June 6, 2006

Challenges abound for Vietnam seafood industry as it enters WTO

As Vietnam prepares to enter the WTO, Minister of Fisheries Ta Quang Ngoc has expressed concern over the competitiveness of Vietnamese seafood as the heady days of high profits are on the wane and restrictive export laws set in amidst lower supplies of raw materials.

On the legal front, Ngoc said Vietnam's impending ascension to the WTO should not pose problems as Vietnamese exporters have gotten used to requirements set by Japan, Europe and the US, which should help them adapt to the WTO rules easily.

In the past, local enterprises could only export to individual countries within the EU. Now that Vietnam has been named in the EU 'list 1', its exports has been allowed to enter the entire EU, Ngoc said.

However, low prices, which once propelled Vietnamese seafood products to popularity in various markets, is less of a factor now. In fact, prices offered by Vietnamese companies are sometimes higher than those by other countries.

Unstable supply has been pushing production costs up. Prices of unprocessed shrimp have doubled while the selling price of the finished product remains unchanged.

On top of that, Vietnam also has to navigate its way through various trade disputes and learn about WTO laws and the requirements set in different markets. For example, Vietnamese seafood was banned in three US states when a chemical residue was discovered. That residue would have been allowed in small amounts in Europe, Ngoc said. 

Once it has entered the WTO, Vietnam would also have to open access to its markets. This means Vietnamese companies would need to compete with other exporters at home as well as abroad.

Ngoc also pointed out that the small scale of most processing plants hamper their ability to fill big orders and that is something the authorities would look into.