Trade Facilitation Group 11 PDF

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FOREIGN TRADE UNIVERSITY

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SUBJECT: TRADE FACILITATION TOPIC: THE EVFTA: VIETNAM AND TRADE FACILITATION FOR THE SEAFOOD SECTOR - AN ANALYSIS

Member:

Nguyễn Kim Sơn – 1810140058 Vũ Hà Phương – 1811140094 Đỗ Thị Phương Thảo - 1811140096 Trần Hồng Quân – 1810140056 Nguyễn Xuân Thành – 1811140095 Nguyễn Quỳnh Chi – 1810140011

Class:

International Business Economics (Advanced Class)

Lecturer:

Ph.D. Pham Thanh Ha

Ha Noi, October 2021

Table of Contents Introduction.........................................................................................................................................1 Part 1: Theoretical framework...........................................................................................................1 1.1. THE DEFINITION AND MECHANICS OF FTAS AND EVFTA:...................................1 1.2. THE PROSPECTS OF VIETNAM - EU’S TRADE RELATIONS:..................................2 Part 2: Vietnam’s seafood and fisheries sector’s current state of play when implementing the EVFTA.................................................................................................................................................2 2.1. OVERVIEW OF VIETNAM’S SEAFOOD EXPORTS AND IMPORTS WITH THE EU:..................................................................................................................................................2 2.1.1. Exports:.............................................................................................................................2 2.1.2. Export markets and forms of seafood export....................................................................2 2.1.3. The competitiveness of Vietnam's seafood products in the EU market............................3 2.2. EVALUATION OF VIETNAM’S SEAFOOD EXPORTS TO THE EU, IN LIGHT OF THE EVFTA:.................................................................................................................................4 2.2.1. Achievements:...................................................................................................................4 2.2.2. Limitations:.......................................................................................................................4 2.3.1. Provisional opportunities:.................................................................................................5 2.3.2. Provisional threats.............................................................................................................6 3.1. MACROECONOMIC SOLUTIONS:..................................................................................7 3.1.1. Enhancing the performance of supporting industries:......................................................7 3.1.2. Continuous provision of market information:...................................................................8 3.1.3. Completing and perfecting the legal environment:...........................................................8 3.2. MICRO SOLUTIONS:..........................................................................................................9 3.2.1. Promoting trade facilitation activities:..............................................................................9 3.2.2. Strengthening the cooperation between businesses and farmers:.....................................9 3.2.3. Developing human resources:...........................................................................................9 3.2.4. Properly implementing regulations to trace the origins of seafood................................10 Conclusion.........................................................................................................................................10 References..........................................................................................................................................11

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Introduction The 21st century - the century of industrialization, modernization, and opening up of markets - has seen the whole world begin to catch up more and more with modern trends: Being dynamic, connected, cooperative and mutually developed together. Recognizing the utmost importance of the current trend of globalization, Vietnam has been transforming, increasingly renewing under the leadership of the Party and State, so that it can quickly take measures to keep up with the times with sustainable development, tightening international relations, in order to optimally support and receive support from countries. To do that, Vietnam has been making great efforts to overcome barriers and trade regulations, participating in the act of signing documents and joining major commercial organizations in the world, such as the ASEAN, the WTO, the APEC, etc. Despite all that, it is next to impossible to mention Vietnam’s efforts in opening its markets without the EVFTA - one of the most important agreements, paving the way for Vietnam's economy later on the path of opening up and integrating into the world. One particularly crucial economic sector that Vietnam hopes to reinforce is the seafood and fisheries sector. In recent years, the seafood industry has always been paid special attention by the State and focused on development in many aspects. Seafood exports not only serve the increasing needs of people, but also help the country curb unemployment, contribute to the national budget, create favorable conditions for economic development, as well as the development of related industries. Vietnam's seafood export industry is increasingly asserting its position in the world economy. Currently, the EU is a key and long-term strategic market. This is also an opportunity for Vietnam's seafood industry to thrive in Europe. Part 1: Theoretical framework 1.1. THE DEFINITION AND MECHANICS OF FTAS AND EVFTA: In the traditional viewpoint, according to the General Agreement on Tariffs and Trade GATT 1947, article XXIV, a FTA is defined as “a pact between two or more nations to reduce barriers to imports and exports among them. Under a free trade policy, goods and services can be bought and sold across international borders with little or no government tariffs, quotas, subsidies, or prohibitions to inhibit their exchange”. The EVFTA (European - Vietnam Free Trade Agreement) is a free trade agreement between Vietnam and 27 European countries. Not only eliminating more than 99% of customs duties on goods, the agreement also opens the Vietnamese market to EU companies and strengthens the protection of EU and Vietnamese investments. The EVFTA Agreement officially took effect on August 1, 2020, opening up great opportunities and prospects, this is also a particularly important time for the comprehensive cooperative partnership between Vietnam and the EU. Besides the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the EVFTA Agreement is an important new generation free trade agreement that Vietnam participates in. The conclusion of the negotiation, signing and ratification of the agreement is a long way with the efforts, efforts and determination of Vietnam with the goal of raising the bilateral trade relationship between Vietnam and the EU to a high altitude.

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1.2. THE PROSPECTS OF VIETNAM - EU’S TRADE RELATIONS: As a matter of fact, at the moment the EU economy is facing public debt crises. Therefore, it is possible that the economic relations of the two sides will also be somewhat negatively affected. The relationship between the two sides in the coming time will depend a lot on the EU's ability to solve their current problems. In addition, the public debt crisis also poses many new problems in thinking about Vietnam's approach to the EU market in this context. Future trade disputes will take place in both quantity as well as diversity in form, fierce in competitive nature, showing a new balance when Vietnam's economy is gradually developing. Production capacity to supply goods is also increasing accordingly to meet the strict and difficult EU market, requiring high technical standards. An extremely great benefit to emphasize is that developing trade with the EU will help Vietnam access modern technology and equipment, as well as receive more training in labor qualifications, skills, serving the national construction to become an industrialized country. In the coming time, trade with the EU and Vietnam will continue to maintain the nation’s trade surplus. As for enterprises and large investors from Europe, Vietnam is currently a potential market with great purchasing power, an economy with high growth rate in recent years compared to the region. Part 2: Vietnam’s seafood and fisheries sector’s current state of play when implementing the EVFTA. 2.1. OVERVIEW OF VIETNAM’S SEAFOOD EXPORTS AND IMPORTS WITH THE EU: 2.1.1. Exports: Currently, Vietnam is ranked among the largest countries in Asia and in terms of seafood exports. According to the report of VASEP, Vietnam's seafood exports have been present in 170 markets around the world, of which still focus on 3 main markets: the US, EU and Japan. These three markets account for 50% to 60% of Vietnam's annual seafood export turnover. In 2020, these three markets still continue to account for about 50% of Vietnam's total seafood export turnover. In terms of export proportions, seafood to the EU has always accounted for a stable rate of 17%-26% of Vietnam's total annual seafood export turnover. In the period of 2009-2011, the seafood export industry accounted for nearly 10% of Vietnam's total export turnover to the EU and in the 2012-2020 period, the fisheries industry accounted for 3%-5% of the total export turnover of Vietnam's goods to the EU. According to new statistics, however, in 2021, Exports to major markets were all reduced, of which exports to the EU decreased the most by 40%. These are alarming numbers for Vietnam's seafood, reminding seafood exports to the EU that there are signs of a decrease and it is necessary to take measures to support and promptly change the export situation in this difficult period. 2.1.2. Export markets and forms of seafood export 2.1.2.1. Export markets: Among the 27 EU countries, Vietnam's main export markets are: Germany, Spain, Italy, France and the Netherlands. Since the 2000s, Vietnam has promoted export promotion to the EU and so far has expanded to all 27 EU countries, of which there are 4 traditional markets with the largest market

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share, namely Germany, Spain, Italy and the Netherlands. In the period of 2015-2020, with the significant support of the EVFTA, these four markets always account for nearly 50% of Vietnam's seafood export turnover to the EU. While the markets of Germany, Spain and Italy tend to decrease slightly in proportion, the Netherlands still tends to increase. Besides, in recent years, France, Belgium and Portugal have also emerged as markets with positive turnover growth. Along with continuing to maintain relationships with traditional markets, Vietnamese businesses have also begun to turn to exploit this potential market. 2.1.2.2. Forms of seafood export: The method of Vietnam's seafood export to the EU mainly has two forms: Direct export and export through intermediary agents. Regarding the direct export channel, Vietnamese seafood enterprises only focus on approaching importers but have not directly approached retailers and supermarkets. Because they have not penetrated deeply into the retail channel, businesses lack information about the market or receive little direct feedback from consumers, thereby failing to promptly change and invest in production to adapt to demand. market demand. In addition, for businesses that are not yet eligible to build their own distribution network, they have chosen to use intermediaries, which are Viet Kieu's trading companies in the EU or through third-country brokers such as: Hong Kong and Singapore. Although this form helps businesses quickly access the market and reduce risks, on the contrary, it makes Vietnamese businesses highly dependent on intermediary partners, not proactive in establishing their own distribution network, even with the current support of the EVFTA. 2.1.3. The competitiveness of Vietnam's seafood products in the EU market - Pricing: Pangasius products, bivalve molluscs and vannamei shrimp are Vietnam's export seafood products that have good competitiveness in the EU market in terms of price. In fact, the price of Vietnamese pangasius products has a competitive advantage compared to other white meat in the EU such as Vietnam's low labor costs and the large scale of pangasius farming. Compared to other countries in the world, Vietnam is leading the supply capacity and production output of pangasius, accounting for nearly 50% of the world production per year. The large-scale production creates a better competitive advantage for Vietnam compared to other countries as the price of Vietnamese pangasius is very cheap. - Quality: To date, there are about 200 shrimp processing plants approved by the European Commission with periodic field inspections right here in Vietnam. Vietnam is also one of the countries with many shrimp farming areas achieving ASC and BAP certificates in the world. In fact, European countries have a high demand for responsible and certified products, and the fact that Vietnam has many shrimp farming areas with ASC and GlobalGap certification is a major factor that helps Vietnamese shrimp compete in quality with other products on the market. In addition, recently, Vietnam has also put the method of ecological shrimp farming in mangrove forests into mass application to increase the output of exported ecological aquatic products, the competitiveness of Vietnamese shrimp in the world market will be much higher than before. - Market share: Vietnam has gradually established its position in the world seafood market. In 2000, Vietnam ranked only 11th among the seafood exporting countries in the world, 5th in Asia

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and 3rd in Southeast Asia, after Thailand (the exporting country of aquatic product) and Indonesia (10th). By 2020, Vietnam's position in the world seafood market has improved a lot, rising to the 4th position among the world's seafood exporting countries. That proves the outstanding development of Vietnam's seafood industry and the competitiveness of Vietnamese seafood products on the world market has been much improved than before. Furthermore, in the past few years, Vietnam has a number of frozen seafood products that are quite stable for export to Sweden and the Nordic region, such as: Pangasius fillet, black tiger shrimp, red snapper and mollusk seafood. Particularly, Vietnam's pangasius product has recently had a stable and dominant position in the Nordic market. Besides, with the diversity in aquatic resources, Vietnam has taken advantage of this advantage to export a variety of products to the European market, in which the main products are pangasius and shrimp. 2.2. EVALUATION OF VIETNAM’S SEAFOOD EXPORTS TO THE EU, IN LIGHT OF THE EVFTA: 2.2.1. Achievements: Thanks in large part to the EVFTA, in recent years, the proportion of Vietnam's seafood exports to the EU has continuously increased in terms of both value and output. Output increased from 345 thousand tons in 2009 to 416 thousand tons in 2015 and 467 thousand tons in 2020. The value of Vietnam's seafood exports to the EU also continuously increased by over $1,133 million in 2011 and up to $1,247 million in 2020. Besides these achievements, the EVFTA have also helped with trade facilitation for Vietnamese seafood exports to the EU, yielding the country considerable results in overcoming trade barriers such as: - In terms of tariffs: Since the EU allowed Vietnamese seafood to enjoy the EVFTA's preferential regime, we have always met the EU's conditions for the country enjoying this regime and are always on the list of priority countries of the EU. - Regarding meeting the EU’s technical standards: Despite the strict control of the EU food authority and pressure from the IUU yellow card, the export turnover of Vietnamese seafood still tends to increase, bringing seafood to the leading position among food products imported into the EU, also bringing the country a large source of foreign currency. The quality of Vietnam's seafood products is constantly being improved, investment in upgrading infrastructure for aquaculture and fishing is always renewed, seafood processing technology meets HACCP standards and is always maintained. - Regarding the dumping of seafood products: Unlike the case with the US market, Vietnamese seafood in the EU market is very little and there are almost no dumping lawsuits. Partly due to the large demand for seafood imports from the EU market, the EU usually does not use antidumping measures as a commercial or political retaliation like the US. Besides, Vietnamese seafood products are exported to the EU at reasonable prices and many varieties have quite high competitive advantages such as shrimp, pangasius and basa fish. Seafood products imported from Vietnam have almost no impact on EU domestic products, so they are usually not sued for dumping. This is also an advantage of Vietnamese seafood products in the EU market.

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2.2.2. Limitations: Besides a myriad of achievements that the EVFTA have brought, there are still many limitations that hinder the promotion of Vietnam's seafood exports to the EU market: - Vietnam's seafood market share still accounts for a small market share although export turnover to the EU has continuously increased. When there are large-scale orders, Vietnamese enterprises still miss orders because the number of large enterprises is not really many, financial constraints, low labor productivity and input materials for products unstable output - In terms of production and processing, seafood products are exported a lot, but the quality is not high, that's why the value of Vietnamese seafood products in the EU market is not high. The selling price of Vietnam's seafood products compared to other countries in the region or the world is much lower, so the total export value is not high, not true to the real value of those products. - In terms of fishing and aquaculture, the fisheries sector has not yet fully taken advantage of the country's potential yet. Currently, the field of aquaculture still accounts for a relatively low proportion compared to other sectors, there is still a lot of wasted land and waters, which has not been fully exploited, the efficiency of aquaculture is not high. Our country's fishing means are very poor and outdated, there are few means of offshore fishing, the fishing means are low in volume, so the economic efficiency is not high. - Regarding the search for markets in the EU for seafood products, businesses have not focused on marketing for their products, but mainly in the form of processing or exporting raw products without a focus on image and brand building. Therefore, EU customers do not understand much and know well enough about the quality and brand of Made in Vietnam seafood products. 2.3. CURRENT OPPORTUNITIES AND THREATS FOR SEAFOOD EXPORTS REGARDING THE APPLICATION OF THE EVFTA: 2.3.1. Provisional opportunities: a/ Continuing to promote exports to the EU: Through the EVFTA agreement, Vietnamese seafood exporters have conditions to access the large European market with more than 500 million people. According to Mutrap's forecast, with the continued application of the EVFTA in about 2-3 years, Vietnam's GDP can increase by 0.5%/year and exports by 5-6%. This is a good opportunity for Vietnam's seafood industry to develop trade with the EU. The elimination of tariffs will still create a huge price advantage for seafood products when competing with competitors from other developing countries without an FTA with the EU, including India, Thailand, and the Philippines and Indonesia. In addition to the benefits from tariffs, another benefit that EVFTA brings to Vietnam to facilitate seafood exports to the EU is the unification in the field of Customs management between the EU and Vietnam to facilitate trade. trade and transparency in understanding and applying non-tariff barri...