High expectations for trade on Vietnam - US partnership upgrade

Statistics released by the Vietnamese Trade Office in the US show that amid several factors affecting total demand in the US market, Vietnam still maintains its position as the US’ eighth largest trading partner, while the US is Vietnam’s largest export market, with a trade surplus of approximately US$40 billion.

Opportunities to expand trade exchanges

According to industry insiders, both Vietnamese and US economies are complimentary, not competitive, making it easier for  US consumers have various options for Vietnamese products available in their market with improved designs, quality, and competitive prices, contributing to strike the overall trade balance.

Tran Nhu Tung, vice chairman of the Vietnam Textile and Apparel Association (VITAS), says garment and textile enterprises expressed high hope that the upgrade of bilateral ties would facilitate greater trade exchanges and open up a wealth of opportunities for major Vietnamese export products to enter the US market.

“Local firms have secured more export orders to the US in the fourth quarter compared to the previous quarter, hoping that the US will devise a tax rate mechanism for Vietnamese textile and garment products in a more competitive manner,” says Tung.

Dang Phuc Nguyen, general secretary of the Vietnam Fruit and Vegetable Association, points out that although the US is one of the key export markets for Vietnamese fruits and vegetables, local exporters face hurdles, for instance far distance, which has made it difficult for them to keep the freshness of the products long.

In addition, Vietnamese fruits and vegetables such as dragon fruit, mango, and rambutan must compete with those from South American countries that have lower logistics costs.

Nguyen therefore advises local businesses to focus on products that have a long preservation period of more than 40 days and storage process when exporting the product to this market.

From a business perspective, Nguyen Dinh Tung, general director of Vina T&T Group, a large fruit and vegetable exporter, anticipates that the country’s export sales to the US this year will increase by 40% compared to last year as the US has just reopened its market for fresh coconut products and grapefruit from Vietnam.

To boost fruit and vegetable exports to this market, relevant agencies are required to negotiate with the US side to get the greenlight for additional fruits such as passion fruit and soursop to enter the US market in the coming time, while working to strengthen trade promotion activities and get further involved into the supply chain, Tung suggests.

Le Hang, communications director of the Vietnam Association of Seafood Exporters and Producers (VASEP), expresses her belief that joint trade, especially Vietnamese seafood exports to the US, will witness major breakthroughs after US President Joe Biden's recent visit to Vietnam.

According to Hang, the US has made up the leading consumer of Vietnamese seafood for several years. Last year saw Vietnamese aquatic exports to the US reach a record of US$2.15 billion, an increase of 80% compared to a decade ago with the main items being shrimp, pangasius, and tuna.

There remains plenty of room for local seafood to increase its market share in the US market, not only for traditional products, but also processed products, elaborates Hang.

Businesses must quickly adapt to market changes

Do Xuan Lap, chairman of the Vietnam Timber and Forest Products Association, analyses that the comprehensive strategic partnership will further serve to resolve trade barriers and promote greater trade development between the two countries.

Moreover, being part of the US supply chain will help the domestic wood industry to develop dramatically moving forward, Lap stresses.

Minister of Industry and Trade Nguyen Hong Dien has said President Biden's historic visit coupled with the upgrading of bilateral ties to a comprehensive strategic partnership will create important breakthroughs and help Vietnam enjoy a greater presence in the global value chains.

He has therefore advised domestic enterprises to quickly adapt to market changes, clearly define product strategies, partners, and distribution channels, and gain more insights into export barriers and trade defence cases to further promote exports to the market.

In addition, local firms are recommended to ensure that input materials have clear origins and do not affect the environment or use forced labour.