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EVFTA: Good opportunity for Vietnamese tuna exports
July 09, 2019, 10:16 AM
(seafood.vasep.com.vn) Free Trade Agreement between Vietnam and 28 EU Member States (EVFTA) is a new generation trade agreement, forecasting to bring more opportunities for Vietnam's tuna industry to penetrade markets. When EVFTA takes effect, Vietnam's tuna products shall have tax advantages compared to some other rival countries such as Thailand and China. These countries are holding large export market shares in the EU. However, both of them have not signed an FTA with the EU.

According to the statistics of Vietnam Customs, EU is the second largest tuna importer of Vietnam in the past 10 years. Since 2015, after Vietnam and EU officially ended negotiations and the agreement was released on 1/2/2016, Vietnam's tuna exports to the EU increased continuously.

Currently Vietnam mainly exports frozen loin/fillet tuna and canned tuna to the EU market in the past 10 years. Before 2014, Vietnam's frozen tuna loin/filet tuna exports to the EU growed continously. However, it tended to fall continuously for 2 years and climbed again in 2017. For canned tuna products, it tended to rose continuously in the period before 2014, but then also went down continuously.

Germany, Italy and Spain were the three largest tuna importers of Vietnam in the EU. Germany imported a lot of canned processed tuna products, while Italy and Spain mainly imported fresh and frozen tuna products.

Vietnam's tuna products mainly compete with similar products from Ecuador, Philippines, Indonesia, Thailand and China. Vietnam is difficult to compete with other countries due to the catches, the scale and capacity of tuna production of these countries are higher than ours. In addition, it is difficult for Vietnam to compete with the Philippines and Ecuador because they enjoy preferential tariffs, while Vietnam is not entitled to incentives. Vietnam's seafood industry has been considered a "mature" threshold, i.e, a group of commodities with a relatively high export value to the EU in recent years. Therefore,  from January 1, 2014,  Vietnam have not enjoyed the offer anymore.  Vietnamese tuna products are subject to a higher tax rate of 20.5%. This has reduced the competitiveness of Vietnamese tuna products in the EU market.

Under the EVFTA commitment, the EU shall remove tariffs on fresh and frozen tuna products (except for frozen tuna loin/fillet HS code 0304) as soon as the agreement comes into effect. For products of frozen tuna loin/fillet tuna HS code 030487, the EU shall eliminate tariffs for Vietnam under a 3-year schedule, from the basic tax rate of 18%, as soon as the agreement comes into effect. With the products of steamed tuna loin/fillet (raw material for canned tuna production), the EU shall abolish tariffs for Vietnam according to the 7-year schedule, from the basic tax rate of 24%. Particularly for canned tuna products (such as canned tuna in oil, in pouch, products of canned tuna family...), the EU shall exempt for these Vietnam products with the quota of 11,500 MT/year.

Thus, when EVFTA takes effect, it will be an advantage for Vietnamese tuna exporters in the long run. However, in the short term, businesses shall face many difficulties. Because this FTA includes a comprehensive chapter on trade and sustainable development, covering relevant labor and environmental issues in trade relations between the EU and Vietnam.

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