VKFTA does not bring many advantages for Vietnam tuna exported to Korea

(10/20/2019 12:00:00 AM)

On May 5, Vietnam - Korea Free Trade Agreement (VKFTA) was signed and officially took effect from December 20, 2015. Compared to the previous signed FTAs of Vietnam and other countries, VKFTA does not really bring many advantages to the tuna industry.

South Korea is currently the world's second largest producer of offshore tuna fishing. South Korean fishing vessels operate mainly in the western and central Pacific Ocean (WCPO). The total output of purse seine fishing vessels of this country reached 278,227 tons, of which about 20% of the output, from 120-130 thousand tons, landed for domestic consumption, 80% of fishing output, about 160 thousand tons exported to other countries, especially Thailand, to produce and process canned tuna. Therefore, the Korean tuna industry satisfies the demand for live/fresh tuna of this country.

Besides, Korea consumes less canned tuna than other Asian countries. The average consumption of canned tuna of Korea is only 1kg/person/year (5 boxes), equivalent to 260 million cans of tuna per year, correspond to  US$370 million. Because of these reasons, Korea is not an attractive tuna market for tuna exporting countries.

According to statistics of Vietnam Customs, South Korea is not a big tuna importer of Vietnam, accounting for only 0.3% of Vietnam's total tuna exports. Export of tuna from Vietnam to Korea started from a very low level, at US$88 thousand in 2007. However, after 6 years, tuna exports to this market rose suddenly 8.370%, reaching over  US$7.4 million (in 2012 ). In 2012, due to the decrease in the supply of tuna in the world market and the fishing ban in the WCPO area, South Korea increased the import of tuna from other countries, including Vietnam. However, export of tuna from Vietnam to this market decreased, although VKFTA took effect. Export value of Vietnamese tuna to Korea is only under US$2 million.

Vietnam is currently exporting mainly canned processed tuna to Korea, especially canned tuna, accounting for over 80% of the total export value. Vietnam 's fresh and frozen tuna has accessed this market. However, exports these products tends to decrease.

According to VKFTA, some Vietnamese tuna products exported to Korea are committed to reducing tariffs according to the roadmap. Specifically, the import tax imposed on frozen yellowfin tuna and bigeye tuna reduced to 0-5% by January 1, 2016 at the latest. The chilled bigeye tuna maintain the 20% base tax rate before January 1, 2016 and will reduce at least 20% of MNF tax rate applied under the ASEAN-Korea Free Trade Agreement.

Chilled yellowfin tuna gradually was eliminated tariff rate in 3 years from the base rate of 20% and to 0% from 01/01/2018. Particularly, tariff rate applied for canned processed tuna, Vietnam's main export item to Korea, remained at the base tax rate of 20%.