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The European Commission has described the EVFTA as the most ambitious free trade deal ever concluded with a developing country.

Shrimp exports to the EU will improve when the EVFTA takes effect

Click on the flag for more information about Viet Nam VIET NAM
Tuesday, June 25, 2019, 17:00 (GMT + 9)

Vietnam will have more opportunities to boost shrimp exports to the EU after the Vietnam Free Trade Agreement with the European Union (EVFTA) takes effect.

In November 2015, Vietnam and EU officially concluded negotiations on EVFTA Agreement. Currently, the two sides are resolving technical issues and completing the agreement text. The agreement is expected to take effect this year.

According to the commitment, after the Agreement comes into effect, Vietnamese goods, including shrimp products, will enjoy special preferential tax.

Black tiger processing line (Photo: Stockfile)

The EU mainly imports frozen raw shrimp and processed shrimp from Vietnam. According to the commitment, as soon as EVFTA comes into effect, import tax on raw shrimp code HS 03061100 (frozen green lobster; frozen HOSO, DP shrimp; fresh frozen PD shrimp; ice-chilled blue lobster; shell, whole, frozen ...) into the EU will be 0% from the current level of 12.5%, tax on HS shrimp product 03061710 (frozen PD tiger shrimp, frozen HOSO whole shrimp, tiger shrimp) top shells, frozen fresh tiger shrimp, frozen tiger prawn, frozen fresh HLSO tiger shrimp, IQF giant tiger shrimp, frozen meat shrimp ...) to 0% from the current 20%. Shrimp code HS 03061791, 03061792, 03061793, 03061799 will reduce tax to 0% from the current 12%. Shrimp code HS 03061794 will be reduced to 0% from the current 18% after 5 years from the entry into force of the Agreement.

For processed shrimp products, shrimp code HS 16052110 (paste shrimp) from the current 20% will be adjusted to 0% after 7 years from the entry into force of the Agreement; Shrimp code HS 16052190 (other shrimp) from 20% to 0% after 7 years since the Agreement took effect.

Currently, the GSP tax rate that EU devotes to Vietnam for frozen raw shrimp (HS 030617) is 4.2%; Frozen processed shrimp (HS 160521) is 7%. However, Vietnamese products must meet EU origin standards to enjoy this tax. Vietnam has an advantage over the two rival countries, Thailand and China, because these two countries do not enjoy EU GSP.

The implementation of the EU-Vietnam Free Trade Agreement (EVFTA) and other free-trade agreements later this year is expected to boost exports to 28 European Union (EU) countries – for an expected value of US$1 billion.(Source: VASEP)

The EU accounts for about 30.6% of the total value of shrimp imports worldwide. EU shrimp imports range from 6-8 billion USD per year.

According to data of the World Trade Center (ITC), in 2018, imports of shrimp into the EU reached more than 7 billion USD; increased by 0.5% compared to 2017. Spain and France are the 2 largest import markets of EU shrimp. Value of Spain's shrimp imports reached 1.2 billion USD, down 2%; France reached 937.6 million, down 1% compared to 2017.

According to the statistics of Vietnam Customs, the first 4 months of 2019, Vietnam shrimp export to EU reached nearly 184 million USD, down 25.7% compared to the same period in 2018.

EU is still the largest shrimp import market of Vietnam, accounting for 21.7% of total shrimp export value of Vietnam to markets.

Vietnamese processing plants offer products with high added value. Cooked Shrimp Ring Tail-on 16oz with cocktail sauce is tail-on, peeled and deveinedfrom Market Pantry

Shrimp exports to the EU in the first months of this year were partly reduced due to an increase in the world supply of shrimps, a decrease in shrimp export prices, and ongoing political and economic disturbances in the EU also impacted on the import and export of shrimp in the market.

The UK, Germany and the Netherlands are the 3 largest single markets for importing Vietnamese shrimp in the EU. Export value to these 3 markets decreased by 2 digits in the first 4 months of this year.

In the EU market, Vietnam must compete primarily with India and Ecuador. While India tends to reduce shrimp exports to the EU due to quality problems. Ecuador also tends to increase shrimp exports to this market after the FTA between Ecuador and EU takes effect.

With EVFTA, Vietnamese enterprises also face challenges of rules of origin and risks of trade defense measures. In the process of EVFTA being approved, enterprises need to actively grasp the commitments of Vietnam and partners to have appropriate export plans.

Although the export value decreased in the first 4 months of the year, but with EVFTA expected to take effect this year, plus the advantages of tariffs that competitors are not available to India and Thailand, the EU is still considered as a market key field of Vietnam shrimp export in 2019. (Source: VASEP)

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