December 13, 2007

 

WTO may stink over Vietnam seafood exports

 

 

Vietnam's entry earlier this year to the World Trade Organization (WTO) was deemed to open new and lucrative market opportunities to the country's many ambitious exporters.

 

But since joining the global trade club, many Vietnamese industries now find that they are actually losing rather than gaining access to certain markets due to growing safety concerns about their products.

 

As a small latecomer to several global food markets - including Japan, China, the United States, the European Union and even countries in the 10-country Association of Southeast Asian Nations (ASEAN) - Vietnamese producers are being saddled by new trade and non-tariff barriers, which are blocking the market opportunities many had banked on for their future profits and growth.

 

Even before Vietnam joined the WTO, particularly for seafood producers, the US Department of Commerce in January 2005 revealed that Vietnamese shrimp exporters were guilty of dumping, or selling at prices below production cost which resulted in material injury to US shrimp producers. The department imposed an average 25 percent disciplinary tariff rate against a number of Vietnamese shrimp producers.

 

Several of those sanctioned producers rebounded from the US' market-closing measures, as they were able to find new global outlets for their products, primarily in Japan and the EU. Yet Vietnam's lack of investment in quality assurance and marketing is baffling Vietnam's drive in capitalizing on its WTO membership to open more lucrative, developed country marketplaces.

 

Vietnamese seafood exports to Japan and Europe began its downward trend this year due to producers' inability to meet their more stringent controls on antibiotic residues and banned chemicals, particularly chloramphenicol

used as a preliminary treatment to keep fish fresh. The substance has been banned worldwide because it can cause severe health effects, but is still often used in some developing countries, including Vietnam, because of its availability and low cost. This prompted Japan and EU to impose several bans on Vietnamese seafood.

 

What could have been Vietnam's advantage for China's expected slide in food exports due to contamination issues could have created a competitive opportunity for Vietnam's food exporters. The country's mounting failure to meet food safety standards will likely result missing its US$3.6 billion seafood export target for this year, some industry analysts say. The situation could get worse before it gets better, as American shrimp and catfish producers aggressively lobby their state health agencies to more vigorously test Vietnamese seafood imports.

 

Whether Vietnam can quickly improve its quality controls and keep these lucrative markets open to its exporters is an increasingly crucial economic question. Though Vietnamese authorities have claimed quick response, it is evident that there are no clear signs of success.

 

Bui Chi Buu, head of the Southern Science and Technical Institute in Vietnam, argues that the country's food producers need to invest heavily in post-harvest technology if they want to upgrade the quality of their rice and other food products. Such investment would also significantly reduce the loss of agriculture products after harvest, of which 7 percent of gross national agricultural products are lost due to pilferage and rot, according to industry experts.

 

Another major need is to invest in the country's rural transportation infrastructure, cold-chain infrastructure and the privatization of agricultural research that could be refocused to further develop the food export industry. These investments, or government subsidies, are necessary on the theory that there are existing technologies that, in the long run, would be profitable to procure and implement to ensure food quality and safety.