General

In the context of the gradual recovery of global demand after the epidemic, agricultural products are still identified as one of the potential commodity categories for export to the EU market. At the same time, the Vietnam-EU Free Trade Agreement (EVFTA) is also one of the "leverage" factors for Vietnamese agricultural products to enter this market.

Vietnamese agricultural products favored by EU market

The EU is one of the potential markets, but it was not easy for Vietnamese rice to enter this market a few years ago when rice was taxed as high as 40%. However, since the EVFTA came into effect in August 2021, Vietnamese rice has had a "pass" to enter this market.

Mr. Fan Taiping, general manager of Zhong'an High-tech Agriculture Co., Ltd., said that in the first half of 2022, Zhong'an High-tech Agriculture Co., Ltd.'s rice export volume increased by 68%, and the export value increased by 17%. Among them, the European market has become the main market of the company, and high-quality rice is the main product exported by the company to this market.

Apart from Zhong An, many other rice companies have taken advantage of the opportunities presented by EVFTA to boost rice exports and have enjoyed relatively good growth so far.

While exporting rice, Ms. Li Heng, communication director of the Association of Aquatic Products Processing and Export (VASEP), revealed that in 2020, despite the impact of the Covid-19 epidemic, the export of aquatic products recovered significantly, with a year-on-year increase of 8%. This trend continued in 2021, with aquatic product exports reaching over US$1 billion, an increase of 12%. The EU is one of the main export markets for Vietnamese aquatic products.

By the end of the second quarter of 2022, the EU has become one of the top three export markets for Vietnamese aquatic products. Except for aquatic products and rice, the overall growth rate of other commodities exported to the EU was stable.

Statistics from the General Administration of Customs show that in the past two years, since the agreement came into force, Vietnam’s exports to the EU reached about US$83 billion, an increase of 15%.

The EU is the second largest partner and Vietnam has been trading with this market for many years, so this agreement has a huge impact on import and export activities in general. The EU is a market that consumes a lot of Vietnamese products, including commodities such as aquatic products and rice. In addition, the EU market is also a diversified market, and the consumption of industrial products is also large.

In the past two years, most of Vietnam's exports to the EU have shown a very high growth trend, especially agricultural products. Aquatic products, vegetables, rice and other industries are the industries that have experienced a large increase in the export volume to the EU market in the past period, and are also industries that make great use of the European No. 1 Mobility Certificate (EUR.1) Certificate of Origin. Rice, in particular, has a 100% utilization rate for the above-mentioned certificates. This also shows that Vietnamese enterprises have quickly grasped and made good use of various regulations.

The "key" for agricultural products to gain a firm foothold in the EU

In addition to the surge in export value, goods exported to the EU market as well as other markets face some problems with regulations related to rules of origin.

Ms. Li Heng said that the biggest challenge facing aquatic products exported to the EU is to ensure the rules of origin. Although VASEP and the Ministry of Industry and Trade have jointly organized many projects to train enterprises on origin certification, it is inevitable that they have not been carefully understood. Because each market has its own regulations, it leads to misunderstandings about the issuance of certificates of origin. This is an obstacle to exporting aquatic products to the EU.

Mr. Pham Taiping said that currently, Vietnam's rice exports account for a large proportion of the country's economy. Among them, the European market is the most potential market, because the average annual rice import volume of the European market is 2 million tons. However, in fact, Vietnam's exports of goods to the EU are still very small in general, and Vietnam's rice export volume ranks first in the world.

Chen Qinghai, deputy director of the Import and Export Bureau of the Ministry of Industry and Trade, said that most Vietnamese agricultural products are still in the form of raw materials or primary processing (with a very low proportion of processing) when they are exported to the EU. Therefore, such products are generally not branded and are not direct-to-consumer products.

In order to be able to enter Europe, the product has to go through several stages of processing and, most likely, when it enters the distribution channel, the product will bear the name of the distributor in that market. Therefore, in order to be able to add value, Vietnamese businesses need to focus on brand building. This is a tool and means to help sell a product, both to expand the market and to increase the value of exports to that market.