Vietnam’s seafood industry upbeat on pending free trade agreement with EU
Vietnam's seafood exporters are hoping the free trade agreement it is finalizing with the European Union will help it strongly boost seafood shipments to the bloc and help the country's products become more competitive there.
On 17 October, the European Commission agreed to submit the E.U.-Vietnam Free Trade Agreement (EVFTA) to the European Council. Its approval is slated for the year-end, which will then result in the deal moving to the European Parliament for ratification in early 2019, the Vietnamese government said in a statement on 22 October.
Once the deal comes into effect, seafood exporters from the Southeast Asian nation will have “huge opportunities” to speed up exports to the E.U., the Directorate of Fisheries of Vietnam said in a public announcement. About half of the import taxes on seafood products from Vietnam to E.U. will be removed immediately after the agreement comes into effect, with the remainder eliminated within seven years from the effective date of the pact. The E.U., however, will give Vietnam annual quotas for duty-free imports of 11,500 metric tons (MT) of canned tuna and 500 MT of canned fish balls. Additional volumes beyond the quotas will be taxed, according to reports from the directorate and the Vietnamese Finance Ministry’s National Institute for Finance.
Vietnam exported USD 1.11 billion (EUR 967 million) worth of seafood products to the E.U. in the first nine months of 2018 – mainly comprised of shrimp, pangasius, and tuna, said the directorate. That total is up 6.2 percent from the same period last year.
Vietnam’s largest pangasius exporter, Vinh Hoan, said on 18 October that live, fresh, dried, and frozen pangasius forms (coded HS03) are currently taxed at 5.5 percent by the European Union, and the other pangasius products (HS16) are taxed at seven percent. The EVFTA will eliminate all E.U. tariffs in three years for the former and in seven years for the latter after the agreement enters into force.
Between January-September, the country shipped pangasius worth USD 176.4 million (EUR 153.8 million) to the E.U., up 14.6 percent from a year earlier. The uptick was surprising, as the export value to the bloc has steadily fallen in recent years, the Vietnam Association of Seafood Exporters and Producers (VASEP) said 23 October.
Vinh Hoan said its exports to the E.U. suffered in recent years due to negative reports in European media regarding the sustainability of pangasius production and “smear campaigns” run by European non-governmental organizations.
“The tariff reduction effect of the EVFTA might, however, provide an opportunity for the Vietnamese pangasius sector to regain its importance in the bloc through increasing the competitiveness of unprocessed pangasius products which account for the large majority of exports,” a company spokesperson told SeafoodSource.
Vietnam’s tuna exports to the E.U. between January and August were valued at USD 102 million (EUR 88.9 million), up 26 percent from the same period last year. The yellow card imposed by the E.C. last October did negatively impact the export volumes to the bloc in the period, but the export value still rose because of higher prices, according to VASEP.
Vietnam hopes the lower tariffs under EVFTA will help it grab more market share from China and Thailand, two of its biggest tuna competitors in the E.U., as neither country has inked free trade agreements with the E.U. Currently, tuna from Vietnam heading into the E.U. sees duties between 11 percent and 20 percent, Vietnam’s directorate said.
Vietnam also expects its shrimp – currently taxed between six percent and 20 percent by the E.U. – to become strongly competitive against shrimp products from India, its biggest competitor. As a free trade agreement between India and E.U. is in the works but has not yet been concluded, the EVFTA will help Vietnam lower shrimp prices in order to gain an advantage over India, the directorate added.
Vietnam exported USD 648 million (EUR 564.4 million) worth of shrimp exports to the E.U. in the first nine months of 2018, up 11.1 percent year-on-year.
Photo courtesy of VASEP