Vietnamese agricultural products en route on EVFTA "highway"
NDO – The EU-Vietnam Free Trade Agreement (EVFTA) is likened to a “highway” leading Vietnamese goods, including agricultural products, to the large and potential EU market quickly and effectively. However, to go on that “highway”, Vietnam is suggested to prepare a “vehicle” that satisfies the European standards.
Tough route not covered with flowers
From August 1, 2020, when EVFTA came into effect, agricultural exports have been considered as the sector with the greatest favourable conditions to enjoy the preferential tariffs, especially agricultural products that are Vietnam’s strength with competitive advantages, such as seafood, vegetables and fruits, rice, coffee, pepper and wooden products.
For example, coffee exported to the EU was previously subjected to tax rates from 7.5-11.5%, but after the door opened thanks to EVFTA, the import tax was completely eliminated, thus opening up great opportunities for Vietnam to increase its competitiveness and boost coffee exports to this potential market.
In addition, EVFTA also offers the advantage that agricultural products will not be restricted in terms of commodities and turnover, so Vietnam can export any vegetables and fruits to the EU, as long as such items are domestically produced and meet the required standards.
However, agricultural experts also pointed out that, Vietnam should not be too excited about tariff reduction. Instead, there should be strategic preparation for more rigorous technical barriers than before to be set up by the import market. According to Nguyen Thi Mai Linh, Head of Office for Import and Export of Agro-Forestry and Fisheries under the Agency of Foreign Trade (Ministry of Industry and Trade), the EU is one of the most selective markets that requires the highest standards in the world, while at the same time, it is also a leading market in combating illegal exploitation of natural resources and is strict on the origin of goods with high quality standards.
Sharing the same point of view, according to Dr. Dinh Viet Tu, from the Agro Processing and Market Development Department (Ministry of Agriculture and Rural Development – MARD) said that agricultural enterprises and cooperatives would have to comply with the regulations to not only ensure food safety and hygiene but also to meet the standards related to social responsibility, labour and gender.
What MARD Minister Nguyen Xuan Cuong is most worried about, is not the external barrier factors. Production fragmentation is a long-standing problem that makes it difficult for Vietnamese agriculture to reduce costs, improve farming size and capacity, and have a direct impact on improving competitiveness. Vietnam is country with 8.6 million farming households and 10 million hectares of arable land, but farmers have been familiar with self-sufficient production instead of closely linked with enterprises to form a closed production chain, making it more difficult for sustainable exports.
That is evidenced by numbers that more than 70% of agricultural materials are purchased from farmers, with just only a small proportion from enterprises that invested by themselves or buy from State-owned farms. In this context, the role of the concerned authorities in production planning is still weak, while Vietnam is also in lack of centralised planning production areas.
Creating the “three-horse chariot”
How can Vietnamese agriculture increase its resistance at home and enhance its export competitiveness to major markets like the EU? Answering this question, Dr. Dinh Viet Tu said that, first of all, enterprises, cooperatives and related units need to build overseas distribution chains, build brands, expand markets and promote exports. Along with that, they need to increase the scale and improve competitiveness for local agricultural products, production establishments and enterprises, while increasing production scale in the value chain and strictly controlling food safety and animal and plant quarantine in production, as well as ensuring quality management under the value chain, origin, production area code, geographical indication and sustainability certificate.
The key to major commodity agriculture is to mobilise farmers to join cooperatives or associate with enterprises, from which they can form concentrated production areas applying safe cultivation methods according to regulations, such as Vietnamese Good Agricultural Practices (VietGAP) and Global Good Agricultural Practices (GlobalGAP). This model has been promoted in some localities such as Son La, Hung Yen and Dong Thap and has obtained efficiency somewhat showing the correctness of the above solution.
Obviously, the change of mindset from leaders to each farming household in actively transforming production from quantity to quality has helped localities find a path for sustainable agricultural development. Along with that, indispensable activeness of businesses and cooperatives is important in finding out how to develop their products to overcome EU technical barriers regarding origin, product quality and intellectual property protection.
To do so, the Director of MARD’s Agro Processing and Market Development Department, Nguyen Quoc Toan, recommended that, first of all, the standards applicable to products are not only VietGAP but must be raised to GlobalGAP, especially the processing capacity for agricultural products also need to be increased to better suit the demands of the EU, where there is a large geographical distance from Vietnam. Second, businesses will have to develop products with good processing and long-term preservation, including both fruit and seafood, to conquer this market.
To take advantage of opportunities brought about by EVFTA, the agricultural sector needs to continue promoting the formation and development of highly competitive product value chains. In which, localities with national-level products need to urgently review and determine clearly the long-term stable planning of regions, sub-regions and concentrated production areas to ensure Vietnamese food safety standards, while meeting the requirements and regulations of the foreign market for products that have been and will be exported. On that basis, there should be the issuance of the production area code with the basic data to include in the traceability information for Vietnamese agricultural products.
In a comprehensive view, EVFTA is only a necessary condition and Vietnamese agricultural products must meet the remaining sufficient conditions to take advantage of the extremely large market pie that this agreement brings about. If good use is make of it, the export of Vietnamese agricultural products will not only support the economy in this difficult period, but more importantly, sustainable agriculture is also the “passport” for accessing other potential markets.
According to the MARD, after just over a month since EVFTA took effect, the export value of agro-forestry and fisheries to the EU in August this year reached US$350 million, up 17% compared to July 2020. In which, rice, fresh vegetables and coffee are the typical items mentioned when taking advantage of export opportunities to the EU thanks to EVFTA. Regarding the export value for the whole year, it is expected that the export value of Vietnamese agro-forestry and aquatic products this year will reach over US$40 billion.
Source: Nhan Dan
PPV 2019 OVERVIEW
10 July, 2019