Post at 16/03/2021
The European Union (EU) is a large, diversified and well-priced agricultural consumer market. In 2019, the EU imported $ 166 billion of raw and processed agricultural products. However, Vietnam’s agricultural exports to this market until the time before the Vietnam – EU Free Trade Agreement (EVFTA) came into effect is very modest.
In 2019, Vietnam’s agricultural exports to the EU only reached 3.4 billion USD. In which, approximately 70% (2.35 billion USD) is raw agricultural products (coffee, tea, cashew, rice, …). In addition to the factors of product quality, processing capacity, geographical distance, … tax and non-tax barriers are an important reason why Vietnam has not effectively exploited this potential market.
While raw agricultural products are entitled to a 0% rate, processed goods are taxed. Many Vietnamese agricultural products with export potential (rice, cassava, garlic, mushrooms, sugar …) do not have the opportunity to access this market because they are regulated by quotas.
From August 1, 2020, the EVFTA Agreement came into effect, opening opportunities for bilateral trade between the European Union and Vietnam. EVFTA is the first trade agreement the EU has signed with a developing country. As a new-generation free trade agreement, the agreement aims to be a much higher degree of trade liberalization than the WTO, which was the previous framework to regulate trade between Vietnam and the EU.
Tax and non-tariff barriers are partially removed as soon as the agreement comes into effect and will be completely removed according to the schedule after 5-7 years of implementation. Customs procedures, quality control, food hygiene and safety are facilitated to minimize the time and cost of procedures. These positive factors make EVFTA are expected to open up great opportunities for Vietnam’s export growth to this market, especially agricultural exports. Because basically EU import tariffs on other industrial products have been eliminated or at a very low level. The opportunity to take advantage of the benefits of EVFTA to boost agricultural exports to this market comes not only from the elimination of taxes and quotas, but also from trade facilitation mechanisms.
In addition to completely abolishing import duties on most items within 5-7 years, the EU grants tariff quotas within the 0% quota for remaining items that Vietnam has export potential. such as rice, raw sugar, sweet corn, garlic, mushrooms … Trade facilitation mechanisms that have direct impact on agricultural exports include unifying regulations on quarantine and food hygiene and safety. simplifying procedures for issuing and checking certificates of origin, …
Two groups of Vietnamese goods will have the opportunity to take advantage of EVFTA to export to the EU after the agreement is implemented, including:
(i) Goods eligible for a tariff rate quota with a tariff within the quota of 0%.
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