Vietnam shrimp exports to EU to get added boost with FTA zero tariff
Vietnam's shrimp exports to the EU are expected to get a big boost when he country's free trade agreement with the 28-nation bloc takes effect hopefully this year.
In November 2015, Vietnam and EU officially concluded negotiations on the EU-Vietnam Free Trade Agreement (EUVFTA). The FTA was signed on June 30 in Hanoi, paving the way for its conclusion and increased trade between the EU and Vietnam.
Under the agreement, Vietnamese goods including shrimp products shall enjoy 0% tax either immediately of after certain numbers of years following effectivity of the EUVFTA, depending on the type of products. However, Vietnamese products must meet EU origin standards to enjoy this tax. Vietnam has an advantage over two rival countries, Thailand and China, because they do not enjoy Generalised System of Preferences tax from the EU.
The EU accounts for about 30.6% of the total value of shrimp imports worldwide. EU shrimp imports range from US$6 billion to $8 billion per year.
According to data of the International Trade Center, in 2018 global imports of shrimp into the EU reached more than US$7 billion, up 0.5% from 2017. Spain and France were the two largest shrimp importers of EU. Value of Spain's shrimp imports reached US$1.2 billion, down 2%, while those of France reached $937.6 million, down 1% compared with 2017.
Statistics from the Vietnam Customs showed that in the first for months, Vietnam shrimp exports to the EU reached nearly $184 million, down 25.7% year-on-year.
EU largest shrimp importer of Vietnam
EU is still the largest shrimp importer of Vietnam, accounting for 21.7% of total shrimp export value of Vietnam to markets.
Shrimp exports to the EU in the first months were partly reduced due to the increase in the world supply of shrimps, the decrease in shrimp export prices and the ongoing political and economic disturbances in the EU.
The UK, Germany and the Netherlands are the three largest single markets for Vietnamese shrimp in the EU. Export value to these markets decreased by two digits in the first four months.
In the EU market, Vietnam must compete primarily with India and Ecuador. While India tends to reduce shrimp exports to the EU due to quality problems, Ecuador is expected to increase shrimp exports to this market after the FTA between Ecuador and EU takes effect.
Despite EVFTA, Vietnamese enterprises face challenges of rules of origin and risks of trade defense measures. The shrimp export value of Vietnam to the EU fell in the first four months. However, with EVFTA, the EU is still considered as a key market of Vietnamese shrimp exports in 2019.
Source: Vietnam Association of Seafood Exporters and Producers