Opportunities and challenges for Agriculture from EVFTA and AEC

	Only 2% of enterprises have high technology
	FTA commitments open opportunity for Vietnam
	Vietnam services market open: VCCI

Vietnam distribution system will be under great competitive pressure in AEC. Photo: Nguyen Hue

According to Mrs. Nguyen Quynh Nga, Deputy Minister of Multilateral Trade Policy Department under the Ministry of Industry and Trade, while ASEAN was a market with more than 620 million consumers and over $US 3,000 billion of GDP, the EU was a more potential market with more than 508 million consumers and $US 18,510 billion of GDP. Joining in these free trade areas, enterprises operating in agriculture would have opportunities to take advantages and promote incentives of the general market of the 10 ASEAN countries, and collaborate with the ASEAN countries to establish a “club” of large exporting countries of agricultural and fishery products as well as expand the exporting market to the whole 28 EU countries due to the agreements on reduction of tax and quota and trade facilitation.

According to Mr. Truong Dinh Tuyen, the Former Minister of Industry and Trade, main expert of EU-MUTRAP project, when the FTA Vietnam - EU (EVFTA) took effect and AEC was established, the tariffs for most Vietnam agricultural products would be eliminated and the non-tariff barriers would be reduced, facilitating export. The EU and ASEAN were large exporting markets of Vietnam (the EU accounted for 24%, the ASEAN accounted for 16% of the total export turnover). These were advantages and opportunities to boost export to these markets. Our agricultural enterprises had conditions to invest and establish a distribution system for business of agricultural products especially agricultural products manufactured in Vietnam in the markets of ASEAN countries if the agricultural products were in high competitiveness.

Besides the advantages above, the challenges and competition were fierce. For EVFTA were livestock products (mainly pork, chicken and milk) and paper. For AEC, when a unique market and a unified manufacturing were established, it would put the competitive pressures on most agricultural products and distribution system of Vietnam. The agricultural products would be under great competitive pressure from rubber, coffee, and pepper from Indonesia and Malaysia; rice and fruits and vegetables from Thailand, Cambodian and Myanmar and sugar from Thailand and Laos after 2018 when the sugar import duty was 5%.

Together with that, the Vietnam distribution system would be put under pressure by ASEAN distributors. These distributors could freely bring their agricultural products manufactured in their countries to distribute in Vietnam if the competitiveness of Vietnam’s agricultural products was lower which made negative effects on life and manufacture of farmers and small businesses who currently occupied a large proportion in the Vietnam distribution system. The technical barriers and food safety and sanitation standards would be stricter. If our agricultural products were unqualified, even the import duties were removed, the export would be impossible and the people would turn their backs on Vietnam agricultural products.

The EVFTA set to lure European SMEs More European small and medium enterprises are flocking into Vietnam in anticipation of the EU Vietnam Free ...

According to experts, in order to take opportunities from AEC and EVFTA, Vietnam’s products must meet the requirements on origin principles; food safety and sanitation standards and animal and plant quarantines. Also, due to the production structure of the ASEAN countries are quite similar with the same advantages for many items; the enterprises have to make further efforts to improve competitiveness to take the opportunities. The advantages of AEC and EVFTA are effective if each enterprise understands clearly the agreed contents to take maximum advantage of the incentives as well as to be ready to deal with the increasing competitive pressures in the area, improve competitiveness and further join in the value chain in the region and in the world.