Vietnam shrimp exports after signing EVFTA: Advantages and challenges
(10/4/2019 12:00:00 AM)
In the context of an effective Vietnam-EU
Trade Agreement (EVFTA), shrimp is one of the seafood products
benefiting from tariff preferences of this Agreement. However, joining
the Agreement also poses many challenges for export enterprises.
In October 2018, the European Council (EC) officially approved EVFTA. The agreement was signed in Hanoi on 30 June 2019.
After
being effective, EVFTA will be considered as an opportunity for
Vietnamese seafood enterprises to increase export value to this market.
According to commitments in EVFTA, Vietnamese seafood exported to the EU
will be completely eliminated tariff (except canned tuna and fish balls
applying tariff quota of 11,500 tons) with the longest schedule of 7
years. Particularly, shrimp products will be more optimistic as import
tax on this market will drop sharply from the first year, then gradually
decrease to 0% in the following years.
The
EU mainly imports frozen raw shrimp and processed shrimp from Vietnam.
For frozen shrimp and prawn products, tax is reduced from the base rate
of 20% to 0% as soon as the agreement comes into effect. Other shrimp
products will reduce following a 3-5 year schedule, particularly
processed shrimp will follow a 7-year tax reduction schedule.
Currently,
the GSP tax rate that EU sets to Vietnam for frozen raw shrimp (HS
030617) of 4.2%; Frozen processed shrimp (HS 160521) enjoyed 7%. Vietnam
has an advantage over the two rival countries, Thailand and China as
these two countries do not enjoy GSP from the EU.
In
addition to tax incentives, EVFTA also gives Vietnamese enterprises an
opportunity to increase their competitiveness compared to competitors
without FTA with the EU (such as India and Thailand). Enterprises can
save production costs to increase competition as it is easier to access
production services when Vietnam is committed to opening logistics,
insurance, finance services ...
Enterprises
also have conditions to participate in regional supply chains thanks to
the investment movement of multinational corporations, ensuring a
stable and transparent institutional and business environment (thanks to
improving regulations and policies according to FTA terms).
However,
there will be new challenges for Vietnam's fisheries sector when
participating in EVFTA such as: conditions on technical barriers,
quality standards, rules of origin, and more new and complex
regulations, while Vietnam's products are less competitive in price
compared to FTA partner countries...
Enterprises
need to strengthen cooperation, focus on linkage chain to improve
productivity, technological innovation, participate in global supply
chains.
In
the first 5 months of 2019, Vietnam shrimp exports to the EU reached
243.4 million, down 26.3% compared to the same period of 2018. The UK,
Germany and the Netherlands are the 3 main importors for Vietnamese
shrimp in the EU market. Shrimp exports to the UK in May have shown
positive signs: an increase of 11.6% to over US$18 million.
With
preferential tariffs and a favourable business environment, Vietnamese
exporters will have an advantage over many other shrimp exporter such as
India and Thailand. It is forecasted that EVFTA will contribute to
increase the export of Vietnamese shrimp to the EU in 2019.
VIFEP (Vasep)
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