Standardizing production to boost exports to EU
Vietnam has signed 15 free trade agreements (FTAs) and is negotiating two additional ones. These trade deals, especially the EU-Vietnam Free Trade Agreement (EVFTA), have greatly helped Vietnam’s import-export activities.
In the first eight months of 2022, Vietnam’s foreign trade value reached nearly US$500 billion, up 15.5 percent year-on-year, with exports growing more than 17 percent.
Eight-month exports to the EU reached US$32 billion, up 24 percent compared with the same period last year. Notably, the trade surplus with this market reached US$21.6 billion, up nearly 47 percent - an impressive result after two years of EVFTA implementation.
Vietnamese rice and other farm products sell well in the EU
General Department of Vietnam Customs data show that in the two years since the EVFTA took effect in August 2020, Vietnam exported to the EU about US$83 billion worth of goods, with annual growth of approximately 15 percent. Most Vietnamese exports to the EU grew rapidly, for example iron and steel 200 percent, coffee 75.2 percent, and pepper 55.8 percent. Traditional exports to this market, such as textiles, garments, leather, footwear and wood products, also grew 10-15 percent.
Pham Thai Binh, General Director of the Trung An Hi-tech Farming Joint Stock Company, said that in 2022, Vietnamese rice continues to benefit from FTAs, especially the EVFTA. The company’s rice exports to the EU have grown considerably since the agreement came into force, with high-quality rice its key export to this market.
The “Com Vietnam” rice brand products of the Loc Troi Group recently reached the shelves of two supermarket chains with more than 800 hypermarkets throughout France, paving the way for the increased global presence of Vietnamese rice.
Nguyen Dinh Tung, General Director of Vina T&T, said the company’s fruit and vegetable exports to the EU have grown strongly, especially fresh fruit such as rambutan and dragon fruit. EVFTA tariff preferences have helped the company increase the added value of its export products, he added.
Ha Tien cement meets EU environmental standards
However, exporters to the EU have to meet strict importer requirements in terms of product quality and safety, labeling and packaging, as well as regulations on pesticide residue and environmental protection. Domestic companies still lack information about importer requirements and the experience in coping with commercial disputes, as well as the linkage with businesses from the same sectors, which can help diversify export products and reduce export costs.
In the first half of 2022, the EU issued 40 warnings on Vietnamese farm produce and food, including safety warnings on nine types of fresh and processed fruit and vegetables. Recently, a consignment of Vietnamese rambutan was discarded in the Netherlands due to excessive pesticide residue.
Nguyen Duy Thuan, General Director of the Loc Troi Group, said domestic companies should abide by importer standards during the production process.
Currently, the EU prefers to import green consumer goods meeting labor and environmental standards. Industrial products such as iron and steel, fertilizer, cement and aluminum are facing the risk of high carbon fees.
Prior to the COVID-19 pandemic, the textile and garment sector exported to the EU more than US$4 billion worth of products. The EU Strategy for Sustainable and Circular Textiles calls for textile products entering the EU market to have a long shelf life and be recyclable, requiring Vietnamese companies to standardize production to meet these new requirements.
The EU is a very discerning market with strict technical requirements and quarantine regulations, and specific standards set by importers. Vietnamese businesses should change their production model to meet those requirements.
VietNam Economic News