Newsletter 2022/3

Thursday September 30, 2022

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Dear Readers,

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Welcome to the third edition of the newsletter of the Vietnam Competence Center for the Agricultural and Food Sector.  Quarterly we use this format to inform you about focus topics in the Vietnamese food sector, current developments and important dates. We hope you enjoy reading it!

 

Kind regards
Your competence center Vietnam for the agricultural and food industry

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⚡EU-Vietnam Free Trade Agreement - Food trade on the rise

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The "EU-Vietnam Free Trade Agreement" (EVFTA) has now been in force for two years. It has promised many benefits for both Vietnam and the European Union. This applies in particular to trade in food and agricultural goods. The focus topic of this newsletter is whether the expectations of the free trade agreement have been met.

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The EVFTA is a free trade agreement between the EU and Vietnam that came into force on August 1, 2020. The key aspect for most exporters and importers is likely to be the reduction in customs duties on goods delivered between the EU and Vietnam. 99% of customs lines are to be abolished. With the entry into force of the EVFTA, Vietnam initially waived 65% of all import duties on European goods. Conversely, the EU waived 71% of import duties on all Vietnamese goods. In the next five to seven years, the remaining tariffs are to be eliminated in various stages. Effects of the free trade agreement can be clearly seen in agricultural goods, because up to now the tariffs for certain goods, such as wine, were sometimes high or still are.

 

Vietnam's export of shrimp, rice and cashew nuts to the EU in particular benefited from the duty-free status last year.

• 🦐 Shrimp: With 54% (303 million USD), they have the highest share of the product category exported to the EU, which represents a jump of 51% compared to the same period in 2021. In the EU, the top 3 markets including the Netherlands, Germany and Belgium all increased 58-91% of Vietnamese shrimp imports in the first 5 months of 2022.

• 🥜 Cashew: The market share of Vietnamese cashew nuts in total EU imports was 54% in 2021. In April 2022, Vietnam's cashew exports to the EU increased by 21% in value and 22% in volume to 49,000 tons compared to the previous month. The increase in export value was attributed to the 0% tariff on Vietnam's cashews.

• 🍚 Rice: In the first quarter of 2022, Vietnam exported more than 22,500 tons of rice to this market and earned nearly 18 million USD, almost 4 times increase in volume and 4.3 times in value compared to the same period of 2021. Italy takes the lead in import volume of Vietnamese rice, with a 26-fold increase over the same period before the EVFTA came into effect. In addition, there were several other key markets such as Germany, France and the Netherlands.

 

The above examples all refer to products that are mainly exported from Vietnam to the EU. And indeed, the Southeast Asian country is currently running a significant trade surplus with the EU. However, there is hope that this imbalance will be corrected with the free trade agreement. In Vietnam, incomes are rising sharply, which creates scope for processed, high-quality foods from Europe in particular. This positive market development, coupled with the effects of the tariff reduction, could boost exports from the EU to Vietnam in the coming years. The following are some examples of strong tariff reductions:

• 🍷 Wine from the EU from 50% before the EVFTA in 2020, successively reduced to 0% by 2030.

• 🍫 Chocolate from 30% to 0% in 2027

• 🍺 Beer from 52.5% to 0% in 2023

• 🌭 Sausage from 33% to 0% in 2030

 

In addition to the tariff reductions, the EVFTA also includes numerous non-tariff elements. Overall, it is considered one of the most modern and far-reaching free trade agreements that have ever been concluded. The following things should be particularly relevant for the food sector:

• Rules for the phytosanitary treatment of food: These rules have been standardized and now follow the "WTO SPS Agreement".

• Geographical Indicators (GIs): Over European 169 GIs are now recognized and protected by the Vietnamese authorities. In Germany, for example, this applies to "Lübecker Marzipan" and "Franken-Wein".  A complete list is available👉 found here.

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So there are many opportunities for food exporters from the EVFTA. The Vietnam competence center for the German agricultural and food industry will be happy to support you in using them.

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📰 The most important news at a glance

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• Seminar "Sourcing and Selling German Foodstuffs in Vietnam",👉available here

• Emart is expanding,👉 Article here

• Recording webinar "Legal issues in the food sector",👉 available here

• Agritechnica Live 2022 will be held in Can Tho,👉 available here

• New trend "lunch in the convenience store",👉 available here

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