The trans pacific partnership and its effects on vietnam seafood exports

GRADUATION THESIS The Trans-Pacific Partnership and its effects on Vietnam seafood exports Student: Luong Thanh Tra Class: International Trade Law and Policy 3 Supervisor: Assoc... Co

GRADUATION THESIS

The Trans-Pacific Partnership and its effects

on Vietnam seafood exports

Student: Luong Thanh Tra

Class: International Trade Law and Policy 3 Supervisor: Assoc Prof Dr Vu Hoang Nam

Hanoi, 2017

gratitude towards my supervisor, Associate Professor Doctor Vu Hoang Nam - Director of Department of International Affairs at Foreign Trade University for his enthusiastic assistance in giving me priceless suggestions as well as instructions Secondly, I specifically feel grateful to all my professors of International Trade Law and Policy program from Foreign Trade University as well as World Trade Institution for knowledge, lessons and helping me overcome the difficulties in finishing this study

Finally, my gratitude also needs offering to my family and my friends at MITPL3 for their valuable support and encouragement during the completion of my graduation thesis

COMMITMENT

I hereby confirm that my study is an independent research The information given in this paper is true The findings in this study are analysed honestly and objectively This study has not been published in any other research

Student

Luong Thanh Tra

TABLE OF CONTENT

INTRODUCTION 1

LITERATURE REVIEW 3

CHAPTER 1 INTRODUCTION OF TPP AND THE POSSIBLE EFFECTS ON SEAFOOD EXPORT ACTIVITIES IN VIETNAM 6

1.1 Overview of the TPP 6

1.1.1 Background and negotiation process 6

1.1.2 The TPP‟s member countries 7

1.1.3 Objectives and main contents 9

1.2 The role of seafood export in Vietnam economy 11

1.2.1 Contribute to economic growth and development 12

1.2.2 An important export source and increase foreign exchange 13

1.2.3 Jobs creation, poverty reduction 14

1.2.4 Ensure food security 15

1.2.5 Ensure water territory, national security and defense 15

1.3 Theoretical framework and indexes 16

1.3.1 Shallow integration 17

1.3.2 Deep integration 20

1.3.3 Methodology: Sussex Framework and indexes 23

CHAPTER 2 THE TPP’S EFFECTS ON VIETNAM SEAFOOD EXPORT 28 2.1 Resources of Vietnam seafood industry 28

2.1.1 Natural resources 28

2.1.2 Social and economic conditions 29

2.1.3 Current status of mining, aquaculture, seafood processing 30

2.2 Vietnam seafood export situation 32

2.2.1 Overview of Vietnam seafood export activity 32

2.2.2 Seafood exported to TPP member countries 46

2.2.3 Seafood exported to non-TPP member countries 56

2.3 SWOT analysis of Vietnam seafood export in the context of TPP 62

2.3.1 Strengths 62

2.3.2 Weakness 63

2.3.3 Opportunities 65

2.3.4 Threatens 65

2.4 Evaluation on TPP's effects on Vietnam seafood exports 68

2.4.1 Shallow integration effects 68

2.4.2 Deep integration effects 77

2.5 Review and evaluation 84

CHAPTER 3 MEASURES TO STRENGTHEN VIETNAM SEAFOOD EXPORT IN THE CONTEXT OF TPP (2016-2020) 85

3.1 Forecast of world seafood demand and Vietnam supply 2020 - 2030 85

3.1.1 Forecast of global seafood demand 85

3.1.2 Forecast of Vietnam seafood production and exports 87

3.1.3 Vietnam government and orientation of fishery development 88

3.2 Measures to strengthen Vietnam seafood export in TPP context, 2016-2020 90

3.2.1 Measures of government 90

3.2.2 Measures of enterprises 94

CONCLUSION 96

REFERENCES 97

LIST OF TABLES

Table 1 TPP members and economic statistics, 2015 8

Table 2 Contribution of economic sectors to Vietnam economic growth 2011-2015 13

Table 3 Fishing vessels with 90 CV capacity or more, 2010-2015E 31

Table 4 Vietnam Seafood Exports by Products yearly 2011-2015 35

Table 5 Vietnam seafood export by products, 2015 36

Table 6 Value of Vietnamese seafood exported to 11 TPP members, 2010-2015 47

Table 7 US per capita consumption of fish and shellfish, 1990-2014 48

Table 8 Seafood importation of the US, 2014-2015 49

Table 9 Top ten seafood suppliers of the US 2014-2016 50

Table 10 Top ten seafood suppliers of Japan, 2015 55

Table 11 Japan‟s seafood importation from Vietnam, 2012-2016 55

Table 12 Import seafood of China by products, 2014-2015 58

Table 13 Shrimps exported from Vietnam to China by species, 9M.2016 60

Table 14 Simple average tariffs applying, 2007-2015 70

Table 15 RCA indexes in HS Codes 03 products by country, 2012-2015 74

Table 16 Trade intensity index of Vietnam‟s export to TPP bloc, 2012-2015 75

Table 17 World seafood demand by regions 2020-2030 86

Table 18 Forecast of Vietnam seafood supply 2020-2030 88

LIST OF FIRGURES

Figure 1 Top 10 major export products of Vietnam by value, 11 months 2016 14

Figure 2 Fishery productions and growth 1995 - 2015 31

Figure 3 Seafood export value and growth in 2000-2015 33

Figure 4 Vietnam seafood export structure by products, 2015 36

Figure 5 Vietnam shrimp export value and growth 2005-2015 37

Figure 6 Vietnam pangasius export 2004-2016E 39

Figure 7 Vietnam tuna exports, 2015-2016 41

Figure 8 Comparison of Vietnam seafood export value to World, TPP and non-TPP member countries 2010-2015 45

Figure 9 Vietnam seafood export markets structure by value, 2015 46

Figure 10 Vietnam seafood exported to US by products, 2000-2015 51

Figure 11 Simple average tariffs (AHS) applying on Vietnam‟s seafood products by HS Codes, 2012-2015 (%) 71

Figure 12 The GL Index between Vietnam and TPP, HS Codes 03, 2012-2015 78

LIST OF ABBREVIATIONS

ASEAN The Association of Southeast Asian Nations

FAO Food and Agriculture Organization of the United Nations

FDI Foreign Direct Investment

FTA Free Trade Agreement

GDP Gross Domestic Product

HS Codes Harmonized System Codes 2012 by World Customs Organization

HS Codes 03 03 Fish, crustaceans, mollusks, aquatic invertebrates

MARD Ministry of Agriculture and Rural Development of Vietnam MFN Most Favoured Nation

NAFIQAD National Argo, Forestry, Fisheries Quality Assurance Department

(Ministry of Agriculture and Rural Development of Vietnam) NAFIQAD National Argo, Forestry, Fisheries Quality Assurance Department

(Ministry of Agriculture and Rural Development of Vietnam) NOAA National Oceanic Atmospheric Administration (The United States

Department of Commerce) SPS Sanitary and Phytosanitary

TBT Technical Barriers to Trade

The US The United States of America

TPP Trans-Pacific Partnership

USD United States Dollar

VASEP Vietnam Association of Seafood Exports and Producers

INTRODUCTION

1 Rationale of the study

The Trans-Pacific Partnership (TPP) is a new-generation free trade agreement and also one of the biggest multinational trade deals among twelve economies along two sides of Pacific Ocean (including Vietnam) With a wide range of commitments and deep liberalization, the TPP will certainly have strong impact on the whole economic institutions of member countries as well as import and export activities

In addition, Vietnam export activities play a very important role in promoting economic growth; raise capital to industrialize and modernize country; shift the

economic structure towards positive direction Domestic jobs are largely resolved;

the external economic relations are also open wide In order to achieve those targets, one of main solutions is key export commodities construction and development Among top ten export commodities of Vietnam, seafood has much potential for development and has gained many achievements in recent years Vietnam has good relative advantages on length of continental coastline and large sea area to develop fishery sector However, there are still many restrictions that potential development can not be fully exploited; especially in complicated economy nowadays

Many economists says that TPP will bring a “bright picture” for Vietnam‟s economy in general but whether joining the TPP will bring benefits to seafood exports of Vietnam or not Vietnam seafood exports will follow the same direction

as judgment of economists about Vietnam‟s benefits or not? To answer this

question, I choose the title: “The Trans-Pacific Partnership and its effects on Vietnam seafood exports” for my graduation thesis

2 Aim of study

Author researches fishery industry and seafood export activity of Vietnam in the context of TPP in order to answer the question: How TPP affects to Vietnam seafood export and whether Vietnam seafood exports will get benefits from joining

TPP or not as well as which solutions are suitable to promote Vietnam seafood exports in the context of TPP

3 Scope of the study

The study research on Vietnam fishery and seafood export situation; mainly in the markets which are major countries importing Vietnam seafood and focuses on major export products This study analyses and focuses on Vietnam seafood export

in the context of TPP and impacts that TPP may bring

4 Research methodology

Author uses qualitative research methodology and secondary information to achieve the mentioned purpose Base on impact analysis of an FTA to an industry which are shallow and integration as well as the concept of trade creation and trade diversion

in particular, author collects trade data of Vietnam in general and trade data of Vietnam seafood in specific Later, author applies rules of thumb from Sussex Framework in order to identify wherether Vietnam seafood export gains or loses Some indexes are used in the thesis to analyse those impacts of TPP to Vietnam seafood and make rules of thumb more clearly such as revealed comparative advantage, trade intensity index and Grubel–Lloyd index

5 Structure of the thesis

Excluding the Introduction and Conclusion, the thesis consists three chapters:

Chapter 1 Introduction of the TPP and the possible effects on seafood export activities in Vietnam

Chapter 2 The TPP‟s effects on Vietnam seafood export

Chapter 3 Measures to strengthen Vietnam seafood exports in the context of TPP

LITERATURE REVIEW

The TPP agreement has been drawing attention from not only Vietnamese but also foreign economists, researchers and enterprises Currently, there are a number of papers, studies and research reports assessing impact of TPP on Vietnam‟s economy However, the number of paper and research addressing impact of TPP on fish and seafood is quite humble We can find some papers and researches with different perspectives such as:

“TPP integration – Opportunities and Challenges for Vietnam seafood” by PhD

Dang Le Hoa from Nong Lam University published in the summary record of TPP workshop in June 20016: The paper provided a general picture of Vietnam seafood industry and Vietnam seafood imports and exports with TPP member countries, especially the US and Japan The paper also addressed opportunities and challenges from TPP for Vietnam seafood However, the paper just provided general comments and did not use any theoretical framework nor models to analysis TPP‟s impacts It also did not provide specific impacts nor recommendations for Vietnam seafood

industry Similar to this study, the paper “TPP and effects on Vietnam’s tuna export” by Kim Thu published in March 2015: Author provided very general

evaluation on opportunities and challenges that TPP might bring to Vietnam tuna export No specific assessment was addressed

”Impacts of TPP to trade of products of Vietnam” by Assoc PhD Hoang Duc Than

from National Economics University published in summary records of National Science Workshop in 2016: The paper concluded that the labor-intensive industries and some agricultural products would benefit the most This stems from the theoretical advantages of international trade while Vietnam has a lower level than other countries in the TPP Footwear, textiles, seafood and agricultural products will increase their exports to the TPP countries Fisheries benefit from exports to the Japanese market while import tariff reduction to 0% in comparison with an average

of 6.4 to 7.2% current import tax

“The Impacts of TPP and AEC on the Vietnamese Economy” by Vietnam institute

for Economic and Policy Research (VEPR) of Vietnam National University published in August 2015 By using Computable General Equilibrium Model, group

of authors analysed impacts of TPP on Vietnam‟s economy (real GDP, investment, trade, output, labor demand, economic welfare and tariff revenue reduction) A quantitative evaluation of potential economic impacts of liberalizing trade in goods and services under TPP was described When calculating the reveal comparative advantage (RCA) index based on trade data classified by SITC, the authors showed that Vietnam has advantages in labor-intensive goods such as fish and crustaceans, mollusks (HS Codes 03), with RCA of this commodity in 2012 is 7.77 Percentage

of output change in fishing sector was predicted to decrease in the research with different scenarios of tariff removal and reduction in non-tariff barriers For the economy as the whole, in almost all simulation scenarios, Vietnam is shown to be the member achieving largest GDP change in percentage term and Vietnam‟s trade with other TPP countries increases in all case

“Trans-Pacific Partnership Agreement: Likely Impact on the U.S Economy and on Specific Industry Sectors” investigation no TPA-105-001, USITC Publication

4607 United States International Trade Commission published this report in May

2016 This research gave the principal findings as to the likely economy-wide effects of TPP to the US, specific sector effects, and the expected effects of TPP‟s crosscutting rules and other provisions The research used a dynamic computable general equilibrium model to determine the impact of TPP relative to a baseline projection that does not include TPP The report assessed the impact of TPP on US agriculture in general and sector-specific analysis for dairy products, beef, pork, poultry meat products, grains, processed foods, fresh fruits, vegetables, & nuts, alcoholic beverages and seafood In the matter of seafood sector of the US, the most significant TPP provisions for U.S seafood exporters are the elimination of tariffs

in Japan and Vietnam The TPP agreement is expected to have a relatively small impact on U.S seafood imports as a share of existing trade, despite the fact that seafood is the second-largest food product group imported from TPP countries, and

the fact that TPP partners (mostly Canada, Vietnam, and Chile) supplied an average

of 37 percent of U.S seafood imports between 2011 and 2015

In general, there is no quantitative analysis on impacts of TPP to Vietnam seafood Most of documents above focused on the overall effects of TPP on Vietnam‟s economy They did not cover detailed analysis of possible effects on Vietnam fish and seafood as well as recommendations for seafood industry to overcome challenges provided by the TPP to promote Vietnam seafood export or enhance the position of Vietnam seafood in the world

CHAPTER 1 INTRODUCTION OF TPP AND THE POSSIBLE EFFECTS

ON SEAFOOD EXPORT ACTIVITIES IN VIETNAM

1.1 Overview of the TPP

1.1.1 Background and negotiation process

The Trans-Pacific Partnership Agreement (TPP) is also known as Trans-Pacific Strategic Economic Partnership Agreement (TPSEP or Pacific Four) which was started from an agreement signed by Brunei, Chile, New Zealand and Singapore in June 2005 and entered into force in May 2006 (WTO Center, 2011) One of the main objectives of the TPSEP is to create a free trade model for the whole of Asia Pacific region; concurrently expand the accession of related countries belonging to Asia Pacific Economic Cooperation (APEC) - base on agreed terms among members According to TPSEP agreement, its aim was to eliminate about 90 percent of all tariffs among members by year 2006, and reduce all trade tariffs to zero by year 2015 It is a comprehensive agreement covering a wide range of trade

in goods, trade in services, trade remedies, sanitary and phytosanitary (SPS) measures, technical barriers to trade (TBT), intellectual property, government procurement and competition policy

In September 2008, the United States of America (the US) decided to take part in negotiation This event has brought a new look with more attractive expectation in enhancing economic growth through effective trade activities; opening up new markets as well as protecting the rights of labor force and competitive environment

in order to ensure sustainable development in long-term for all member countries With its attraction, also in year 2008, some more countries have shown their interest and joined the negotiations such as Australia, Peru and Vietnam during the Summit

of the APEC held in Lima, Peru

After the three first rounds of negotiation among eight members above, Malaysia officially presented its application in October 2010 to join the ongoing negotiations

as the ninth member of TPP negotiations Two years later, Mexico and Canada were

invited to join as the tenth and eleventh member after expressing their intent to enter The latest member of the TPP is Japan who entered the negotiation in 2013 (SICE, 2016)

Through nineteen official rounds of negotiations and a number of additional meetings, after more than five years of negotiations, the TPP was concluded in October 2015 and signed by all twelve members at the signing ceremony held in Auckland, New Zealand on 4 February 2016 (SICE, 2016) The TPP is expected to ratified to enter into force in 2018 In the near future, it will still require tough negotiations before becoming a reality

The latest updates of TPP negotiation: President-elect of the US, Donald Trump, who has won the presidential election in November 2016, has claimed against the ratification of the TPP He said that he would withdraw the US from the TPP trade pact on the day he took the office (The Washington Times, 2016) With the biggest role and position of the US in TPP, the decision of the new President totally changes the future of TPP Current TPP members should have preparation for the scenario of TPP region without the US and Japan takes the lead or the negotiations will change a lot due to the withdrawal of the US

1.1.2 The TPP’s member countries

Prior to the withdrawal of the US as the new US President said, there were twelve negotiating parties in the TPP (including the US) The TPP supported expanding TPP membership to other economies in the Asia Pacific region Each prospective new member must demonstrate commitments to achieve ambitious, comprehensive outcome One big target of the US and Japan when joining TPP was to overcome China and other non-TPP countries Establishing a unified counterweight economic zone in the Pacific Rim was paramount important in order to develop regional economics within their sphere of influence TPP was also an economical and political outpost to balance the force and influence of China in the region Some countries had shown their interests and intent to join the TPP such as South Korea

and Taiwan (East Asia), Indonesia and Thailand (South East Asia), Costa Rica (Central America) and Colombia (South America)

Table 1 TPP members and economic statistics, 2015

(million)

GDP

(USD billion)

GDP per capita

(USD

at PPP)

Real GDP Growth

(%)

Start of TPP Negotiations

Signature

of TPP

4thFebruar

Source: International Monetary Fund World Economic Outlook, April 2015

TPP was an extremely diverse group of countries, both in terms of level of development and economic size The US had the most important role and influence among TPP member countries GDP of the US accounted for 65% of the total GDP

of the TPP countries in 2015 TPP countries‟ population (including the US) accounted for about 11 percent (about 812 million people) of world population but accounted for 40 percent (about 27,907 billion USD) of global GDP Without the

US, TPP will have only 11 members (including Vietnam), accounted for 7 percent

of world population and 13 percent of global GDP (Table 1)

The US had shown their interests and joined the negotiations of TPP from 2008

to November 2016 However, the new President of the US, Donald Trump, has planned to withdraw the US from TPP "on day one" of his presidency in January

2017 The new President of the US has claimed against the TPP: "I'm going to issue our notification of intent to withdraw from the Trans-Pacific Partnership, a potential disaster for our country." Instead, he said he would “negotiate fair bilateral trade deals that bring jobs and industry back” Hours before Trump‟s announcement, the Prime Minister of Japan, Shinzo Abe, warned that the “TPP would be meaningless without US participation” (Ha Thu 2016) The two biggest

members among TPP have opposite opinions on the approval of the TPP Japan - the second biggest countries among TPP members - with its GDP accounted about 15% of the total GDP of the TPP bloc (Table 1) has approved TPP - regardless the TPP withdrawal of the US after the victory of Donald Trump to be the 45th President of the US

1.1.3 Objectives and main contents

Prior to the withdrawal of the US, the main objectives and contents of TPP (including the US) are described shortly as following:

TPP Leaders‟ Statement, November 2011: “…We are confident that this agreement will be a model for ambition for other free trade agreements in the future, forging close linkages among our economies, enhancing our competitiveness, benefiting our consumers and supporting the creation and retention of jobs, higher living standards, and the reduction of poverty in our countries…” The TPP is an open agreement It allows updates if necessary to

resolve trade problems arising in the future as well environmental problems in the process of expanding TPP and accepting new members

The TPP was expected to enhance trade and investment targets among members, promoted innovation and support economic growth as well as development In reporting to Leaders on the achievement of the broad outlines of an agreement, the Trade Ministers identified five defining features that will make TPP a landmark, 21st century trade agreement, setting a new standard for global trade and incorporating next-generation issues that will boost the competitiveness of TPP countries in the global economy

b Main contents

The TPP agreement has 30 chapters covering trade and trade-related issues, which begins with trade in goods and continues through customs and trade facilitation; SPS measures; technical barriers to trade; trade remedies; investment; services and electronic commerce Others include government procurement; intellectual property; labor; environment; „horizontal‟ chapters meant to ensure that the TPP fulfils its potential for development, competitiveness, and inclusiveness; and dispute settlement, exceptions and institutional provisions These include issues related to the Internet and the digital economy, the participation of state-owned enterprises in international trade and investment, and the ability of small businesses to take advantage of trade agreements Five key-features (USTR, 2015) listed as below:

First, comprehensive market access: The TPP eliminates or reduces tariffs and non-tariff barriers of all trade in goods and services as well as investment

Second, regional approach to commitments: The TPP facilitates the development and growth of production as well as supply chains TPP was expected to enhance efficiency and create more jobs, raise living standards and facilitate cross-border integration, as well as opening domestic markets All of those goals were to achieve sustainable growth in general

Third, addressing new trade challenges: The TPP promotes productivity of trade and investment as well as competitiveness TPP addresses new issues, including the development of the digital economy, green technology and the role of state-owned enterprises in the global economy in order to ensure the competitive environment in the entire TPP region

Fourth, crosscutting trade issues: The TPP added new elements to make sure those economies at all levels of development and businesses of all sizes could benefit from trade TPP establishes commitments to support small and medium sized enterprises to take advantage of opportunities as well as proposing obstacles to the TPP governments

Fifth, platform for regional integration: The TPP was intended to allow the updating or adding new economies

c New objectives, new contents

In case of withdrawal of the US from TPP, current members will face a big question: Where will the TPP go? There are scenarios for the future of the TPP: (i) TPP without the US and Japan is a leader; (ii) TPP will be remained but the negotiations change significantly In any scenario, the objectives and contents will change totally New objectives will be established as soon as defining who are members joining the TPP

1.2 The role of seafood export in Vietnam economy

In general, the fisheries sector is a specific technique economy including wide range

of industrial, agricultural, trade and services activities structured into a unified system While the mining industry, building and repairing fishing boats, fishing

gear production and processing equipment, trade and many activities such as logistics services provider transported supplies and special use of the services sector, the aquaculture carries many characteristics of the agricultural sector

The fishery sector is considered major source of foreign exchange for many countries, including Vietnam In Vietnam, the fishery sector plays an important role in the national economy, accounting for about 4 to 5 percent of Gross Domestic Product (GDP) and about 9 to 10 percent of the national export turnover This is one of the key economic sectors of Vietnam, with export value

of foreign currencies in the fourth of national economic sector More than 4 millions of people working in the fishery and the growth in production have attributed to the fish exports Vietnam is one of top ten seafood suppliers and seafood products exporting to nearly 170 markets in the world Vietnam seafood industry‟s role is continuously growing in the national economy while its scale is expanding more and more For more specific, please take a quick look at some main roles of Vietnam seafood industry in the next article

1.2.1 Contribute to economic growth and development

The contribution of fishery in Vietnam economy is considerable According to General Statistics Office of Vietnam: GDP of fisheries in 2015 (constant prices

in 2010) reached 91,185 billion VND, accounted for 19.25% of the total GDP of the agriculture, forestry and fisheries and 3.17% of total GDP of Vietnam In

2015, GDP of fisheries increased 2.8% in comparison with in 2014, accounted for 0.09% percentage point to economic growth of agriculture, forestry and fisheries in particular and nationwide in general This is the lowest growth rate in the last five years of fisheries due to many difficulties and challenges of bad weather, diseases, prices and consuming markets On average of period 2011-

2015, GDP of fisheries grew 4.64%/year, contributed 0.21% to the economic growth of agriculture, forestry and fisheries in particular and the Vietnam economy in general

Table 2 Contribution of economic sectors to Vietnam economic growth 2011-2015

Average ratio of change

Source: General Statistics office of Vietnam, period 2011-2015

1.2.2 An important export source and increase foreign exchange

In the past few years, the fisheries sector of Vietnam has affirmed its advantages and position in the national economy, annually has brought a major source of foreign exchange to reinvest and implement industrialization and modernization Seafood has always been one of the main export items of Vietnam to the world market Seafood export has been on Top 10 list of the biggest export turnover industries of Vietnam Vietnam has started exporting seafood and the aquaculture

production since 1994 with an average growth rate of 9.07% per year Total seafood export value of Vietnam was only at about 600 million USD in 1994, this figure had risen to nearly 6.5 billion USD in 2015 and about 6.4 billion USD in 11 months of

2016 The highest value recorded in 2014 at nearly 8 billion USD and seafood export value ranked no 5

Figure 1 Top 10 major export products of Vietnam by value, 11 months 2016

Source: General Department of Vietnam Customs

According to the Preliminary assessment of Vietnam international merchandise trade performance in 11 months of 2016 (Figure above), total export turnover of Vietnam reached 160 billion USD (nearly 3 billion USD excess exports over imports); up 7.8% compared with the same period in 2015 In more details, export values of 10 major products in 11 months of 2016 generated about 115 billion USD, accounted for 71.8% of total export turnover of Vietnam; while seafood export value contributed 6.4 billion USD (up 7%) including 1.33 billion USD to the US, 0.99 billion USD to Japan and 0.61 billion USD to China

1.2.3 Jobs creation, poverty reduction

It is an economic sector to create jobs for many local especially in rural and coastal regions In Vietnam, fishery and aquaculture provide regular jobs for about five

million people Fishery is an important source of directly and indirectly income of labor force who are working with seafood catching, aquaculture, processing and consumption such as: Port wharves, building and repairing boats, ice production and supply oil, provide farming equipment, provides packaging… Vietnam government has established a lot of hunger elimination and poverty reduction programs via developing the aquaculture models in remote regions Household economy model has resolved basic jobs for anglers in coastal areas Economic smallholder model and private capitalist economy models have helped to create jobs for many workers, especially the harvest labors in the Southern and Central regions Aquaculture in the Mekong River has created jobs for more than 48 thousands workers at more than

200 riverside communes

1.2.4 Ensure food security

Seafood industry plays an important role in providing food and ensures food security Aquatic foods bring high nutritional and essential value for human development and provide direct consumed products At a macro level, it contributes

to ensure food security, meets specific requirements that increase protein and vitamins in food In Vietnam, aquaculture is widely developed to remote areas, contributes to the restructuring of the daily foods as well as provides profuse nutrition From the plains to the highlands, all small ponds are used strictly for aquaculture activities In the near future, seafood products will be on a high position

in food consumption of Vietnamese

1.2.5 Ensure water territory, national security and defense

Boosting seafood export and enhancing seafood production as well as productivity contribute to a more stable development for fishing and aquaculture In the remote areas, social stability and economic development of coastal areas and islands will contribute to the national defense strategy and people's security The increasing in quantity of offshore fishing vessels not only exploit the potential of new suppliers of raw materials for processing seafood but also contribute to protecting national

security on the seas Islands and archipelagos have possibilities and conditions to develop marine and fisheries economics as well as to be outpost system to protect lands and sea territory Aquaculture development is to create chances for Vietnam exploit the resources in the sea, on the islands and continental shelf effectively This

is the basis to affirm our sovereignty to the sea and the continental shelf around the islands At the moment, a lot of important ports are built following the East Sea islands program, such as: Co To (Quang Ninh), Bach Long Vi and Cat Ba (Hai Phong), Hon Me (Thanh Hoa), Con Co (Quang Tri), Ly Son (Quang Nam), Phu Qui (Binh Thuan), Con Dao (Ba Ria-Vung Tau), Nam Du, Tho Chu and Phu Quoc (Kien Giang) This ports system will be ready to serve fisheries production and contribute to protecting the security and sovereignty of Vietnam

1.3 Theoretical framework and indexes

According to a Preliminary Assessment of TPP‟s impact on Vietnam by Le Hong

Hiep, “the TPP will create both winners and losers in Vietnam Greater access to major markets, especially the US and Japan, will boost the export of some major product categories in which Vietnam enjoys comparative advantages, such as textile and apparel, seafood, aquaculture, agriculture and forestry products The industry, however, will have 10 years to enhance its competitiveness before having to compete with duty-free imported products” The nature of the TPP is a new model

of free trade agreement (FTA) Free trade means that countries can import and export goods without any tariff barriers or non-tariff barriers to trade FTA enables lower prices for consumers, increased exports, benefits from economies of scale and

a greater choice of goods According to the theory of comparative advantage: By specialising in goods where countries have a lower opportunity cost, there can be an increase in economic welfare for all countries Free trade enables countries to specialise in those goods where they have a comparative advantage Theoretical analysis of an FTA was based primarily on the concepts of trade creation and trade diversion introduced by Viner (1950) According to the theory of international economics and Sussex Framework, FTA in general and the TPP in specific also

have those two types of effects on welfare Let us take a closer look at TPP‟s possible effects on export as following:

1.3.1 Shallow integration

Preferential trade liberalisation involves a process of shallow integration, defined as the removal of border barriers to trade, typically tariffs and quotas The potential net benefits from shallow integration are inherently ambiguous because of the likelihood of both trade creation (which is welfare increasing) and trade diversion (which is welfare reducing) There always exist benefits and costs of accession into FTA, which are trade creation and diversion Those are happening to any member

of any integration The free trade in general utilizing comparative advantage of each member to benefit national welfare is trade creation However, when a member switches import from an efficient country to a less efficient country due to the FTA, the economic welfare will be hurt, resulting in a trade diversion In most cases, FTA brings both trade creation and trade diversion with net effects determined by the structure of the FTA (Evans, 2006) The TPP is also a FTA and it will create that both effects The more integrated members of TPP become, the more efficiency trade will generate through the application of economies of scale Prices may fall, relative to those of non-TPP countries, and the process of trade creation continues The major losers are old trading partners left outside the bloc Member countries tend to import products from other member countries in FTA rather than their old trading partners The process of efficient producers losing out to inefficient ones is referred generally to a trade diversion

1.3.1.1 Trade creation effects

Reducing tariff barriers leads to trade creation where consumption switches from high cost producers to low cost producers (Nam, 2014) Trade creation does not move trade turnover from a country to another country but increase trade turnover when TPP is established Export activity is expected the most beneficiary from TPP

It is estimated that the TPP might help Vietnam expand its GDP by 11% and its

exports by 28% within ten years Seafood export of Vietnam will be distributed more broadly crossing the world

The first important effect that TPP brings to Vietnam seafood industry is the elimination of all tariffs on fish and seafood under the TPP Similar to other FTAs, the TPP also desires to create non-barrier trade environment Within TPP agreement, 18 thousand tariff lines on industrial and agricultural product will be eliminated immediately or reduced to zero in a very short time among TPP member countries The elimination of tariffs in key TPP markets will generate a price advantage for Vietnam seafood exports relatively to export products from non-TPP countries In 2015, the two largest export markets of Vietnam (the US and Japan) accounted for nearly 36% of total seafood export turnover and accounted for nearly 80% of total seafood export value of Vietnam to TPP member countries When TPP

is in effect, taxes of import and export goods will be reduced to 0% following schedule This will be a good opportunity for Vietnam's fisheries sector development in the future

Second, seafood-processing enterprises of Vietnam take advantage of excess capacity due to imported raw materials for seafood from TPP member countries After that, they are processed and re-exported to TPP market and non-TPP market, especially the EU It should be noted that only raw materials imported from new TPP members could enjoy tax rate of 0% Following that, seafood sector also has a chance to increase its competitiveness by taking advantages of support services to produce products at a lower price such as transport, imported technology, imported machines and equipment from TPP members at a cheaper price

The TPP will help seafood consumers to benefit the most because they can approach and buy products at a lower price Meanwhile, trade creation effects do not generate the same result for the government and the domestic enterprises of import countries Government budget will decrease due to loss of tax revenue partly from imports; domestic manufacturers will also reduce profits by standing in front

of the fierce competition and shared market share from foreign enterprises However, when considered together, the impacts on trade has increased national

welfare because the surplus that consumers receive still greater than the loss of the import tax of government and profits of domestic manufacturers Moreover, Vietnam - a seafood export country - will get benefits thanks of expanding its market and consumers

1.3.1.2 Trade diversion effects

Trade that occurs between members of a FTA that replaces what would have been imports from a non-member Trade diversion shifts imports from low to higher cost countries In this case, non-TPP member countries will get damages because the impact of trade diversion will create discrimination against non-TPP countries It is different from trade defection, which causes damages for members of a FTA region; trade diversion construct positive trade flows as well as developing trade relations among FTA members (Nam, 2014) Trade diversion affects also create damages for non-members of a FTA although those countries produce effectively, offer cheaper products due to difference in import tax (Evans, 2006) By removing tariffs among members of TPP, it can make imported price among TPP members relatively lower than from non-TPP members due to remained high tariff rate by import countries Vietnam will have an opportunity to connect more with other TPP members In case

of being an export country, Vietnam will have a chance to gain benefits Other TPP member countries will tend to import more seafood from Vietnam, instead of their old partners Moreover, with a relatively cheaper price and equal or better quality, consumers of import countries in TPP, especially in the US and Japan, will have a trend to consume more

A concluded FTA can make policies of related countries changed FTA not only affects its members but also indirectly affects non-member countries The distinction of treatment and benefits between members and non-members as well as the lost of non-members (due to trade diversion to FTA member countries) will create volatilities in the movement of the FTA and two consequences either non-member countries will establish a new FTA to counterbalance or non-member countries will try to be a member of the existing FTA

The Sussex Framework identifies important rules of thumb using to analyse and evaluate the relative importance of trade diversion and creation For instances: “The higher are the initial tariffs/barriers, the greater are the likely effects on both trade creation and trade diversion The greater the number of partners, the more likely it

is that there will be trade creation as opposed to trade diversion Wide differences in comparative advantage between partner countries are likely to lead to a welfare improving The more similar the product mix in the economies concerned and the higher the elasticity of supply, the greater the possibility of trade creation The higher the percentage of trade with potential partners, the greater the possibility of the FTA enhancing welfare…” (Evans, Holmes, Gasiorek, Rollo and Robinson,

2007, pg 3-7)

1.3.2 Deep integration

While the shallow integration refer mainly to the benefits of consumers and the political role is very blur, the deep integration refer to the benefit of manufacturers - the major force of the integration process Deep integration also known as positive effects involves in policies that facilitate trade by reducing behind border impediments to trade These can include custom procedures, product standards, competition law and policy, intellectual property rights or government procurement Taking part in FTA also opens up opportunities for export enterprises to access foreign markets Deep integration effects are long-term and mobile Most economists agree that these effects are not immediate and do not change significantly as quickly as tariff effects do (Evans, Holmes, Gasiorek, Rollo and Robinson, 2007, pg 8-12) However, they should be considered and evaluated both opportunities as well as challenges that they will bring in the process of international economic integration The impacts of deep integration effects are long-term: Higher production efficiency, the decline of average production costs, larger markets, more investment opportunities then more foreign investment, enhanced technological and competitiveness, all are dynamic effects of FTA Generally, deep integration is the effect of removal of barriers to trade behind borders including

SPS, TBT, regulations on services and investment, intellectual property rights and restrictions on government procurement Deep integration in those areas produces significant gains in comparison with shallow integration More foreign investment flows also promote technology transfer Competitive policy also brings substantial benefits to member countries in one FTA through enhancement of productivity of enterprises and increase in consumer welfare by approaching cheaper products

In specific case of TPP, it is expected to create more jobs, incomes and improve workers' skills The most important opportunity for seafood production in Vietnam

is to absorb new science and technology to enhance productivity quality, ensure food safety and protect the ecological environment The integration into TPP also motivates to develop fishery industry, promote transparency in policy and environment related to fisheries in accordance with international regulations as well

as requirements for TPP members Seafood enterprises whose production is not sustainable, technical standards do not meet regulations prescribed by the TPP will stand at dissolution or merger risk This will be a great opportunity to restructure the fisheries sector towards higher added values and sustainable development

Since Vietnam has not concluded a bilateral free trade agreement with the US, the TPP would be an alternative solution to boost Vietnam‟s exports into this big and important market Vietnam would become less economically dependent on China However, when the US is no longer in TPP, Vietnam will have to continue to seek a balance between the two great powers while adjusting its strategic position in accordance with its perception of the China threat in the East Sea Taking advantage

of the TPP would help Vietnam enhance strong connection with very big markets coming with 0% import tariff and commitments on improving investment environment as well as intellectual properties protection Vietnam exporters will also benefit from enhanced regulatory cooperation, and streamlined customs and administration procedures that will costs at the border

This is also a good chance for Vietnam to attract foreign investment and technology from multinational enterprises into aquaculture and create more jobs Joining TPP will create advantages for Vietnam due to good production conditions and labor

force This will bring great opportunities for Vietnam export enterprises to be chosen to invest by foreign investors Domestic enterprises will have a great opportunity to welcome more and more foreign investment flows into Vietnam, formation of new production capacity, especially the involvement of global value chains TPP also opens up opportunities for sustainable development of Vietnam fisheries with commitments on sustainable management, promoting conservation of important marine species and combat illegal fishing, to prevent and prohibit some forms of subsidies could lead to exploitation and depletion of fish resources

TPP not only bring good chances to Vietnam seafood export, but also many challenges The first challenge that Vietnam has to face is the very strict regulations

on SPS measures of chapter VII of the TPP This chapter includes provisions on regionalization, equivalence, and science and risk analysis This is a big challenge for Vietnam In spite of tax exemption, if we do not fully comply with rules on SPS,

we will easily lose markets while our goal is to expand exports to markets not to be dependent on certain markets Besides, coming with deeper and wider integration, TBT measures (chapter VIII of TPP) are coming with SPS measures to protect domestic seafood producers of TPP members Although import duties are reduced

to 0%, but the requirements such as: quarantine and antibiotics residue inspection, the requirements for labeling products will be strictly controlled and more frequently in order to limit imported fisheries This can even create more risk than tariff measures Meanwhile, TPP negotiations revolve around issues related to co-operation and problems solving in order to shorten processing time, complaints while the quarantine conditions remain the same The negotiations do not mention

to the conditions that restrict issuing new SPS or technical measures; so, these countries still have rights to introduce new or revised requirements or to prevent the import of seafood from Vietnam in particular A series of those regulations on SPS, technical barrier to trade as well as trade remedy measures that developed countries have proposed in negotiation rounds are difficult and less feasible for countries with weaker production levels (including Vietnam – lowest GDP among TPP members) Secondly, countries tend to protect their domestic agricultural products in general

and seafood in particular If so, the schedule will be long and normally require partners to open their markets too Concurrently with accessing to new markets, Vietnam will have to open our market for seafood products of 11 other TPP member countries This is a big matter of concern for Vietnam's fishery and may harm to local seafood market

Thirdly, challenges related to intellectual property rights issues will create risk for fisheries producers using unknown original, uncopyrighted technology such as computer softwares or programs Vietnam's aquatic products will be limited after accessing markets of TPP member countries

To enjoy preferential tariff rate from any free trade agreements (including the TPP)

is to meet the requirements of SPS, TBT as well as proving that products come from TPP members; then, exporters are eligible for incentives in order to enjoy preferential tariffs when exporting to the TPP member countries Due to these rules, temporary import and re-export products will be limited and will not be enjoyed non-tax incentives unless materials are made in one of TPP members If not, products imported from non-TPP member countries will be subjected to normal tax

1.3.3 Methodology: Sussex Framework and indexes

Recently, many trade agreements have been negotiated, not only bilateral but also regional ones It is required to have more simple and easy-to-apply methodologies for policy makers and governments to assess the impact of agreements Although, there are some standard methodologies for assessing impact of changes in trade policy such as general or partial equilibrium simulation models or econometric analysis These methodologies are currently useful but still create difficult for users because of data or expertise requirements Therefore, author chose Sussex Framework - a simpler method to examine impacts of an FTA to a specific industry Sussex Framework is a logical and analytical template framework developed by University of Sussex allowing users to analyze potential benefits of trade agreements Basically, its concept is to consider general political, social and economic viability of a proposed agreement The economic impact depends on

various key factors such as: economic relationship among partners (size, tariff rates, cost differences…) overlap or compatibility with World Trade Organization rules, barriers to trade, overlap with other agreements and so on (Evans, 2007) Sussex Framework has been applied widely to analyze negotiations and agreements such as: Cariforum EPA negotiation, the EU-Egypt Association Agreement, EU-India free trade area, China-South Korea FTA and so on Sussex Framework deals with both shallow and deep integration relating to a proposed FTA as well as providing indicators and qualitative methods to facilitate analysis

1.3.3.1 Rules of thumb and indexes

Any FTA involves a process of shallow integration The potential net benefits from lowering tariff barriers in a FTA involve both trade creation and trade diversion While trade creation increases welfares and trade diversion reduces welfares, the net welfare impact of an agreement will depend on the relative size of these two effects The Sussex Framework provides a number of rules of thumb to evaluate trade creation and diversion in the process of shallow integration The rules of thumb used in this paper are described as followings:

a Initial tariffs rule

The higher are the initial tariffs, the more likely it is that there will be both trade creation and trade diversion With high initial Most Favoured Nation (MFN) tariffs, initial distortion is great and greater scope for both trade creation and diversion when high tariffs are removed When high pre-FTA tariffs are removed and price reduces, new partners may supply goods more efficiently, then increases the demand and creates more trade Processes of trade creation increase welfare Concurrently, there is possibility of new FTA partner countries supplying the (tariff free) goods that is cheaper than those of non-member countries Even if non-members may produce more efficiently, goods will be supplied by FTA members who have preferential market access The higher pre-FTA tariffs are, the more likely the form of welfare reducing trade diversion will occur (Shingal, 2012)

b Number of trade partners rule

The greater the number of FTA members, the more likely it is that trade creation will outweigh trade diversion (Evans, 2007) There will be trade creation as opposed to trade diversion because of the increased likelihood of including more effective suppliers Including a greater number of countries in a FTA will minimize the extent of trade diversion as well as maximizing the likelihood of trade creation

c Comparative advantage rule

The wider the differences in comparative advantage between partners, the more likely the FTA will be welfare improving Wide differences in comparative advantage between member countries are likely to increase welfare Trade creation occurs when there are differences in efficiency and costs among FTA The greater differences in comparative advantage (costs) are, the greater the gain from trade creation is In order to understand this rule of thumb, author uses Revealed Comparative Advantage (RCA) Index introduced by Béla Balassa (1965) It is an index used to calculate the relative advantage or disadvantage of a certain country in

a certain goods or services by trade flows Its theory is based on the Ricardian comparative advantage concept The RCA index tries to identify whether a country has a “revealed” comparative advantage rather than to determine the underlying sources of comparative advantage RCA index has been used to assess a country‟s export potential Countries with similar RCA profiles are unlikely to have high bilateral trade intensities unless intra-industry trade is involved In this study, author use Balassa‟s (1965) measure of relative export performance by country and product defined by its share of total world exports According to Béla Balassa (1965), RCA index for product j of country i is calculated as below:

RCAij = (xij/Xit) / (xwj/Xwt)

In which: xij : Export value of product j of country i

xwj : Export value of product j of world

Xit : Total export value of country i

Xwt : Total export value of world

A value of less than unity implies that the country has a revealed comparative disadvantage in the product Similarly, if the index exceeds unity, the country is said to have a revealed comparative advantage in the product (WITS, 2011)

d Rule of share of trade with potential partners

The higher the initial share of trade among FTA members, the higher the likelihood

of the FTA enhancing welfare Consider a situation where there is little trade with the potential partners, non-members are more efficient suppliers A FTA is more likely to result in trade diversion Conversely, if in the initial situation the countries traded significantly with each other, it is more likely that they are each respectively importing from the more efficient supplier and the chances of trade diversion occurring are lessened Author uses Trade Intensity Index (T) developed by Srivastava and Green (1986) to assess whether the value of trade between Vietnam and the TPP bloc is greater or smaller than it would be expected Trade intensity is calculated as the share of one country‟s exports to a partner divided by the share of world exports to the partner

Tit = (xit/Xi)/(xwj/Xw)

In which: xit : Values of country i‟s exports to country t

xwt : Values of world exports to country t

Xi : Country i‟s total exports value

Xw : Total world exports value

If trade intensity index is more than one indicating that trade flow is larger than expected, given the partner country‟s importance in world trade and converserly Values greater than one indicate an “intense” trade relationship However, as with trade shares, high or low intensity indices and changes over time may reflect numerous factors other than trade policy

1.3.3.2 Intra-industry trade (IIT index)

Although there are few well-established analytical tools to evaluate the degree of deep integration, the Sussex Framework proposes some methods to evaluate the

existing and potential for further deep integration quantitatively and qualitatively The first one is intra-industry trade (IIT) which calculates among trading partners in one FTA Intra-industry trade exist if a country simultaneously imports and exports similar types or same kind of products or services (in same sector) IIT index can be calculated for individual sectors, sub-sectors or products A high level of IIT can lead to specialization and generate productivity gains, which creates large increases

in trade and likely to be larger than potential trade loss from shallow integration The most popular method for determining the extent of intra-industry trade proposed by Grubel and Lloyd (1975) is called Grubel–Lloyd (GL) index It is calculated as below:

If the country only imports or only exports goods within the same sector, there is no intra-industry trade, GL index is zero Similarly, if the export value is exactly equal

to the import value, GL index is equal to one The value of the GL index ranges from zero (pure inter-industry trade) to one (pure intra-industry trade) with higher values indicating greater IIT index and potential for deeper integration

CHAPTER 2 THE TPP’S EFFECTS ON VIETNAM SEAFOOD EXPORT 2.1 Resources of Vietnam seafood industry

2.1.1 Natural resources

Vietnam is located at the west seaside of East Sea, a very big sea in Pacific Ocean, has 3,260 kilometers of coastline running from Mong Cai (Quang Ninh province) in the North to Ha Tien (Kien Giang province) in the Southwest facing the East Sea and the Pacific to the East and the South More than 29 out of 67 provinces are coastal ones Vietnam owns 226,000 square kilometer internal water and sea territory, about 1 million square kilometer exclusive economic zone is (3 times larger than land area) with more than 4,000 islands and islets creating twelve bays and lagoons (Vietnam Government portal, 2016) It is easily to anchor and protect boats, ships The reserve of marine resources in the water territory of Vietnam is estimated at about 5 million tons and capacity for sustainable exploitation reaches over 2.3 million tons per year

Vietnam has a dense network of rivers and streams flowing in two main directions

of Northwest and Southeast in a bow shape The Red River and the Mekong River, the two largest rivers in Vietnam, create two vast and fertile deltas: (i) Red River Delta (also known as the Northern Delta) has 16,700 square kilometers; and (ii) Mekong River Delta or the Southern Delta has 40,000 square kilometers Between these two major deltas is a chain of small and narrow deltas along the Central coast from the Ma River (Thanh Hoa province) to Phan Thiet with the total area of 15,000 square kilometers (Vietnam Government portal, 2016)

Vietnam marine biological diversity (biodiversity) is quite high It is also the birth and spread of many groups of tropical marine organisms India - Pacific with about 11,000 species have been discovered, ensuring mining reserves of nearly 2 million tons annually Moreover, plus the hydrological conditions and system of rivers, canals, lagoons, ponds are favorable for the development of aquaculture, fishing, creating strong potential for economic development in the sea of the country

With its long coastline, thick river systems and biological diversity, Vietnam has abundant natural resources and huge advantages to capture, aquaculture as well as exporting seafood In 1994, Vietnam started exporting catfish and with a total export value of 500 million US dollars In 2012, this figure had increased to more than 4 billion USD, with many seafood items Since then, Vietnam has become one

of the world's largest seafood exporters

Vietnam has great advantages of location and natural resources for the development

of fisheries; however, there are still difficulties Vietnam has had about nine to ten hurricanes and 30-35 monsoons annually It has stopped ships from heading for the open sea and catching fishes The degraded environment of some coastal areas has endangered fisheries resources seriously

2.1.2 Social and economic conditions

Overall, the labor structure in the field of fishery compared to other sectors accounted for a very low rate According to the Population and Housing Census in

2009 (once per ten years): The quantity of fishing workers increased from 270,587 people in 1999 to nearly 700,000 people in 2007 The average had increased 23,155 people per year including semi-professional fishing employees The number of households involved in aquaculture increased from 0.51 million in 2001 to 0.69 million in 2006, brought the average growth rate to 5% per year (GSO, 2010) Total fisheries workers in 2006 reached 1.4 million, accounted for 4.56% of the total number of employees of Agriculture, Forestry and Fisheries, increased 1.1% in comparison with it in 2011

According to statistics, the level of education of fishermen remained low: 68% never graduated from elementary school, more than 20% graduated from elementary school, about 10% had secondary qualifications and 0.65% graduated from vocational schools or universities (GSO, 2010) Accordingly, the fishermen had difficulties in acquiring new technologies, especially for offshore fishing technique Corollary is whether fishing output continued to increase, but the quality

of the catches were often of small size, low-quality, high percentage of trash fish

Fishing craft in Vietnam has had a long lifetime Fishermen often have no or very little land on shore They often settle in the bays, estuaries and some waist together then have formed fishing villages The majority fishermen are poor, lack of clean water, drainage systems and waste water treatment systems

Current, Vietnam has promulgated policy and mechanisms to manage in fisheries sector such as: the Law on Fisheries, fishery expansion policy, natural disaster assistance policy In addition, there are many legal documents on the management

of industry standards on food safety and fisheries equivalent to the provisions of the Code of practice for fish and fisheries products (CODEX) and World Trade Organization or the code of conduct for responsible fisheries Simultaneously, Vietnam has built management system to strengthen the capacity of the quality and safety inspection agencies from the central to local levels in order to control from production to purchase, transportation and sale of products

2.1.3 Current status of mining, aquaculture, seafood processing

Aquaculture activities have dramatically grown since 1994 when Vietnam started to export Their yields have increased continuously with an average of 12.77 percent per year and contributed significantly to the growth of the total fishery production

of Vietnam Meanwhile, with the gradual depletion of natural fishery resources and the level of fishing activity is not improved, fishery production from mining operations has increased relatively low in recent years, with an increase of average

of 6.42% per year

While the capture production has been stable and has not changed much since 1995, thanks to the aquaculture production is the main reason of the increasing in fishery productions and growth in the period of 1995-2015

Figure 2 Fishery productions and growth 1995 - 2015

Source: General Statistics Office of Vietnam

Considering inshore fishing vessels (sailing craft, small boats) needed 2 to 5 people

on a boat, in 2012, estimated number of employee accounts for about 40% of the total labor force in fishing and total fishing vessels of Vietnam reached 123,125 pieces with total capacity of 10 million CV1. Among them, fishing vessels with engine and capacity from 50 CV to 90 CV were 9,162 pieces – accounted for 7.4%; while the ones with capacity from 90 CV or more (offshore fishing vessels) were 22,566 pieces - accounted for 18,3% Total catches of seafood products per year was from 2.5 to 2.7 million tones

Table 3 Fishing vessels with 90 CV capacity or more, 2010-2015E

Source: General Statistics Office of Vietnam

Seafood processing sector now has developed into a spearhead economic sector, large manufacturing sector, at the forefront of international economic integration

On the export of processed products: In the past times, Vietnam only exported

1

CV (Chevaux Vapeur): French and Italian tax horsepower

frozen products, but now the rate of value added products has been increasing, so far estimated at about 35% Sushi, sashimi and surimi products are present in most seafood processing factories Factories have more newly attractive and valuable products as well as exploiting new seafood for processing Processing by-product effectively is also a new trend It brings great economic benefits and minimize impact to the environment

2.2 Vietnam seafood export situation

2.2.1 Overview of Vietnam seafood export activity

Vietnam is in the group of top ten countries having ablility and competitive capacity

in the fisheries sector With advantage of very long coastline (3,260 km) and more than one million square kilometer of exclusive economic zone, Vietnam aquaculture ranked the third in the world (after China, India) with 6.8 million tons in 2014, and the fourth world fisheries exporter (after China, Norway, Thailand) with export value reached nearly 7.9 billion USD in 2014 Since 1994, Vietnam has begun exporting seafood and the aquaculture production has maintained continuous growth in 17 years with an average growth rate of 9.07% per year Total seafood export value of Vietnam was only at about 600 million USD in 1994, this figure had risen to nearly 8 billion USD in 2014 This brought Vietnam to be one of the biggest seafood exporters in the world

In 2009 and 2012, the world‟s economy situation had been through market fluctuations, fiercely competitive that made serious decline in prices and create many difficulties for seafood manufacturers, processing and exporters of Vietnam Export turnover of these two years also declined significantly in comparison with the trend of increasing from 2000 to present

Figure 3 Seafood export value and growth in 2000-2015

1,479 1,816

2,022 2,200 2,408

2,733 3,358 3,763 4,510

4,255 5,017 6,112 6,089

6,712 7,836 6,573

51.8

22.8

11.3 8.8 9.5

13.5 22.9 12.1 19.9 -5.7

17.9 21.8

-0.4

10.2 16.7

-16.1

-40.0 -20.0 0.0 20.0 40.0 60.0 80.0

Value (mil USD) Growth (%)

Source: General Department of Vietnam Customs and VASEP

Seafood was one of top five of high-value exported commodities of Vietnam in

2014 According to VASEP, seafood export value in 2014 reached 7,836 million USD, increased 16.5 in comparison with in 2013, increased on average 14.27 year (1995-2014) Seafood export value in 2014 accounted for 25.39 of total agricultural products export v 2.65 of Vietnam export value Among of that, shrimp and catfish were still the major export products of Vietnam seafood industry: Shrimp exports reached 3,952 million USD, accounted for 50.43% of total export value of fisheries; Catfish exports reached about 1,768 million USD and accounted for 22.56% of total export value

However, in 2015, seafood export value of Vietnam was only about 6.5 billion USD, decreased 16.1% in comparison with the same period in 2014 Year 2015 was

a difficult year for export activities in general and seafood in particular The target

of 8 billion USD of seafood export in 2015 was not achieved and seafood export value of most of markets decreased in comparison with in 2014 For instances: export value to the US fell to 23.45%, reached only 1.31 billion USD; to Japan fell

to 13.4%, reached 1.04 billion USD; to Korea decreased to 0.57 million USD and to China down to 0.45 million USD The poor consumer market, low export price and reduced volatility of exchange rates USD/VND were the reasons impacted strongly

on Vietnam's seafood exports in 2015 Shrimp was affected the most Shrimp export