Đề tài Opportunities for Vietnamese seafood Export market to America

OPPORTUNITES AND THREATS FOR VIETNAMESE SEAFOOD EXPORT TO AMERICA Overview It is clear that Vietnam is still an agricultural country, in which planting and farming play an important role in the life of Vietnamese people. Although in recent years, there has been changes in structure of economy such as the fall in the share of agriculture and the rise of other sectors, agricultural production also provides jobs for about 60% of Vietnamese population as well as key export commodities. However, Vietnam is not only famous as the biggest supplier of rice but also popular with many kinds of fisheries produce like Pangasius fillets, shrimps, cuttlefish, etc. In line with Thailand and Indonesia, Vietnam has long been a country of strong seafood production and export. And this continues to develop in recent years despite some unstable conditions of international market and countless hurdles. Viet Nam is currently supplying seafood to 156 nations and territories, with the top 10 destinations constitute 85 percent of the total export value. In 2013, while the export value of many agricultural products decreased sharply, that of fisheries experienced a significant increase, reaching approximately 7 billion USD with the growth rate of about 10.7%. Also in this year, export of Vietnamese shrimp hit the record, ranking third in the global market with over 6 million ton and it was the first time the white-legged shrimp surpassed black tiger prawn in terms of export quantity and value. In contrast, 2013 was considered as a dark year of Pangasius export as the price of this product continually went down. This mainly results from the drastic competition between Vietnamese and the US producers as CFA (the association of American catfish producers) blamed Vietnamese enterprises for dumping. This essay seeks to provide general research into the opportunities and threats that Vietnamese seafood faces during recent periods. Afterwards, solutions are drawn from such research. Opportunities for Vietnamese seafood Export market to America: VN’s recovery from EMS EMS stands for early mortality syndrome of shrimps which is very dangerous disease due to its high level of contagion. The outbreak of EMS in Asia began in 2009 with the first case spotted in China and since then had spread to almost all shrimp exporting countries in the continent. Vietnam was affected by the EMS early at the beginning of 2010. During the rise of the disease in 2009, Vietnam along with Malaysia and few other countries were hit first and have been recovering since. However, there are two notable points here: up to 2013, Vietnam has shown few signs of further infection and the quality of our export has been consistent as well. Secondly, other countries are suffering greatly from EMS. As can be seen from the two pie charts, over the period of 2008 – 2013, countries with low export quantity lost their entire market share in America. Surprisingly, the same pattern was applied to China. For countries such as Thailand and India, it is reported that they have just been hit very recently. This leads to VN being able to maintain and expand our market share in America. Ecuador, on the other hand, is bound to China large demand and therefore has there competitiveness decreased. Indonesia, due to suspicion of EMS, have decided to close down production in the beginning of the year 2014. VN rising export coupled with a large increase in price because of pressing US demand also means a huge increase in profit for us. Nhập khẩu tôm vào Mỹ bảy tháng đầu năm 2013 Nhập khẩu tôm vào Mỹ cuối 2013 Vietnamese shrimps won the antidumping case In 2004, Vietnamese shrimp officially was obliged to United States anti-dumping duty of 4.57% tax rate for the participating enterprises consider administrative 1st (16/7/2004 - 01/31/2006). From 2004 to date, over 7 review periods, along with sustained effort of the participating enterprises to pursue litigation, DOC finally had to admit the fact that exporters were not dumping and decided a 0% tax rate for all businesses Vietnam shrimp exporters who participated in antidumping duty administrative review. Right after that, at the end of 9/2013 shrimp exports to the U.S. witnessed a record increase of 138.7% compared to the same period in 2012 and continue to keep growth above 3 numbers in the next 2 months. Vietnam shrimp exports to this market in October & November rose by 132.5% and 111.3% over the same period in 2012. As of 11/2013 the U.S. became the largest market for Vietnam's shrimp whose export value to the U.S accounted for over 748.5 million, an increase of 75.7% over the same period in 2012 and accounted for 26, 7% of the total shrimp exports of Vietnam. Xuất khẩu thủy sản Việt Nam tháng 7-10/2013 TPP prospects Now Vietnam and the United States have been taking part in the Negotiation of The Trans-Pacific Partnership (TPP), which is currently being held between 12 countries. The vision of TPP is to create a new free trade area with greater trade liberalization than even WTO and other FTAs. Once TPP is achieved, Vietnam will be able to export to the US with a more preferential tariff duty (could be reduced to 0%). However, import duty imposed by the U.S on Vietnam seafood imported into the market has been relatively low already. The duty rate on live fish is 0.3% and 4.7 % for processed seafood. Thus, there is not much benefits from TPP agreement for Vietnam seafood exporters to the U.S. Besides, TPP regulations will support Vietnam enterprises in importing raw seafood materials from other members. Why does Vietnam, a seafood exporting country have to import materials from others? In recent years, due to the instability of domestic raw fish supply, Vietnam seafood enterprises must import raw material from foreigners to produce for re-exporting. However, a high import duty is charged for importers in such these cases with approximately 15% for live fish and 30% for processed seafood. When TPP takes into effect, the task is much easier since Vietnam seafood importers have to pay lower import duty to import raw material for processing and re-exporting.​ Therefore, Vietnam seafood enterprises are capable of maintaining a stable amount of exports to the US. Threats for Vietnamese Seafood Export market to America Fish processors face raw material shortfall (in 2013) Vietnamese pangasius exporters need 300,000 MT of raw fish for processing in the last months of 2013. However, pangasius production of the Mekong Delta cannot satisfy their needs. Only 40 percent out of total 70 pangasius exporters located in the region sourced fish from their own fish farms. The rest cannot hold initiative in raw material supply for processing. Shrimp sector face the same situation. The shrimp supply of Ca Mau province, home to shrimp farming of Vietnam, only meet 40 percent of local processors’ demand. Instability in the South Chinese Sea recently somewhat limits amount of offshore fishing, along with the Chinese traders’ intention to scramble for Vietnamese seafood with a high price, making Vietnam’s material shortage even more serious. Vietnamese catfish subject to unreasonably high taxes in US (in 2013) The US Department of Commerce (DOC) has decided to impose new anti-dumping taxes on Tra fish fillets imported from Vietnam. Under the DOC’s recent 9th administrative review (POR 9), the Vietnamese fish products imported into the US from August 1, 2011 to July 31, 2012 will be subject to higher tax rates. Notably, the rates increased almost double to US$0.42/kg for Vinh Hoan products and US$2.15/kg for Hung Vuong products. It is important to note that processed Tien Giang based Vinh Hoan Corporation and Dong Thap based Hung Vuong Corporation are among the leading Tra and Basa fish processors in Vietnam. High rates ranging from US$0.99/kg to US$2.11/kg will be also imposed on products of other Vietnamese Tra fish businesses. Furthermore, The DOC has decided to select Indonesia as a sole benchmark country to calculate and impose the anti-dumping rate on Vietnamese fish products, although Indonesia was not included in the list of countries subject to the rate announced by the DOC in November 2011. Besides, Indonesia is actually an importer of frozen tra fillets and did not export tra fish to the world market. Additionally, according to the Vietnam Trade Office in the US, Indonesia cannot be used as a benchmark country because Vietnam and Indonesia have different economic conditions and Tra fish farming and processing industries. It is suspected that the US Catfish Association lobbied the Department of Commerce to change the sole benchmark country to increase taxes to prevent Vietnamese tra and basa fish from competing with US catfish. As a result, Vietnamese Catfish may subject to more unfair decisions from US. U.S. farm bill to hit Vietnam fish exporters (in 2014) “Tra” fish exporters will face great difficulties, possibly from next year, as U.S. President Barack Obama has signed into law a 2014 farm bill which will deliver a blow to Vietnamese export of the farmed fish to America. Truong Dinh Hoe, general secretary of the Vietnam Association of Seafood Exporters and Producers (Vasep), said the law would not immediately affect Vietnamese tra shipments. The U.S. Department of Agriculture (USDA) would need 60 days from the date of the bill signed into law on February 7 to issue regulations on functions and duties of agencies mentioned in the law, Mr. Hoe said. The law tasks USDA, instead of the U.S. Food and Drug Administration (FDA), with supervising catfish, including Tra and Basa fish from Vietnam. The FDA has long been responsible for this job but it focuses on food safety and hygiene issues only. Meanwhile, USDA will monitor fish farms to see whether they meet America standards before it allows the fish from those farms to enter the American market. The law also puts Vietnamese Tra and Basa fish into a catfish inspection program. The program could only start after all guidance documents are made available, which means Vietnam’s fish exports to America would not take an immediate hit from the law, Hoe noted, adding the impact might be felt next year. The term which is considered directly affecting Vietnamese Tra fish exports requires meat, fish and egg products imported into the U.S. to have the labels of farming and slaughtering origins as well as slaughtering methods. Why such requirement is disconcerting is that at the commercial counselor conference held in HCMC two months ago, Vietnamese commercial counselor in the U.S. Dao Tran Nhan said that it would take Vietnam 5-7 years to upgrade the production and processing process to have its quality equivalent to that of U.S. farming, production and processing facilities in compliance with the new farm bill. In a recent statement on its website, the Vietnamese Embassy in the U.S. voices objections, saying that the U.S. Congress has ignored free and equal trade with developing countries in Asia. According to the embassy, the catfish inspection program is irrational as it is intended to prevent Vietnamese fish from entering the U.S. market. Solutions To deal with some problems of seafood exporting industry of Vietnam when integrating with the world economy, the following solutions are viable: Material shortage: -To deal with the problem of material shortage, domestic fish farmers should be given assistance from both government and businesses. Government can help by regulating domestic buying prices to maintain profitable farming, giving loans for businesses to maintain and expand their buying systems, etc. -In terms of businesses, they should create better relation with farmers like providing them more information about required farming standards (global GAP), assisting prices, etc. In 2013, China became the biggest importer of Vietnamese shrimp products. This not only compensated for the shortage of Chinese shrimp market but also implied some intention to seize Vietnamese shrimp market. Because of that reason, domestic producers should be highly conscious of the foreseeable shrimp shortage in case exporting too much to China. Legal awareness: -Vietnamese government should raise the awareness of its firms to follow all the rules and regulations of the importing country and legal trade agreements that Vietnam has agreed. In case USA government forces the company to obey legal process or leave the country, companies should also be prepared for a trade-off. -Vietnamese firms should be self-aware that they are the only big exporter of Pangasius, therefore they must be the one regulating the price which should be regulated in the scale of global prices. Following this, Pangasius will no longer take anti-dumping tax as it has taken for a long time. Quality control: -To deal with the problem of quality and safety, the level of technology, producing methods and labor skills should be improved to meet the requirements of US standards. Because Vietnam itself cannot afford the large amount of money for technological advance, its government should apply some new policies to attract foreign investment to develop domestic production quality. Market stratergy: -Last but not least, there should be more thorough researches on the habitual eating, cooking and spending of American in order to provide suitable range of products to meet their needs. In addition, Vietnamese exporters should make more use of mass media as well as international fairs to make our seafood products to be more popular by as many customers as possible. Reference: