Research on the impact of TPP on vietnams aquaculture export industry and some solutions to promote seafood exports to TPP member countries by 2025

INSTITUTE OF ADVANCED TRAINING, HIGH QUALITY, AND POHE INTERNATIONAL ECONOMIC COURSE INTERNATIONAL ECONOMIC PROJECT Topic: Research on the impact of TPP on Vietnam's aquaculture export

INSTITUTE OF ADVANCED TRAINING, HIGH QUALITY, AND POHE

INTERNATIONAL ECONOMIC COURSE

INTERNATIONAL ECONOMIC PROJECT

Topic: Research on the impact of TPP on Vietnam's

aquaculture export industry and some solutions to promote

seafood exports to TPP member countries by 2025

Student phone number : 0914996686

Hanoi, 06/2022

STATUTORY DECLARATION

I hereby declare that this assignment is entirely my own work The quotations and materials used in the exercise are completely honest, are cited and guaranteed to the highest

degree of accuracy to the best of my knowledge If it is not as stated above, I take responsibility

for my assignment

Student

Le Quang Huy

ACKNOWLEDGEMENTS

To carry out and complete this project, data sources from reputable agencies as well as magazines and newspapers have supported the group a lot The research has been completed

based on references, learning experiences and inheriting from related research results, books and

specialized journals of many authors at universities, research organizations, political

organizations

First of all, I would like to thank the National Economics University in general and the leadership of the Institute of Advanced and High Quality and POHE in particular for

creating favorable conditions for us to have a favorable environment learn, gain experience and

capture useful information based on providing lectures of subjects related to the research topic

In particular, I would like to thank Mr.Nguyen Xuan Hung, who directly guided

me throughout the course of the exercise During the time working with you, I have not stopped

learning to accumulate a lot of useful knowledge for myself, but also have learned a serious and

effective working spirit, these are very necessary things for me in my career future study and

work

I have tried a lot to complete this research topic, but shortcomings cannot be avoided Therefore, I hope that you and others who are interested in the topic can continue to

give suggestions and help to improve the topic

Wishing everyone good health, happiness and success in life!

Hanoi, April 15th 2022

Student

Le Quang

The TPP is expected by the world to become a comprehensive, high-quality trade framework that

is a template for 21st century Agreements This Agreement will have a certain effect on the

import and export of agricultural products in general and seafood in particular of Vietnam This

article focuses on giving an overview of the TPP, analyzing the current situation of Vietnam's

seafood import and export into TPP member countries in the past time, clarifying the

opportunities and challenges for the seafood industry when Vietnam Nam joined the TPP, and at

the same time made a number of proposals and recommendations to take advantage of

opportunities, overcome challenges, and contribute to promoting Vietnam's seafood exports to

the markets of TPP member countries in the near future

Keywords: TPP, aquaculture, export, tariffs, technical barriers.

Content

1 Introduction

The Trans-Pacific Partnership (TPP) is a new-generation free trade agreement that is expected to

have huge impacts on member economies This article analyzes the impacts of TPP on Vietnam's

export aquaculture (Aquaculture) industry The TPP will have positive effects on Vietnam's

export industry through opportunities in market access, foreign investment, advanced science

and technology, and access to international arbitration institutions neutral economy Besides,

TPP will also be able to create challenges due to stronger competition in the domestic market,

higher requirements for meeting technical standards,for export aquatic products and labor and

environmental standards in aquaculture

2 Research overview, theoretical basis and research methods assist:

2.1 Research overview and related theoretical basis

Relating to the theoretical and practical basis on the topic of competitiveness of exported seafood

has been studied at home and abroad with different approaches and levels, through research

works , publications are published The content of some major research works of domestic and

foreign authors in recent years can be mentioned as follows:

The study "Improving the competitiveness of Vietnamese seafood exporters to 2030" This is a

doctoral thesis by Tran The Hoang and will be completed in 2021 The thesis has systematized

the development of seafood export enterprises To develop competitive theory of enterprises,

measure the components of competitiveness, analyze the current situation of strengths and

weaknesses, thereby proposing groups of basic solutions to improve the competitiveness of

enterprises competitiveness of Vietnamese seafood exporters by 2030

The study "Improving the competitiveness of Vietnam's seafood processing industry", This is the

doctoral thesis in economics conducted by Bui Duc Tuan, completed in 2019 The thesis

analyzes and evaluates the current state of energy competitiveness of the seafood processing

industry in Vietnam, analyzing potential factors and advantages of Vietnam in the process of

developing the seafood processing industry, thereby uncovering the problems posed for the

seafood processing industry Vietnamese products in terms of world economic integration The

thesis has assessed the competitive status of the industry, the barriers that affect the improvement

of the competitiveness of the seafood processing industry in Vietnam, in addition to certain

competitive advantages compared to other countries other countries in the world

Research by co-authors Arie Pieter van Duijn, Rik Beukers and Willem van der Pijl, "The

VietNamese seafood sector A value chain analysis", published in 2020 The work focuses on

analyzing the following contents: characteristics and trends trends of Vietnam's seafood

industry; EU demand for Vietnamese seafood; bottlenecks for Vietnam's seafood exports to the

EU The work uses a global value chain tool to analyze four sub-sectors of Vietnam's seafood

industry Vietnamese seafood: shrimp, pangasius, tuna and sub-sectors, oysters, mussels Report

“The Fisheries Sector in Vietnam: A Strategic Economic Analysis” by the Embassy of Denmark

in Vietnam in Phase II of Fisheries Sector Support Program, Early 2020 This study was

presented to Vietnamese government policymakers, to provide a basis for making the right

choices in selecting and designing Government intervention design in Vietnam's fisheries sector

The study focuses on the following key issues: Overall assessment on Vietnam's seafood

industry; Aquaculture in Vietnam; Fisheries

Although there are many research works related to this problem, none of them really focus on

solutions that need to be implemented immediately to be able to improve Therefore, this article

will analyze the current situation of seafood import and export of Vietnam into TPP member

countries, clarifying opportunities and challenges for the seafood industry when Vietnam joins

TPP, At the same time, some proposals and recommendations were made to take advantage of

opportunities, overcome challenges, and contribute to promoting Vietnam's seafood exports to

the markets of TPP member countries in the coming time

2.2 Theoretical framework or analytical framework used in the article

(do not have)

2.3 Research Methods:

Document Research, Observation

3 Research results and discussion:

3.1 Research results:

3.1.1 Basic contents of the TPP Agreement related to the export aquaculture industry

The objective of TPP is to facilitate trade by eliminating taxes and barriers for import and export

goods and services between member countries… Here are some basic related agreements related

to the aquaculture export industry

Tariff reduction: Member countries will reduce 90% of import and export taxes on goods and

cut them by 0% according to the roadmap Vietnam's seafood exports are entitled to a tax rate of

0% immediately after the Agreement comes into effect or after 3-5 years Specifically, the US,

Singapore and Chile committed to eliminate import-export tax on Vietnamese pangasius and

shrimp as soon as the Agreement took effect; Canada, Japan, Australia commit to eliminate after

3-5 years For Mexico, Pangasius, Basa, will be eliminated in the 3rd year, Frozen shrimp will be

eliminated in the 13th year, Processed shrimp will be eliminated in the 12th year Vietnam is

committed to implementing the elimination roadmap tariffs in the 8th year for imported

(imported) aquatic products

Simplify border controls: Regulations relating to phytosanitary measures (SPS) apply only to

the extent necessary and are non-discriminatory TPP accepts equivalence, recognizes

epidemic-free areas, transparency, permits the application of urgent measures, facilitates inspection

process, technical consultation and strengthening between the parties

Rules of Origin for Goods: TPP member countries agree on a common set of rules of origin to

identify a particular good as “originating” and thus enjoy preferential tariffs in the TPP The TPP

Agreement also provides for "aggregation" so that input materials from one TPP party are treated

like materials from another party if used to produce a product in any of the TPP parties

However, for seafood products (except tuna), regulations allow the use of seed and input

materials imported outside TPP

Customs procedures: TPP facilitates trade through simplification and harmonization of customs

procedures, application of a common mechanism for certification of origin, self-certification of

origin, transparency of financial institutions and animal and plant health and safety (SPS)…

Export subsidies: For agricultural and fishery products, in addition to cutting tariffs according

to the schedule, member countries also loosen other restrictive policies, including: removing

export subsidies, regulations on export credits, do not allow the use of special safeguard

measures…

* Commitment to facilitation in the field of investment and finance

The TPP agreement provides commitments that allow investors to be unrestricted in the transfer

of capital and assets into and out of a country; except for cases affecting the macroeconomic

balance or related to crime, tax evasion The TPP also sets forth principles that require fair and

non-discriminatory investment protection and policies to uphold the rule of law, while ensuring

the ability of member governments to achieve legitimate public policy goals The TPP provides

for the same basic investment protection as in other trade agreements

The Agreement also provides for neutral and transparent international arbitration for investment

disputes The procedural safeguard mechanism includes: transparent arbitration process,

submissions by interested parties, third party submissions; a review is conducted of insignificant

claims and a determination of attorneys' fees; interim review and decision mechanism; binding

interpretation of the TPP parties; …

The contents of commitments on financial services include expanding commitments on market

opening along with a transparency mechanism, allowing exceptions The TPP provides

opportunities to open up investment and cross-border markets while ensuring that TPP members

maintain adequate regulatory authority over financial institutions and markets, taking urgent

measures in the event of a crisis Accordingly, it allows the cross-border sale of specific

financial services to a TPP member from a service supplier of another TPP member without

requiring the service supplier to establish a base of operations in another country to sell its

services

The TPP Agreement also includes specific commitments on portfolio management, electronic

card payment services and information transfer for data processing; The specific provisions on

investment disputes relate to minimum standards of treatment based on customary international

commercial law, as well as those relating to financial services professionals in arbitration and

special sequence mechanism intended to facilitate the application of prudent and other

exceptions

* Other commitments

Commitment to harmonize institutions and policies among member countries The TPP is

expected to include commitments on cross-cutting issues such as the harmonization of legal

regulations, competitiveness, issues of supporting the development of small and medium-sized

enterprises, supply chains, and development assistance…

3.1.2 Overview of Vietnam's aquaculture export industry

According to a report of the Vietnam Directorate of Fisheries, it is estimated that by the end of

June, the total fishery production will reach 4.1 million tons, increased 3% over the same period

in 2020 Of which, the fishing yield will reach nearly 2 million tons, increase 1%; aquaculture

output reached 2.1 million tons, increase 4%; The value of seafood export turnover in the first 6

months of the year was estimated at 4.1 billion USD, increased 13.6% over the same period and

reaching 47.1% of the plan thanks to the recovery of consumer demand in major markets such as

the US, the European Union (EU) and other potential markets

Regarding shrimp, in the first 6 months of 2021, shrimp production is estimated at 371 thousand

tons, increased 12% over the same period in 2020 In which, the yield of Black Tiger is nearly

113 thousand tons, and the yield of Vannamei is nearly 113 thousand tons Vannamei reached

nearly 258 thousand tons Regarding Pangasius, it is estimated that by the end of June 2021, the

harvested yield will reach 704.1 thousand tons, increased 0.9% compared the same period;

Pangasius export turnover reached 637.9 million USD, increased 14.7% over the same period

Compared with the target, the total yields reached 104.3%, of which, the aquaculture production

reached 102.3%, the fishing yield reached 106.8 %; compared with the whole year plan target,

the total fishery yield reached 47.6%; in which, exploitation yield reached 51.9%, aquaculture

production reached 44.2% These results are positive despite many difficulties of Covid-19

pandemic

Source: Statista

Seafood export value has increased healthily

Thanks to the recovery of consumer demand in major markets of Vietnamese seafood such as the

US, EU and other potential markets, Vietnam’s seafood export turnover in June 2021 increased

by 20% compared to the same period last year As a result, seafood export value in the first 6

months of the year reaches 4.1 billion USD

According to Vietnam Association of Seafood Exporters and Producers (VASEP), Pangasius is

being consumed well in the US, European, and Chinese markets As of the end of June 2021,

Vietnam’s export value of other seafood products reached 1.6 billion USD, increase 16% over

the same period in 2020 Seafood sources accounted for nearly 40% of the export proportion in

the first 6 months of this year; in which, tuna export value reached 364 million USD, increased

24% over the same period in 2020 Export value of squid and octopus reached 277 million USD,

increased 15% compared to the same period last year Other types of fish reached USD 847

million, up 13%

Mr Truong Dinh Hoe, General Secretary of VASEP said that squid, octopus and tuna are all

growing in most major markets In recent months, import value of Vietnamese tuna has increased

1.5 times in the US market compared to the same period last year, so in the first half of the year,

tuna export value to the US increased by 23% The US is consuming 43% of Vietnam’s tuna

When the US market reopens, all segments of tuna products have the opportunity to increase

market share Other key markets all have very optimistic signals of growth Typically, Italy

increased 122% in the first 6 months, Israel increased 37%, Canada increased 62%

The Chinese market is Vietnam’s fifth largest cephalopod consumption market, accounting for

6% of total exports of squid and octopus In the last 3 years, Vietnam’s export value of squid and

octopus to China have tended to grow continuously The export value of squid and octopus in

2020 will increase by nearly 61% compared to 2019 Entering 2021, this growth trend will

continue Import value of dried squid and grilled squid into China from Vietnam continued to

grow impressively by more than 300% compared to 2020 Besides, Vietnam’s export value of

fresh and frozen squid to this market have also increased again

Regarding the Korean market, the largest market for Vietnam’s squid and octopus consumption,

accounting for 41% of the total export volume of squid and octopus, is on an increasing trend,

with a growth rate of 7-8% The Japanese market, accounting for 20% of Vietnam’s squid and

octopus export value, is also showing a good trend At the same time, export value of squid and

octopus to Italy have grown sharply by 170% in recent months and increased by nearly 70% in

the first half of the year Those are good news for Vietnam’s seafood exports to reach $9 billion

in 2021

3.1.3 Analyzing the impact of TPP on Vietnam's aquaculture export

industry Positive effects of TPP

* Expanded consumption market

Currently, the member countries participating in the TPP are all strategic partners of Vietnam's

seafood The total value of seafood exports to these 11 markets reached over 3 billion USD,

accounting for nearly 50% of the total seafood export value In theory, TPP will be an

opportunity for Vietnamese seafood enterprises to expand their market Trade barriers are

removed forming a larger regional seafood consumption market In addition, Vietnam's seafood

products will be more competitive in the TPP market than those outside the bloc because these

countries do not enjoy preferential tariffs For example, TPP will make Vietnamese shrimp

exports to the Japanese market more competitive than Agentina, Ecuador and India when these

three countries do not have a free trade agreement (FTA) with Japan

However, in fact, the tax rates of many TPP member countries on Vietnamese seafood products

before TPP were quite low For example, for Peru, Canada, the MFN tariff is now approximately

0%, or Malaysia, Singapore, Australia tariffs have been eliminated under FTAs in ASEAN and

ASEAN+ This shows that Vietnam's seafood products also do not benefit much from the

reduction/elimination of tariffs For the Japanese market, tariffs on Vietnamese seafood imported

into this country on average account for about 3.5% for live seafood and 7.3% for processed

seafood, so TPP will be an opportunity so that Vietnamese seafood has more competitive

advantages in price when exporting to Japan

* Access to more diverse input sources in aquaculture

For enterprises operating in the field of aquaculture for export using imported materials, TPP

will be an opportunity for enterprises to import input materials from countries in the TPP With

the reduction of import tax to 0%, it will create opportunities to import advanced seafood

processing machinery, equipment and technology from the TPP market to serve production and

business activities of seafood enterprises The import of input materials from seed, feed, disease

prevention and treatment drugs for aquaculture to processing and preservation technology, etc

will benefit from having access to cheaper import prices, helping reduce production costs,

stabilize input sources, improve business efficiency and competitiveness of export products

* Reducing procedures and costs in export activities

The phytosanitary measures (SPS) specified in the TPP help reduce costs for businesses

Accordingly, goods from an already recognized immune or quasi-immunity zone will not need

any additional certification of quality standards, especially since TPP allows for electronic

self-certification and self-certification However, this regulation will also pose challenges for seafood

enterprises in building and adjusting all behaviors to enhance responsibility and maintain trust

among businesses in business activities

The TPP Agreement stipulates a self-certification mechanism of origin in the inspection and

determination of origin for import and export goods This mechanism allows enterprises to

self-declare the origin of their goods, instead of the current management method, which requires

enterprises to submit to the customs office the Certificate of Origin issued by the competent

authority of the exporting country This new regulation allows exporting enterprises to reduce the

time and procedures performed in the process of proving the origin of seafood, thereby reducing

costs for enterprises

Enterprises importing input materials such as feed, breeders, etc will not have to go through tax

refund procedures, which can also be considered as a small benefit Exporting seafood products

can also increase competitiveness thanks to the use of low-cost production support services such

as transportation and storage in TPP member countries In addition, TPP also creates favorable

conditions for the region Domestic production of raw materials developed thanks to the import

of animal feed, raw materials, supplies, equipment and machinery at cheaper prices from TPP

member countries; increase opportunities for joint venture cooperation to improve product

quality and improve the production chain of aquatic products

* Access to investment capital, modern technical technology in aquaculture for export

With the requirements of commitments with extensive openness in many fields, trade and

investment relations between Vietnam and TPP member countries are forecasted to develop

strongly, leading to investment capital flows between Vietnam with countries in the bloc and

also with countries outside the TPP Vietnam is expected to receive investment projects from

new partners such as Mexico, Peru, and Chile At that time, seafood enterprises have the

opportunity to access investment capital from abroad to expand the import scale and improve the

competitiveness of seafood products Besides, through investment cooperation in aquaculture

with foreign enterprises, it will create favorable conditions to increase opportunities to access

science and technology of aquaculture enterprises, thereby improving productivity, quality,

ensuring hygiene and safety food and environmental protection

* Access to neutral international arbitration institutions in settling cases related to international trade in seafood exports

Vietnam's seafood products entering major markets are often subject to technical barriers from

importing countries In many cases, these impositions are not right to the detriment of

Vietnamese enterprises Vietnamese seafood enterprises must accept to comply with those

unreasonable impositions because they do not have access to international legal services to

effectively sue When participating in TPP, enterprises can have more favorable access to neutral

and transparent international arbitration institutions for disputes over safeguard mechanisms as

well as investment and avoid/reduce disadvantages caused by the application of international

law ordered from importing countries to protect domestic production