Vietnam is currently participating in 16 free trade agreements (FTAs) with countries and regions around the world. These are considered highways, connecting the Vietnamese economy with major trading partners around the world. In the agricultural sector, FTAs have become a strong growth driver, marking new achievements for the entire industry.
“Leverage” for production and export
Over the years, agriculture has always played a pivotal role in supporting the economy, with strong growth in output, productivity, quality and export turnover. This is partly due to the important contribution of FTAs, as Vietnam's leading export markets are currently all countries participating in FTAs. At the same time, FTAs play a role in promoting a strong transformation of agricultural production towards safety and transparency.
In 2023, the GDP of the entire agricultural sector will reach 3.83% - the highest growth rate in the past 10 years; the total export turnover of agricultural, forestry and fishery products will reach 53.01 billion USD, the trade surplus will reach a record 12.07 billion USD, up 43.7% compared to 2022 and accounting for more than 42.5% of the country's trade surplus. In 2024, the GDP of the agricultural sector is expected to reach 3.5%; export turnover will reach 55 billion USD.
Exports increase sharply in markets with FTAs
In the first 4 months of 2024, Vietnam's agricultural, forestry and fishery export turnover reached 19.06 billion USD, up 23.7% over the same period in 2023. Of which, the export market share to Asia accounted for the highest at 46.5%; followed by America at 21.9% and Europe at 13.4%. In 2023, China, the US, Japan and South Korea were also the 4 largest export markets for agricultural, forestry and fishery products of Vietnam. These are mostly markets and market areas that have FTAs with Vietnam.
Specifically: ASEAN-China Free Trade Agreement (ACFTA); ASEAN-Japan Comprehensive Economic Partnership Agreement (AJCEP); Vietnam-Japan Economic Partnership Agreement (VJEPA); Regional Comprehensive Economic Partnership Agreement (RCEP); Vietnam-Korea Free Trade Agreement (VKFTA); Vietnam-EU Free Trade Agreement (EVFTA); Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)...
Deputy Secretary General of the Vietnam Association of Seafood Exporters and Producers Nguyen Hoai Nam said: In recent times, FTAs have had a very positive impact on the export activities of the seafood industry, most notably the results achieved in 2022 when export turnover reached a record of 11 billion USD. Of which, exports to countries and regions with FTAs with Vietnam such as CPTPP, EU, and Japan all achieved high growth rates, of which exports to the EU increased by 20% and to Japan increased by 28% compared to 2021.
Particularly in the markets of CPTPP member countries, seafood exports have continuously increased over the past years. Specifically, export turnover increased from 2.2 billion USD in 2019 to 2.9 billion USD in 2022.
CPTPP is the market group with the second strongest growth in Vietnam's seafood export proportion, after China. In 2018, CPTPP accounted for 25% of Vietnam's seafood exports, and by 2023, it accounted for nearly 27%.
Regarding rice, according to statistics from the General Department of Customs, in 2023, rice exports to the EU will increase by 10% in both volume and value compared to 2022, reaching about 104,000 tons, with a turnover of 71.7 million USD - the highest figure ever. This clearly demonstrates the efforts of Vietnamese enterprises in effectively taking advantage of the EVFTA.
Meanwhile, the fruit and vegetable industry is also growing strongly in exports to the EU thanks to high-quality and deeply processed products. The Vietnam Fruit and Vegetable Association believes that the growth rate of fruit and vegetable exports to the EU market in 2024 could reach 20%.
In 2023, Vietnam's fruit and vegetable exports to the EU will reach 227.6 million USD, up 22.2% compared to 2022 and accounting for 4.1% of the country's total fruit and vegetable export turnover. Of which, exports will mainly be to the Netherlands with a turnover of 147.1 million USD, up 25.7%; exports to Germany will be 36.2 million USD, up 45.6%.
In the Korean market, VKFTA is also a great support for Vietnam's fruit and vegetable exports. In the first quarter of 2024, fruit and vegetable exports to Korea reached 74.6 million USD, an increase of 59.3% over the same period in 2023. According to the Import-Export Department (Ministry of Industry and Trade), agricultural product groups exported to Korea with the best FTA incentive utilization rate include: seafood 96.32%, vegetables and fruits 91.18%, coffee 94.54%; pepper 100%; wood and wood products 73.76%... This rate is quite high because in addition to VKFTA, import and export activities between Vietnam and Korea are also affected by two other FTAs, including the ASEAN-Korea Trade in Goods Agreement (AKFTA) and the Regional Comprehensive Economic Partnership Agreement (RCEP).
In addition, Vietnam's main agricultural export product, coffee, also recorded strong growth in markets with FTAs. Most recently, in the first quarter of 2024, the value of coffee exports to Asia and Europe increased sharply compared to the first quarter of 2023. Accordingly, the proportion of coffee exports to Asia and Europe increased from 34.28% and 47.63% in the first quarter of 2023 to 37.81% and 48.34% in the first quarter of 2024.
Promote safe and transparent production
Mr. Le Thanh Hoa, Deputy Director of the Department of Quality, Processing and Market Development (Ministry of Agriculture and Rural Development) said: In order to penetrate into FTA markets to effectively take advantage of tariff incentives, Vietnam's agricultural, forestry and fishery exports must also adapt to many non-tariff measures such as technical barriers to trade (TBT) and sanitary and phytosanitary measures (SPS) imposed by member countries.
In 2023 alone, the Vietnam SPS Office received and processed 1,164 notifications of draft SPS measures from WTO members, an increase of 20 notifications compared to the same period in 2022. The countries with the highest number of notifications were: Japan, EU, China, Korea, Australia. These are all markets with FTAs with Vietnam.
The main issues that these markets are concerned about are maximum residue levels of pesticides (MRLs), antibiotic residues and SPS measures related to animal feed, food additives and food contact materials... This is a challenge but also a driving force for domestic agricultural production and processing to have a strong change, meeting the increasingly high requirements and conditions of importing countries. Therefore, warnings for Vietnam have been greatly reduced.
Specifically, in 2023, the EU's Rapid Alert System for Food and Feed (RASFF) issued 4,681 alerts to all countries/territories importing agricultural food and feed products into the EU.
While some countries have more than 280 warnings (accounting for more than 6% of the total number of warnings), Vietnam has only 67 warnings (accounting for about 1.4%), a decrease of 5 warnings compared to 2022.
This result was achieved because the quality of agricultural products has been controlled from the beginning of production through the use of biological pesticides and organic fertilizers. Deputy Director of the Plant Protection Department Nguyen Quang Hieu said: At the end of 2023, the Ministry of Agriculture and Rural Development issued a decision approving the Project on Development of Production and Use of Biological Pesticides until 2030, with a vision to 2050.
Accordingly, Vietnam is striving to become a country with the leading rate of biological pesticide use in the region. For the program to develop the production and use of biological pesticides in the period of 2021-2025, the Plant Protection Department has coordinated with 12 pesticide enterprises to organize training for 335,124 farmers and 8,980 agents; deploy the construction of 825 demonstration model points on rice, fruit trees, coffee, pepper, and vegetables with a total area of over 1,249.7 hectares. In addition, the Department has also coordinated with many localities to develop production models using organic fertilizers, economical, balanced and effective fertilizers with an area of over 15,000 hectares.
“In addition, the development and management of growing area codes and packaging facilities are being actively implemented to fully meet the import requirements of many countries that have FTAs with Vietnam. By the end of 2023, the Plant Protection Department has coordinated with importing countries to issue more than 6,997 growing area codes for export in 56 provinces and cities; issued 1,613 packaging facility codes for export for fresh fruits permitted for export to the markets of China, Australia, New Zealand, Korea, Japan…” - Mr. Nguyen Quang Hieu added.
The Vietnam-Israel Free Trade Agreement (VIFTA) concluded negotiations on April 2, 2023 after more than 7 years and 12 negotiation sessions, and was officially signed on July 25, 2023. The agreement is expected to take effect soon this year. This is considered an important FTA, not only opening up opportunities for Vietnamese goods to access the Israeli market but also penetrating the large Middle East market. Also in 2023, Vietnam and the United Arab Emirates (UAE) concluded negotiations on most of the contents of the Comprehensive Economic Partnership Agreement (CEPA) between Vietnam and the UAE, and is expected to conclude negotiations early in 2024.
(Source: Import-Export Department, Ministry of Industry and Trade)
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