EVFTA brings chances and challenges to local agricultural production

HÀ NỘI — The new trade agreement between Việt Nam and the European Union opens many doors for agriculture, according to experts.

Rice is loaded at Saigon Port in HCM City. With the ratification of the EU-Việt Nam Free Trade Agreement, Việt Nam can export 80,000 tonnes of rice a year with a zero tax rate to the EU. VNA/VNS Photo Đình Huệ

Nguyễn Đỗ Anh Tuấn, director of the Department of International Cooperation, Ministry of Agriculture and Rural Development said the newly-ratified EU-Vietnam Free Trade Agreement (EVFTA) offers plenty of opportunities.

He said as the EU imports about US$150 billion agricultural products each year so the EVFTA would open up a potential market for the local export agricultural products.

Tuấn told a discussion hosted by the Government Electronic Portal on the EVFTA in Hà Nội yesterday that: “There is room for Vietnamese agricultural products.”

Agreeing with Tuấn, chairman of Vietnam Chamber of Commerce and Industry (VCCI) Vũ Tiến Lộc said: “The EU is a large market with the world's leading purchasing powers and the EVFTA Agreement marks a new phase for Việt Nam with favourable conditions for the local enterprises, including the agriculture firms, to increase exports.”

However, Lương Hoàng Thái, director general of the Multilateral Trade Policy Department, under the Ministry of Trade and Industry raised a number of challenges for the industry as the strict conditions from the EU market such as the regulation of origin, quality and labour relating to the agriculture production.

Thái added: “Local livestock industry would face increasing competitive pressure from imported products from the EU.”

He thought the small scale of the husbandry would make farmers and local livestock cooperatives fall behind imported products from EU. 

As frozen pork meat would be duty-free after seven years, dairy products after five years, and processed food after seven years, and chicken after 10 years, Thái said: “Việt Nam should take time to improve the local livestock.”

Currently the EU’s livestock products exported to Vietnam are subject to tariffs of 10-40 per cent. The reduction of import tariff on livestock products from the EU will improve their penetration of the Vietnamese market and pose significant competition to domestic products.

Thái added the country should apply further modern technology to ensure clean production as well as avoid child labour in the production to improve agriculture production to better grasp the chance from the EVFTA.

SIDEBOX

Gov’t to issue lists of preferential tariffs under EVFTA

The Ministry of Finance said on February 13 that it will build and submit the draft decree to the Government.

When the agreement takes effect, Vietnam will immediately remove 48.5 per cent of import tariff lines, equivalent to 64.5 per cent of its imports from the EU. The respective rates will reach about 99 per cent and 99.8 per cent after 10 years.

Regarding the remaining tariffs, the elimination roadmap will last for more than 10 years, or Vietnam will give preferential treatment to the EU on the basis of the World Trade Organisation (WTO)’s tariff quota.

Meanwhile, the country pledged to erase tariffs on exports to the EU according to a 15-year roadmap, except for some products such as crude oil and coal.

On February 12, the European Parliament ratified the EVFTA with 401 votes in favour, 192 against and 40 abstentions. The EU-Vietnam Investment Protection Agreement was also passed the same day.

Both agreements were officially signed in Hà Nội on June 30, 2019.

The European Parliament will later issue an announcement on the completion of the EVFTA ratification process and transfer the ratification dossier back to the European Council to complete final procedures.

Vietnamese agencies are also working on procedures to submit the EVFTA to the National Assembly at the session in May. If the parliament adopts the deal in May and the two sides inform each other about procedure completion in June, the EVFTA will become effective on July 1 this year.