Vietnam needs production chain in agriculture

Opportunities are foreseen but there exist worries about the real dangers for Vietnam's agriculture from the TPP agreements.

In an article about the TPP opportunities for Vietnam on the government's website chinhphu.vn, Chairman of Ho Chi Minh City Food Association Van Duc Muoi said that the country had to open the market, or eliminate 100% of import duties for agricultural products, while it had no technical barriers or had ones which were not stringent enough.

Muoi, who is also general director of Vissan, said duties were a part of the story. The duties could be reduced or wholly eliminated but technical barriers to trade and sanitary and phytosanitary measures from other countries would be very strict on packaging, label, maximum level for pesticide residues and legal origin of materials – which may keep the Vietnamese out of the select group of TPP member countries.

Interests in duties of TPP are just interests on paper, Muoi wrote.

Related to agricultural products, in facets of production, a number of commitments in TPP will directly affect domestic production as well as the potential of products in Vietnam.

He gave an example on a TPP commitment clause on child labour which prohibited the use of children and eliminated the worst forms of child labour. In Vietnam, handicraft villages would be the first vulnerable group as their products are made by households which include children.

To turn the opportunities into reality, Muoi gave an assessment on competition capacity of the Vietnamese agriculture with its TPP partners.

As for Brunei, Malaysia and Singapore, it does not matter because Brunei and Singapore are small countries, and their agricultural production is insignificant. Malaysia has been importing agricultural products from Vietnam, including rice, vegetables, fruit and meat.

Australia and New Zealand are seen as countries challenging Vietnam as they have the competitive capacity at the highest level in the world with products such as beef, milk, apple and orange.

Meanwhile, Vietnam's capacity to access the markets of the two countries is very small because their population is low. Australia has about 25 million people while New Zealand has some 5 million. In addition, their technical barriers to trade and domestic competitive capacity on agricultural products stand at the highest level in the world.

Even though the FTAs are signed, Vietnam's interest in agricultural product exports is almost zero while challenges are significant. Therefore, the commitment to open the market to the two countries should stand similar with the level Vietnam has committed in ASEAN-Australia-New Zealand agreement to avoid the situation to be more serious.

Peru and Chile are at quite a distance in terms of geography from Vietnam. They have a small population and their competitive capacity is similar with Vietnam.

As for the US, it has not signed any free trade agreement with Vietnam, either bilateral or multilateral, therefore Vietnam will open its market at the same level of the WTO commitment.

Vietnam has the opportunity to export vegetables and fruits to the US, however, the US has strictly applied technical barriers to trade and sanitary and phytosanitary measures so that the country's export may be limited.

The US is at an advantage shipping in very high volumes products such as milk, beef, pork and poultry, to Vietnam. If Vietnam opens the door for such products, similar products in the country will be faced with difficulty when competing with the US products.

In Vietnam, animal husbandry has created a job for farmers who have occupied more than 80% of the population. They have a low and unstable income and are seen as the most vulnerable group in the market. Therefore, it is needed to issue a certain protection level for this group anyway.