Commodities buyers are eyeing the prospect of getting access to cheaper prawns and pangasius as well as rice and coffee following the agreement of a landmark free trade deal with Vietnam last week.
The EU and Vietnam concluded negotiations on 2 December, paving the way for the removal of import and export tariffs over the next decade. The deal is expected to come into force in 2017.
The agreement has been described by Brussels as the “most comprehensive” FTA deal the EU has ever struck with a developing nation, and gives buyers and suppliers access to an emerging economy with a strong agricultural sector.
Vietnam’s key agrifood outputs include seafood, rice and coffee - it exported €1.9bn worth of agricultural products to the EU in 2014, and €912m worth of fishery products [EU directorate general for trade].
In the UK, the most common seafood imported from Vietnam is pangasius and shrimp, according to Seafish. “Any reduction in trade tariffs will necessarily make Vietnamese imports more economical, however this will not automatically result in lower prices for the consumer as the market is already very competitive,” says Malcolm Large, Seafish head of international trade.
Vietnam is also a major grower of rice, prompting Italian rice growers to oppose the FTA over fears of sharp competition. However, agriculture commissioner Phil Hogan has insisted the deal will not damage EU grower interests.
Booming exports market
The FTA with Vietnam also opens the door to an attractive export market for UK food and drink producers. UK food and drink exports there were worth just under £40m last year [HMRC], but this is expected to rise significantly. UK exports to Vietnam are already rising, with beef exports growing particularly strongly.
“The new Free Trade Agreement should provide a significant boost for already strong food and drink export growth to Vietnam,” says the FDF. “UK food and drink companies can expect reduced tariffs on primary and processed food products, although there will be different phase-in periods for different product categories, as well as removal of existing non-tariff barriers.”
Beef exports to Vietnam will be duty free after a phase-in period of three years, with dairy to follow after five years, pork and food preparations after seven years, and chicken 10 years down the line.
To encourage food and drink companies to explore opportunities in Vietnam and to promote British products to Vietnamese consumers, UKTI is organising a Food and Drink GREAT week in March, working with local supermarket Vinmart. “If British food companies are interested in joining, it is not too late,” says a BIS spokeswoman.
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