Benefits from EVFTA, billion-dollar agricultural products rush in to EU

According to the Ministry of Agriculture and Rural Development, after more than onemonth of the Vietnam-EU Free Trade Agreement (EVFTA) took effect, the value of agricultural, forestry and fishery exports to EU in August 2020 was US$350 million, up 17% year-on-year.

On September 16, the first coffee shipment of Vietnam will be exported to the EU under the EVFTA. Photo: Internet

Rice, fresh vegetables and coffee are major agricultural products mentioned by the Ministry of Agriculture and Rural Development when taking advantage of export opportunities to the EU due to the EVFTA.

Nguyen Do Anh Tuan, Director of International Cooperation Department (Ministry of Agriculture and Rural Development), said after nearly one month of implementing the EVFTA,Vietnam's rice export price to the EU market has increased in from 80-200 USD/tonne, depending on each type compared to the period before EVFTA took effect.

Vietnam’s rice export value in August to the EU is estimated at more than US$1.2 million, up93.5% month-on-month and 35.6% year-on-year.

“It can be seen that the Vietnam’s rice export to the EU market is not only the initial success of rice exporters, but also marks the official recognition of Vietnam’s rice in the international market,” Tuan said.

In addition to rice, Vietnamese fresh vegetables and fruits are also exported to the EU since August 1.

The EU is the fourth export market for Vietnamese fruit and vegetables. Tuan said this existing foundation and the tax exemption and reduction as committed in EVFTA are helping increase the competitiveness of Vietnamese fruit.

The export value of Vietnam’s fruit and vegetable products to the EU market in August is estimated at US$14.7 million, increasing 25.2% month-on-month and 6% year-on-year.

In addition, rice and vegetables, the export value of coffee to the EU market arealso expected to be increase in the near future when the tax rate is reduced from 15% to 0%.

The EU is the biggest buyer of Vietnamese coffee, accounting for 40% of total volume and 38% of the total export value.

Tuan emphasised that “Buon Ma Thuot coffee is one of Vietnam’s 39 geographical indications that are protected by the EU’s commitments when the EVFTA comes into effect. This is a huge competitive advantage for Vietnam's coffee industry with rivals in the EU market.

To promote exports of the entire agriculture, forestry and fishery sector in the near future, Nguyen Van Viet Director of the Planning Department from a market perspective, the Ministry of Agriculture and Rural Development identified and focused on making use of each export market group, even the smallest markets in each period.

Especially, theMinistry of Agriculture and Rural Development will take advantage of the opportunities brought by the EVFTA to increase exports of advantageous and appropriate commodity groups amid the pandemic.

“The Ministry of Agriculture and Rural Development will also work with the Ministry of Industry and Trade, agencies and businesses to monitor price movements, supply and demand of essential agricultural products to balance supply and demand,improve the quality of market forecasts and timely inform localities and businesses to have appropriate production and business plans,” Viet said.

Regarding export value in the whole year, the Ministry of Agriculture and Rural Development said that if we try our best and there is no major change in the world situation, the export value of agricultural, forestry and fishery products will reach the target of more than US$40 billion. Total export value of the entire sector strives to hit the target of US$41 billion.

The EVFTA took effect on August 1. For major agricultural products including the application of tariff quotas, the EU's commitment to Vietnam is as follows:

Coffee: The EU eliminates tariffs for all unroasted or roasted coffee products, decreasing from 7-11% to 0%.Processed coffee products from 9-12% to 0% on the effective date of the agreement on August 1.

Fishery products (excluding canned tuna and fish balls): The EU will eliminate tariffs on 86.5% of Vietnam’s exports within 3 years, 90.3% within fiveyears and 100% within sevenyears. For canned tuna, the EU gives Vietnam a tariff quota of 11,500 tonnes.

Rice: The EU gives Vietnam a quota of 80,000 tonnes of rice (including 30,000 tonnes of milled rice, 20,000 tons of unmilled rice and 30,000 tonnes of fragrant rice). For products from rice, the EU will apply the 0% tax rate after a certain roadmap.

Sugar: The EU gives Vietnam a quota of 10,000 tonnes of white sugar and 10,000 tonnes of products containing more than80% of sugar.

Honey: The EU will abolish tariffs as soon as the agreement takes effect and atariff quota will not be applied.

Fruits and vegetables, processed fruits and vegetables and other fruit juices will basically be eliminated from tariffs as soon as the agreementtakes effect. Most wood and wooden products will eliminate taxes as soon as the EVFTA takes effect.

The EU will give Vietnam a tariff quota of 25,000 tonnes of cassava starch (of the total EU’s imports of 33,000 tonnes); 5,000 tonnes of sweet corn (particularly baby corn will not be subject to tariff quota and enjoy a tax rate of 0% within sevenyears); 400 tonnes of garlic and 350 tonnes of mushrooms. The tax rate in tariff quota for all products under the EU commitment is 0%.