VietNamNet Bridge – Vegetables, fruits and seafood are expected to benefit much from the Trans-Pacific Partnership (TPP) agreement despite concerns that agriculture will be one of the most vulnerable sectors.

Customers select fruit at a supermarket in HCMC. Vegetables, fruit and seafood are expected to benefit much from the TPP when the trade pact comes into force – Photo: Thanh Hoa

According to the Institute for Policy and Strategy of Agriculture and Rural Development (IPSARD), Vietnam’s vegetable and fruit exports to TPP member states have grown steadily in recent years. Thanh long (dragon fruit) has made its way to New Zealand and Australia, and litchi, logan and mango to the U.S.

Vietnam’s vegetable and fruit shipments to Pacific Rim nations have amounted to some US$200 million, accounting for 10% of the total.

IPSARD said tariff cuts and exemptions under the TPP agreement will be of great help for Vietnam to boost exports to other TPP member states. Japan, the U.S. and Mexico will emerge as potential markets for Vietnam’s fresh and processed vegetables and fruits.

Under its commitments to the TPP, Japan will cut import tariffs on vegetables and fruits to zero right after the TPP agreement comes into force. Notably, Japan’s taxes on some Vietnamese items with large export volumes will drop gradually.

At present, import taxes of 40% within quota or 2,796 yen per kilogram for the volume exceeding quota are imposed on potato. Japan pledged to cut the duty for the volume exceeding the quota by 15% after six years.

Data showed that the northeast Asian country has bought an average of 200 tons of potatoes from Vietnam annually over the past three years.  

Meanwhile, Japan imposes an import tariff of 17% on tea within quota, which will be lowered to zero after six years. Vietnam ships to Japan around 300 tons of tea a year.

Japan’s import tax of 33 yen per kilogram is applied to pineapple exports out of quota, and it will fall by 15% in six years. Vietnam’s pineapple shipments to the Japanese market reach an average of 40 tons per year.

IPSARD said in a report that Japan as a member of the TPP agreement will become a potential market for Vietnamese vegetables and fruits.

However, IPSARD pointed out Vietnam has yet to take steps to tap into the Japanese market. Antibiotic residues and food hygiene and safety matters have prevented Vietnam’s fresh vegetables and fruits from entering the U.S. and Japanese markets.

Meanwhile, processed vegetables and fruits make up small proportions of the export volume. In 2013, they accounted for over 20% of the total.

Vietnam spends some US$100 million buying vegetables and fruits from other TPP members, mainly the U.S. and Australia. The two nations will be able to penetrate deeper into the domestic market, backed by tax reductions under Vietnam’s commitments to the TPP agreement.  

Vegetables and fruits imported from TPP member states strongly compete with Vietnamese farm produce in the high-end segment. In the future, fierce competition might be seen in all segments.

Product quality, design, food hygiene and safety and production cost should be improved for Vietnam’s vegetables and fruits to stay competitive, according to IPSARD report.

TPP member states, except for Mexico, currently quote import tariffs of 0-5% on unprocessed and semi-processed seafood. Therefore, tariff reductions by TPP nations are not much meaningful to Vietnam’s exports of these products.

However, there is huge potential for exports of value-added products to the U.S., Japan and Canada. Given poor technology, Vietnam must focus on the processing stage of the seafood value chain.    

IPSARD said in the report that the biggest challenge for Vietnam’s farm produce is that despite tax reductions, TPP members will rely on non-tariff barriers. Therefore, Vietnam’s seafood exporters will have to overcome technical barriers and meet high food hygiene and safety standards if they want to tap into key markets like the U.S. and Japan.

Thuy Dung

SGT