FTAs to usher in new era for shrimp export

Thanks to its favourable climate for seafood farming, Vietnam is ranked among the world’s third largest exporters of shrimp with an annual turnover of more than $2.5 billion. Ca Mau, the southernmost province of Vietnam, accounts for half of this export volume and shrimp farming remains the main source of income for the local population.

Some experts in the seafood industry have predicted that Vietnam’s new free trade agreements (FTA), in particular the Trans-Pacific Partnership (TPP), will boost shrimp exports even further in the years ahead. In their latest report, analysts at Bao Viet Securities noted that the Eurasia-Vietnam FTA will eliminate most tariffs into the Eurasia region, including those for shrimp. Likewise, the Korea-Vietnam FTA will remove South Korea’s 20-per-cent tariff on Vietnamese shrimp, with a quota of 10,000 tonnes.

Le Van Quang, chairman and CEO of the seafood producer Minh Phu, pointed out that unlike other FTAs, the TPP has few tariff benefits for Vietnamese shrimp exporters, since shrimp taxes to TPP countries have already been abolished. However, he expected the TPP to standardize technical or hygiene import requirements for Vietnamese shrimp.

“The Vietnamese seafood industry has been subjected to unreasonable non-tariff barriers, including anti-dumping laws and hygiene standards that vary from country to country. I sincerely hope that all of these discrepancies will soon be standardised following the TPP,” Quang told VIR.

Likewise, Chau Cong Bang, deputy head of Ca Mau’s Department of Agriculture and Rural Development, expressed his high hopes for Ca Mau shrimp exports following the FTAs. He noted that Vietnamse shrimp from Ca Mau are consumed in 80 major markets around the world, including the US, Japan, and the EU; and this figure is likely to expand thanks to lower tariffs in the trade deals.

“However, the road ahead isn’t all downhill. Despite tariff cuts, Vietnamese shrimp exporters will have to face higher non-tariff barriers, as import markets try to protect their domestic seafood industry. Expensive costs for certifications and anti-dumping rules may continue to plague Vietnamese firms,” Bang told VIR. He added that to solve this problem, Ca Mau authorities will dedicate a greater part of their budget to education programmes this year, thus familiarising local shrimp farmers with opportunities and challenges arising from the FTAs.

Moreover, the province has also courted assistance from non-governmental organisations. One large-scale project is Mangroves and Markets, which combines mangrove conservation with organic shrimp farming in Ca Mau. This programme has been jointly run for two years by the International Union for Conservation of Nature and the SNV Netherlands Development Organisation. These bodies have promised to help farmers achieve international accreditation standards while protecting mangrove forests.

Another headache for Vietnamese exporters, according to Le Van Quang of Minh Phu Corporation, is the currency battle around the Southeast Asia region. As Indonesia, India, and China all devalued their currencies in 2015; shrimp exports from these nearby competitors were significantly cheaper than Vietnam, which kept its foreign exchange rates relatively steady last year.

“The currency war is partly responsible for Vietnam’s falling volume of shrimp exports in 2015. This has been further exacerbated by decreasing shrimp prices, which dropped by 40 per cent due to regional oversupply. Ca Mau only exported $967 million of shrimp last year, compared to $1.3 billion in 2014. So I can say that despite all the FTAs, shrimp exporters from Vietnam still have a tough future ahead,” said Quang.