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The European Union-Vietnam Free Trade Agreement (EVFTA), which came into effect on August 1, 2020, has significantly influenced various sectors in Vietnam, including the Rice Industry. This agreement, along with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), represents the largest scope and extent of commitments between Vietnam and partner territories on the international market.
Vietnam, with its rich agricultural regions, is the world’s second-largest rice exporter. Rice plays a major role in the economy and culture of Vietnam. It is used as a staple food in everyday Vietnamese cuisine and is one of the most valuable export commodities of the agriculture sector in the country.
This article provides an overview of the Vietnam-EU Trade Relations and the impact of EVFTA on Vietnam Rice Export. The EU is one of the largest strategic trading partners of Vietnam, with a total two-way trade turnover of 56.45 billion USD in 2019. The enforcement of the EVFTA has opened up numerous opportunities for Vietnamese rice in the EU market.
Before the implementation of the EU-Vietnam Free Trade Agreement (EVFTA), the Vietnam Rice Export industry had its own set of challenges and opportunities. Vietnam, being the world’s second-largest rice exporter, has a long history of rice cultivation that dates back thousands of years. Rice plays a major role in the economy and culture of Vietnam. It is used as a staple food in everyday Vietnamese cuisine and is one of the most valuable export commodities of the agriculture sector in the country.
The agricultural sector adds up to 24% of the gross domestic product (GDP), 20% of the total exports, and over 70% of the total employment. Vietnam’s economy is highly dependent on the agricultural sector, specifically rice production, which constitutes 30% of the country’s total agricultural production value.
The EU-Vietnam Free Trade Agreement (EVFTA), signed on 30 June 2019, provides opportunities to increase trade and support jobs and growth on both sides by eliminating 99% of all tariffs, reducing regulatory barriers and overlapping red tape, ensuring protection of geographical indications. The EU will progressively remove its duties on imports from Vietnam by 2027. This asymmetric approach takes into account the fact that Vietnam is a developing country.
The enforcement of the EVFTA has opened up numerous opportunities for Vietnamese rice in the EU market. According to EVFTA, the EU provides Vietnam with 80,000 tons of rice for export at 0% tax rate annually. For rice from Vietnam, the EU will reduce the import duty rate to zero in the coming years. Taking advantage of the above, from September 2020, Vietnam started to sell rice to the EU at a much higher price than before.
The European Union-Vietnam Free Trade Agreement (EVFTA) has brought about significant changes to the Vietnam Rice Export industry. After two years of implementing the EVFTA, Vietnam has thrived in many fields, especially in attracting foreign direct investment (FDI) and promoting trade between Vietnam and the European Union bloc.
The enforcement of the EVFTA has led to a substantial increase in Vietnam’s rice exports. The agreement provides Vietnam with an annual quota of 100,000 tons of rice for export to the EU at a 0% tax rate. This has opened up new opportunities for Vietnamese rice in the EU market.
Despite the difficulties caused by the COVID-19 pandemic, Vietnam has still shown remarkable results, from the continuing efforts of the management agencies and enterprises in Vietnam. The quarantine order due to the widespread COVID-19 epidemic, complex logistics, and supply chain crises, and geopolitical fluctuations in Vietnam and internationally, have had a significant negative impact on the implementation of the EVFTA.
Vietnam is the world’s second-largest rice exporter, with a rich history of rice cultivation that spans thousands of years. The agricultural sector, with rice production at its core, plays a crucial role in Vietnam’s economy. It contributes to 24% of the country’s GDP, 20% of total exports, and over 70% of total employment.
The level of rice trade liberalization has significant implications for the global rice market. The world rice market is highly distorted due to the high degree of intervention in rice markets across various countries. Trade liberalization could result in a shift in the flow of rice exports from poorer Asian countries like Vietnam to richer countries in East Asia and Europe.
However, the impact of trade agreements on Vietnam’s rice exports varies, and not all agreements bring positive effects. Based on these findings, it is crucial for Vietnam’s rice export industry to adapt to the contents and standards of the trade agreements.
The European Union-Vietnam Free Trade Agreement (EVFTA) has opened up numerous Export Opportunities for Vietnamese Rice Varieties in the European Market for Rice. However, there are also Trade Barriers faced by Vietnamese rice in the EU market due to EU Import Regulations.
As of 2023, Vietnam had exported nearly 6 million tonnes of rice, the highest amount ever recorded, up 20% year-on-year. This brought Vietnam’s total rice export turnover in the first eight months to almost 3.2 billion USD, a year-on-year increase of 34%. China, Ghana, Indonesia, and the Philippines were the largest buyers of Vietnamese rice.
The enforcement of the EVFTA has led to a substantial increase in Vietnam’s rice exports. The agreement provides Vietnam with an annual quota of 80,000 tons of rice for export to the EU at a 0% tax rate. This has opened up new opportunities for Vietnamese rice in the EU marke.
Despite the opportunities, Vietnamese rice exporters also face challenges due to EU Import Regulations. The EU has strict regulations on product quality and safety, environmental protection, and social responsibility. These regulations pose challenges for Vietnamese rice exporters to meet the EU’s standards.
In the face of complicated developments in global food trade, including India’s ban on export of non-basmati white rice, Russia’s withdrawal from the Black Sea Grain Initiative, climate change and El Nino phenomenon, the Ministry of Industry and Trade has coordinated with the Ministry of Agriculture and Rural Development and the People’s Committees of rice production localities, the Vietnam Food Association as well as rice traders to roll out various measures to regulate rice production and export activities in 2023, while ensuring the stability of the domestic rice market.
The European Union-Vietnam Free Trade Agreement (EVFTA) has had a profound impact on Vietnam’s Rice Export, shaping its future. The agreement has boosted exports, with Vietnam exporting nearly 6 million tonnes of rice in 2023. However, exporters face challenges due to the EU’s strict regulations. Despite these challenges, the industry remains optimistic, leveraging trade agreements and technology to ensure sustainable growth. This concludes our exploration of the impact of the EVFTA on Vietnam’s rice export. Thank you for joining us on this journey.
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