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Canada is currently Vietnam's fifth most important export market after the United States, China, South Korea, and Japan. (Source: Customs Newspaper) |
This significant difference is due to the fact that Canada includes the transit flow of imports through the United States into Canada. If calculated according to the host country's data, Canada is the 5th most important export market of Vietnam (after the United States, China, South Korea, Japan).
However, the growth recorded in the host country data shows that Vietnam's exports have not been affected and will be less affected by the economic situation in Canada. Electronics, electrical appliances, reactors, boilers, optical equipment, automobiles and spare parts continue to record good growth.
Since the beginning of the year, the Top 10 commodity groups accounting for the largest proportion of Vietnam's export turnover to Canada have maintained double-digit growth in turnover (except for seafood down 32.8%; furniture down 8.1% and toys and sports goods down 4%): electronics, mobile phones up 28.9%; leather and footwear up 82.8%; knitted clothing up 12.4%; non-knitted clothing up 29.8%; boiler reactors up 16.7%; leather products up 75.7%; optical equipment up 14.2%.
However, some other important export items of Vietnam have begun to record declines such as nuts and seeds down 39.5%; plastic products down 16.6%; rubber and rubber products down 4.4%; iron and steel down 77.8%; iron and steel products down 4.5%; aluminum products down 27.7%; ceramic products down 15.2% compared to the same period last year.
Vietnam's export growth rate to Canada in the first 3 months of 2023 was much higher than Canada's import growth rate from other countries in the world (9.3%) and higher than all major exporting countries in ASEAN such as: Indonesia, Malaysia, Thailand...
Among Canada's top 10 trading partners, Vietnam recorded the highest export growth rate but dropped to 8th place as an export partner.
The import trend of the Canadian market also clearly shows the "friendshoring" orientation in Canada's foreign policy strategy, accordingly, Canada continues to prioritize imports from allied partners (with sudden growth from Germany, Italy, UK, averaging 10% or more) and sharply reduce imports from China (down 10.1% compared to the same period in 2022).
In addition to the major export barriers for Vietnam such as high domestic logistics costs in Canada, making Vietnam's export prices less competitive compared to neighboring South American countries; low CAD exchange rate policy; social and environmental criteria; packaging standards and recycled plastic content... the trend of Canada promoting policies towards the South American economic bloc is a trend that clearly affects the export of some Vietnamese products with strengths such as: fruits, seafood, textiles.
According to the Vietnam Trade Office in Canada, in the first quarter of 2023, through monitoring data from the host country, Canada especially boosted imports from Ecuador, Argentina, Chile and Mexico. Except for Argentina, Ecuador, Chile and Mexico all have new-generation bilateral Free Trade Agreements (FTAs) with Canada.
Research on local data from 2018 - 2022 shows that since the CPTPP came into effect, Vietnam's exports in most areas of agricultural products and processed foods have increased (except for fruits and nuts).
In the consumer goods sector, many products of the domestic industrial sector have seen remarkable growth, demonstrating the positive impact of CPTPP on Vietnam's exports to the region.
However, Vietnam's rate of using CPTPP tariff incentives has yet to fully exploit the potential that this Agreement brings.
According to local data, in 2022, about 81% of Vietnamese exports to Canada will still use MFN tariff preferences and less than 1% will still use GPT tariff preferences; only 18% will use CPTPP tariff preferences.
The reason is that either Vietnamese enterprises are not interested in using CPTPP tariff incentives; or our products do not meet the requirements of origin/regional content (usually for textile products because CPTPP requires origin from yarn onwards).
In addition, in many commodity sectors, export and import enterprises still do not know how to take advantage of and exploit the principle of cumulative origin in production and in the strategy of purchasing input materials to ensure the CPTPP content in the origin to enjoy tariff incentives.
"This can be said to be the most regrettable limitation, hindering Vietnam's export potential to this market," said the Vietnam Trade Office in Canada.
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