US market opening up for agri-goods

May 17, 2022 | 10:00
With the demand growing, the United States is maintaining its position as the largest export market of Vietnamese agricultural products, which are increasingly advancing in quality.
Many agricultural products are sold at supermarkets. (Photo: VNA)
Many agricultural products are sold at supermarkets. (Photo: VNA)

Fruit exporter Vina T&T Group is preparing the final step to export pomelos to the US, the seventh fruit that Vietnam is permitted to export to this market.

“The US is a key export market of Vina T&T with 80 per cent of our export turnover. The advantage for Vietnam is its tropical fruits, and that the orchards have fruit right around the year,” said CEO Nguyen Dinh Tung.

In 2021, the company’s export value to this market was $53 million, and the figure is expected to increase by 30 per cent this year.

Along with Vina T&T, Pacific Foods JSC is also making efforts to increase export of products to the US and its 330 million-strong population. In March and April, the company exported 44 tonnes of products, including rice, fish sauce, spices, energy drinks, and instant coffee to the US.

Le Ba Linh, chairman of the Board at Pacific Foods, said, “This is the first time that our products have been exported to this super-fastidious market, opening up opportunities to bolster exports to the US with a large turnover soon for green and clean Vietnamese products.”

The US is the largest export market for Vietnam’s agri-forestry-fishery products. In the first four months of this year, the export value of these products was nearly $4.9 billion, making up just over 27 per cent of these products’ export turnover overseas. Of that, the export value of timber and wooden products accounts for around 68 per cent.

This market, which is also another major consumer of Vietnamese shrimp, imported nearly $195 million worth of this product from Vietnam in the first quarter, an on-year increase of 45 per cent.

Indoor wooden furniture and other seafood products made in Vietnam are also highly popular and trusted by American consumers.

At present, the US has allowed the import of seven types of fresh fruit from the nation – pomelo, mango, longan, litchi, dragon fruit, rambutan, and star apples. Other fruits such as coconut and durian are only shipped to the demanding market as frozen or processed products.

Vietnam’s products are competing with ones of the same type, which are grown more and more in places with natural conditions similar to Vietnam, such as Florida, California, Mexico, and South American countries, as well as products of other Asian countries and substitutes grown in the US.

According to norms, irradiation of fresh agricultural products is mandatory before they are exported to the US. Vietnam only has two irradiation warehouses, which can lead to goods congestion and lower quality. In addition, the geographical distance and weak logistics system are also disadvantageous factors compared to other countries in South American.

Nguyen Manh Hung, chairman and CEO of Nafoods Group, an enterprise with 27 years of experience in exporting processed fruits and vegetables to the US and EU, said that to penetrate this market, “Vietnamese enterprises must commit to ensuring good quality, uniformity, and stability in each export shipment, thereby making it possible for retailers to place long-term orders.”

Nguyen Thuy Chung-Partner, ASL LAW

US market opening up for agri-goods

The United States has been one of the largest export markets for Vietnamese enterprises in recent decades. Vietnamese products, especially seafood, textiles, footwear, and agricultural products, have significant profit margins in the US.

However, there are still many legal barriers to the expansion of Vietnamese exports into this market. Trade barriers are the first issue for Vietnamese exporters. US is faced with the inflow of goods from Vietnam, with prices, labour standards, and technology that are lower in quality than those of US goods. Therefore, the US government has set up a number of restrictive requirements which are extremely difficult for Vietnamese enterprises to meet standards.

To avoid anti-dumping lawsuits and trade remedies, Vietnamese exporters must understand and constantly keep abreast of the US legal system, which includes federal and state law.

Intellectual property (IP) is also one of the most important barriers for Vietnamese exporters. Unlike most countries, the US follows the rule of “first to use” in registration, which gives rights to the person or entity that uses a brand or specific mark in commerce first. It leads to many disputes for Vietnamese exporters in the US market because their distributors/partners/franchisees have recently filed trademark applications without consent here.

To succeed in opposition and/or cancellation on the ground of bad faith, Vietnamese exporters must submit sufficient evidence to prove that the registrant was acting in malice or negligence when applying for the trademark. Therefore, Vietnamese exporters should get IP protection by signing an non-disclosure agreements before negotiating, and/or signing a contract which specifies what IP rights their distributors/partners have as well as states who will own any IP rights that are created or modified during the relationship.

The US market has lots of potential, but it is not easy to get Vietnamese products there and take advantage of incentives. To penetrate deeper, businesses need to be more proactive in learning regulations in the US relating to their business.

By Hoang Kim

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