In addition to the U.S. and Japan, the other signatories to the TPP with Vietnam are Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand and Peru. Mexico is a significant importer of Vietnamese pangasius, as is Australia.)
VASEP General Secretary Truong Dinh Hoe is optimistic that while neither free trade agreement has yet been ratified, Vietnamese seafood exporters have already met the rigorous standards required by importers in these countries. For example, for shrimp exports to the U.S., exporters must follow Best Aquaculture Practices (BAP) standards, Aquaculture Stewardship Council (ASC) standards and the Marine Stewardship Council’s Chain of Custody (CoC) standard.
Hoe emphasized that the higher standards the TPP enforces will improve the bargaining power of Vietnamese exporters. In the case of a dispute, Vietnamese exporters can take advantage of the TPP’s requirement that all signatories comply with the agreement rules, he said.
When the TPP was signed, Vietnamese seafood exporters were already meeting the standards set by importers in these countries, he added. And when the export tariff is eliminated following the agreement’s phase-in, it will create incentives for seafood businesses to invest further in farming and processing, thus bringing them higher economic value.
Cadovimex, a shrimp and pangasius exporter, is one Vietnamesse company that recently invested in processing lines equipped to BAP standards, according to Nguyen Phuoc Buu Huy, the company’s deputy general director.
Huy said that his company had also invited experts from the U.S. Department of Agriculture and the Food and Drug Administration to evaluate its ponds, hatcheries, feed and processing plants. By doing so, Huy said he strongly believed that his company is ready to meet the strict requirements of clients from the U.S., Japan and other markets.
Huy said the TPP will help Vietnamese exporters expand to additional markets, helping them avoid the business risk of selling to a single market. This solution will also help businesses become more flexible in processing and help farmers, he added.
As Vietnam fully enters into the TPP, its regulatory agencies must meet the challenge of improving development and support policies to meet the requirements of the global market, said Duong Ngoc Minh, chairman of the VASEP Freshwater Fish Committee and Le Van Quang, chairman of the VASEP Shrimp Committee.
Vietnam’s Minister of Agriculture and Rural Development Cao Duc Phat said that the ministry would continue to work closely with seafood exporters to handle the difficulties and challenges facing them after joining the free trade and TPP agreements.
Vietnam’s export business won’t be the only one that thrives under the TPP, according to Minh. Minh said that investment in processing technology to meet local demand was one of the important parts of the TPP and that as domestic products attained higher quality, local demand for them will increase.
