Will pangasius exports benefit from FTAs?

News 15:49 26/03/2015 609
(vasep.com.vn) Trade deals with major importing markets promise better conditions for Vietnam pangasius exports in 2015.

 

 

In particular, free trade agreements with Russia and Europe will help Vietnam exports with reduced tax.

Currently, Vietnam is negotiating with the EU in the framework of FTA known as EVFTA. Reportedly, the most recent, the 11th negotiation round took place in Brussels, Belgium in from 19th to 23rd January 2015.  Significant progress has been made in this session. Tax on pangasius as well as other seafood was agreed to be strongly cut.  The European countries are demanding markets with tariff barriers and strict regulations of sanitary and phytosanitary (SPS) on imported seafood. Enterprises, therefore, expect much from this FTA to boast pangasius exports to these markets.

It is expected that the negotiation will finish this year. Currently, average tariff on frozen fish fillets (HS code 0304) is 6.88%, and tariff on frozen pangasius fillets is 5.5%. In 2014, Vietnam pangasius exports to the EU valued at US$ 344.29 million, down nearly 11% compared to 2013. The EU now accounts for 19.5% of total Vietnam pangasius export turnover. Despite declines in recent years, Vietnam, holding over 95% of the market share, maintained its position as the leading pangasius and catfish provider and in top 12 frozen fish fillets (HS code 0304) to the EU in 2014.

With EVFTA, tariff and non-tariff barriers will be lifted, giving processors from Vietnam more opportunities to expand markets, import materials from the third for processing and re-exporting to the EU.  

Beside exempting most taxes (90% of all taxes) in 7 years, EVFTA will support Vietnamese businesses with investments and technical transfer to sustainably access the EU market and attract foreign more investments into Vietnam. According to experts, as tax rates stay lower than 3% or 4%, Vietnam will get more benefits against other competitors. Currently, frozen fish fillets from Vietnam exported to the EU are levied at 5.5%, which will decrease after EVFTA takes effect.

Negotiation for Free Trade Agreement (FTA) with the Customs Union, including 3 countries namely Russia, Belarus and Kazakhstan, is also expected to end negotiation rounds this year. At least 80% of goods from Vietnam exported to Russia, including fisheries products will be tax-exempted. Currently Russia is imposing tax of 5.63% on frozen pangasius fillets from Vietnam. In 2014, Vietnam pangasius exports to Russia valued US$ 33.24 million, down from 2013. Russia accounts for 1.88% of the of total pangasius export turnover of Vietnam. Meanwhile, exports to Belarus and Kazakhstan both increased from 2013, valued at US$ 2.09 million and US$ 3.14 million, respectively. The proportion of exports to these markets was not high. The former accounted for 0.12% and the latter made up 0.18%.  

In brief, Vietnam seafood exports will benefit from the FTAs, at least for the European market and Customs Union as taxes are lower while China, Thailand, Norway are still subject to high tariffs.  

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