Exporting fruit of vietnam to the european market – opportunities and challenges after trade agreement freedom Vietnam–EU (EVFTA) effect

Nội dung text: Exporting fruit of vietnam to the european market – opportunities and challenges after trade agreement freedom Vietnam–EU (EVFTA) effect

1. EXPORTING FRUIT OF VIETNAM TO THE EUROPEAN MARKET – OPPORTUNITIES AND CHALLENGES AFTER TRADE AGREEMENT FREEDOM VIETNAM–EU (EVFTA) EFFECT Ph.D Pham Van Son1 – Ph.D Nguyen Xuan Hung2 – MA. Nguyen Thi Thanh Xuan3 Abstract: Europe is the world's leading import market for fruit. Although the amount of fruits imported from Europe accounts for about 50% of the world's fruit imports, but the amount of Vietnamese fruits exported to Europe also accounts for a significant proportion of about 8%. Especially, after Vietnam officially signed a Free Trade Agreement with the European Union, EVFTA will be a huge boost for Vietnam's export activities, including fruit products. The article presents the basics of the situation of Vietnam's fruit export to the European market in recent years (2016–2019), opportunities and challenges for Vietnam's fruit exports to European market when the Free Trade Agreement between Vietnam and the European Union (EVFTA) takes effect. Thereby, orienting solutions for Vietnamese fruit producing and exporting enterprises and ministries in responding to the challenges brought by EVFTA. Key words: Fruit export of Vietnam, European market, Free trade agreement between Vietnam and the European Union (EVFTA). 1. OVERVIEW OF THE FREE TRADE AGREEMENT BETWEEN VIETNAM AND THE EUROPEAN UNION (EVFTA) EVFTA is a comprehensive, high quality, balanced agreement of interests for both Vietnam and the EU, and in accordance with the provisions of the World Trade Organization (WTO). The Agreement consists of 17 Chapters, 2 Protocols and a number of memoranda of understanding with the main contents: trade in goods (including general regulations and commitments to open markets), rules of origin, Customs and trade facilitation, food hygiene and safety measures (SPS), technical barriers to trade (TBT), trade in services (including general regulations and commitment to open markets), investment, trade defense, competition, state enterprises, government procurement, intellectual property, trade and sustainable development, cooperation and capacity building, legal issues management, institutions. * Trade in goods: For Vietnam's exports, as soon as the Agreement comes into effect, the EU will eliminate import duties on about 85.6% of tariff lines, equivalent to 70.3% of Vietnam's export turnover to the EU. After 7 years from the date of entry into force of the Agreement, the EU will abolish import duties on 99.2% 1 Deputy Director of Industry Department, Committee on Management of State capital in enterprises. Email: Sonpv3003@gmail.com. 2 Chief of Office of the Institute of International Trade and Economics, National Economics University. Email: hungnx@neu.edu.vn. 3 Lecturer in Accounting Department, Dai Nam University, Vietnam. Email: Xuan_nguyen2010@yahoo.com. 711
2. of tariff lines, equivalent to 99.7% of Vietnam's export turnover. For about 0.3% of remaining export turnover, EU commits to give Vietnam a tariff rate quota with import tax in quota of 0%. For EU exports, Vietnam committed to eliminate tariffs as soon as the Agreement came into effect with 48.5% of tariff lines (accounting for 64.5% of import turnover). Then, after 7 years, 91.8% of tariff lines equivalent to 97.1% of export turnover from the EU was abolished by Vietnam. After 10 years, the tariff elimination is about 98.3% of tariff lines (accounting for 99.8% of import turnover). For about 1.7% of the remaining EU tariff lines, we apply the tariff elimination schedule of more than 10 years or apply tariff quotas according to WTO commitments. Other contents related to trade in goods: Vietnam and the EU also agreed on the contents related to customs procedures, SPS, TBT, trade defense, to create a legal framework for the two sides to cooperate, to facilitate export and import of enterprises. * Trade in services and investment: Commitments of Vietnam and the EU on trade in investment services are aimed at creating an open and favorable investment environment for the operation of enterprises of both sides. Vietnam's commitments go beyond WTO commitments. EU's commitments are higher than in WTO commitments and equivalent to the highest level of EU commitments in recent FTA Agreement of EU. Areas in which Vietnam committed to be favorable to EU investors include a number of specialized services, financial services, telecommunications services, transportation services, distribution services. The two sides also made commitments on national treatment in the field of investment, and discussed the content of dispute settlement between investors and the state. – Banking services: Within 5 years from the date of entry into force of the Agreement, Vietnam committed to consider favorably allowing EU credit institutions to increase their foreign holdings to 49% of charter capital in two commercial banks of Vietnam. However, this commitment does not apply to 04 joint–stock commercial banks in which the state is holding dominant shares, namely: BIDV, Vietinbank, Vietcombank and Agribank. – Insurance services: Vietnam commits to permit cross–border ceding reinsurance, commitment to voluntary health insurance services under Vietnamese law. As for the request to allow the establishment of a reinsurance branch, we only allow it after a period of transition. – Telecommunication services: We accept a similar level of commitment in the Comprehensive and Progressive Agreement for Trans–Pacific Partnership (CPTPP). Especially for value–added telecommunication services without network infrastructure, we allow the EU to set up 100% foreign– owned enterprises after a transition period. – Distribution services: We agree to remove the requirement of an economic needs test 5 years after the entry into force of the Agreement, however we reserve the right to implement distribution system planning on a non–discriminatory basis. We also agree not to discriminate in the production, import and distribution of alcohol, to allow EU businesses to reserve their operating conditions under the current licenses and only need one license to carry out their activities: import, distribution, wholesale and retail. * Government procurement: Vietnam and the EU agreed on equivalent contents to the Government Procurement Agreement (GPA) of the WTO. With some obligations such as online bidding, setting up a portal to post bidding 712
3. information, Vietnam has a roadmap for implementation. The EU also commits to provide technical assistance to Vietnam to fulfill these obligations. In terms of commitments, we commit to open the procurement of ministries, central agencies, some units under the Ministry of Defense (for goods and services procured normally not for security purposes – National Defense), Hanoi City, Ho Chi Minh City, Vietnam Electricity, Vietnam Railway Corporation, 34 hospitals under the Ministry of Health, Hanoi National University, Ho Chi Minh National University and a number of central institutes. Regarding the market opening threshold, we have a 15–year roadmap to gradually open up shopping activities. Vietnam reserves the right to set aside a certain percentage of the value of bidding packages for domestic contractors, goods, services and workers for a period of 18 years from the date of entry into force of the Agreement. For pharmaceuticals, Vietnam commits to allow EU businesses to participate in the pharmaceutical procurement bidding of the Ministry of Health and public hospitals under the Ministry of Health with certain conditions and itineraries. * Intellectual Property: Commitments on intellectual property include commitments on copyrights, inventions, commitments related to pharmaceuticals and geographical indications, Basically, commitments on Vietnamese intellectual property is in accordance with the current law. Some key features of commitments to intellectual property are as follows: – About geographical indications: When the Agreement comes into force, Vietnam will protect over 160 geographical indications of the EU (including 28 members) and the EU will protect 39 geographical indications of Vietnam. Vietnam's geographical indications are related to agricultural products and foodstuffs, creating conditions for some of Vietnam's agricultural products to build and affirm their brands in the EU market. – About the brand: The two sides are committed to applying favorable and transparent registration procedures, including having an electronic database of a published trademark application and a registered mark for public access; at the same time allows the deactivation of the registered trademark but has not been used in a real way for 5 years. – About execution: The Agreement contains provisions on border control measures for exports suspected of infringing intellectual property rights. – Most–Favored–Nation (MFN) treatment commitment: The most–favored–nation commitment in this Agreement ensures that EU organizations and individuals enjoy the benefits of a high standard of protection not only to intellectual property rights under the Agreement of WTO on trade–related aspects of intellectual property rights (TRIPs) but also other objects of intellectual property rights in free trade agreements to which Vietnam is a party (such as CPTPP). * State–Owned Enterprises (SOEs): The regulations on SOEs in the EVFTA Agreement aim to create an environment of equal competition among economic sectors. The commitment also takes into account the important role played by SOEs in the realization of public policy goals, macroeconomic stability and security and defense. Therefore, the EVFTA Agreement only regulates the commercial activities of enterprises owned or controlled by the State and monopolistic enterprises whose commercial activity scale is large enough to make sense in competition. The main obligations of the SOE Chapter are: (i) Operating under the market mechanism, means that the enterprise has the right to make its own decisions in 713
4. business activities and without the State's administrative intervention, except in the case of implementing public policy objectives; (ii) There is no discrimination in the sale and purchase of goods and services for the sectors and fields that have been opened; (iii) Transparency of basic information of enterprises in accordance with the law on enterprises. * E-commerce: In order to develop E-commerce between Vietnam and the EU, the two sides committed to not impose import tax on electronic transactions. The two sides also pledged to cooperate through maintaining a dialogue on management issues raised in E-commerce, including: (i) Responsibility of intermediate service providers for transmission or storage of information; (ii) Deal with forms of electronic communication in commerce without the permission of the recipient (such as email offers, advertising ); (iii) Protect consumers when participating in electronic transactions. The two sides will also cooperate to exchange information on domestic laws and related enforcement issues. * Transparency issue: Derived from the practice of the domestic legal environment that has a great influence on trade, the EVFTA Agreement dedicates a separate chapter on transparency with the most general requirements to ensure an effective and predictable regulatory environment and is predictable for economic actors, especially SMEs. * Trade and sustainable development: Both sides affirmed their commitment to pursuing sustainable development, including economic development, social development and environmental protection. On labor issues, as members of the International Labor Organization (ILO), the two sides pledged to respect, promote and implement the 1998 ILO Declaration on fundamental principles and rights in labor. This includes promoting the ratification and effective implementation of the ILO fundamental conventions. In addition, the two sides also agreed to strengthen cooperation through information and experience sharing mechanisms to promote the ratification and implementation of labor and environmental conventions in some areas such as climate change, biodiversity, sustainable forest management and forest product trade * Other contents of the EVFTA Agreement: The EVFTA Agreement also includes Chapters related to cooperation and capacity building, legal – institutional, competition policy and subsidies. These contents are consistent with the legal system of Vietnam, creating a legal framework for the two sides to strengthen cooperation and promote the development of trade and investment between the two sides. 2. CURRENT SITUATION OF VIETNAM'S FRUIT EXPORT TO EUROPE Europe is a large market for fresh fruit with a stable overall demand and is seen as a center of commerce providing millions of jobs for people all over the world. With a population of more than 500 million consumers, Europe is responsible for 45% of the global trade value of fresh fruits and vegetables. European buyers look for reliable suppliers in strategic areas so that they can deliver fruit and vegetables to consumers at any time of the year. In particular, in recent years, tropical fruit has always been widely imported from the European market from tropical countries. That is the main reason for exporters to target the European market because of its sheer size and purchasing power. 714
5. 2.1. Current situation of fruit consumption in the European market Currently, the number of fruit farms in Europe is decreasing. European farmers choose to use high technology and develop varieties of fruits to increase yield, prolong production seasons and improve quality and characteristics of products. These efforts lead to improved quality of products, but at the same time almost no increase in total production leads to a shortage of consumer goods for the domestic market. The shortage of domestic fruit products makes Europe increasingly dependent on imports. In which, the UK depends heavily on the supply of fresh fruits and vegetables from outside. Germany is Europe's largest import market for fresh fruit. In 2019, German companies imported a total of more than 6 million fruits and products processed from this item. This is why Dutch trading companies, as well as Spanish and Italian manufacturers, have a strong focus on supplying Germany. The German market shows positive growth, especially avocados and blueberries from developing countries. German retailers are among the buyers with the most stringent standards so when entering this market, suppliers must guarantee their supply of fruit to the highest standards. The Netherlands is Europe's main trading center for fruits imported from developing countries. The value of Dutch fruit imports from developing countries increased by 55% from 2014 to 2018. More than 20% of the fresh fruit supplied to Europe by developing countries to the EU enters the EU through the Netherlands. In 2019, the Netherlands imported more than 5.6 million fresh fruits and products processed from it, of which bananas topped the list of most imported fruits with more than 1.3 million tons, then are citrus fruits with the quantity of more than 1.2 million tons. From the port of Rotterdam, the main point of entry, Dutch and international merchants distribute the product to the rest of Europe. Belgium accounts for 7% of the market share of fresh fruit imports from developing countries in 2018. In 2019, Belgium imported a total of more than 2.3 million fresh fruits and products processed from it, of which Bananas accounted for 49% of the total quantity of imported fruits for the year with more than 1.1 million tons. France has the second largest population in Europe, making it one of the main target markets for exporters of fresh produce. In 2019, France imported more than 3.8 million tons of fruit including fresh fruits and products processed from it, of which the highest volume was imported citrus fruits with the volume of more than 1 million tons. Spain is Europe's number one producer and exporter of fruit. Imports of Spain mainly focus on off–season fruits. Spain is developing into a potential trading hub. Among European countries with high import value from developing countries, Spain is growing fastest. From 2014 to 2018, Spain's imports from developing countries increased 57% in volume and 103% in value. Spain imports a variety of tropical fruits from Latin America. In which watermelon from Morocco, avocado and mango are imported from Peru. In particular, oranges imported from Egypt soared from 648 to 21,439 tons in five years. In 2019, Spain imported more than 2 million tons of fruits and products processed from it with the highest volume being bananas with more than 391 thousand tons. Italy is a large traditional fruit consumption market with an important local fruit yield. Italian producers export a portion of their production, including apples, grapes, watermelon, and kiwi. Italy imports less than Spain, but the Italian market consumes most of the products imported domestically, so re–export is limited. 2.2. Current situation of fruit imports at the European market In general, the demand for tropical fruits in the European market is always high. The variety of 715
6. tropical fruits is increasingly expanding to meet the needs of the consumer experience. The main fruits such as bananas, oranges, apples, and tangerines are still leading in terms of import volume. Table 1. Summary of figures for European fruit imports FRESH FRUIT 2016 2017 2018 2019 Bananas 8529 9179 9196 8339 Pineapples 1314 1409 1514 1379 Oranges 3193 3239 3188 2767 Table Grapes 1579 1656 1633 1504 Avocados 447 486 607 540 Apples 2554 2647 2452 2185 Easy Peelers 2206 2033 2005 1835 Watermelons 1548 1634 1805 1754 Lemons 1179 1228 1281 1170 Other 7228 7768 7606 7144 TOTAL 24390 25918 27744 24432 Source: EU fruit and vegetable market report in 2019 Bananas are the most imported fruit in the EU – a market worth up to $ 6.7 billion (According to statistics by Trademap). Belgium took the lead in the list of imports with more than $ 1 billion in 2019, followed by Germany with approximately 982 million, the Netherlands with more than 896 million and the UK with more than 745 million. In 2018, 17% of bananas imported from outside the EU came from Africa, the Caribbean and the Pacific (ACP). Ecuador, Colombia and Costa Rica are the main suppliers of bananas to the European countries. Table 2. Import value of fruits Unit: 1000 USD Nations 2016 2017 2018 2019 Germany 7.476.620 8.264.208 8.753.725 8.154.656 England 5.693.492 5.751.192 5.850.531 5.728.809 Netherlands 5.300.146 5.883.474 6.535.324 6.723.298 France 4.437.783 4.819.917 5.050.092 4.771.961 Belgium 3.088.807 3.407.533 3.459.351 2.893.731 Italian 1.868.273 2.099.737 2.168.998 2.083.669 Spain 1.889.428 2.143.828 2.513.443 2.433.843 Source: Trademap 716
7. Currently, the demand for fresh tropical fruits in Europe is forecast to increase by 6%–8% annually. Germany is Europe's largest fruit import market with a total fruit import value of more than $ 8 billion in 2019, followed by the UK more than 5.7 billion, the Netherlands more than 6.7 billion and France more than 4.7 billion. The Netherlands has become Europe's largest trading center, importing fruit from developing countries, so from 2017 to 2019 the value of imports has grown to surpass the UK. It can be seen that tropical fruits are increasingly popular in Europe, this is clearly reflected in the value of imports into this market each year. With the 10 most tropical fruits imported into Europe in 2019 (Table 3) ranked first with bananas with more than 8 million USD, followed by avocados with more than 3 million USD and ranked third are citrus fruits like lemons and oranges with over $ 2 million. Table 3. Top 10 most imported tropical fruits Europe in 2019 Unit: thousand USD Code Description of goods Value of EU imports in 2019 080390 Banana fresh or dried 8.250 080440 Avocado 3.457 080430 Pineapple 1.316 080450 Guava, mango and mangosteen 1.488 080550 Lemon 2.210 081190 Other, frozen fruit 1.579 Tamarind, jackfruit, lychee, 081090 1.104 passion fruit 080111 Desiccated coconut 256 080711 Watermelon 1.101 081340 Other, dried fruit 314 Source: Trend Economy (2020) 2.3. Current situation of Vietnam's fruit export to the European market Vietnam has favorable climatic conditions. Moreover, the large agricultural area is suitable for the cultivation of vegetables and fruits. Therefore, Vietnamese fruits are not only diverse in types, but also have typical fruits every season, which has comparative advantages with other countries in the region and around the world. Vietnamese fruit not only serves the enjoyment needs of people in all parts of the country, but is also a valuable export commodity. Up to now, Vietnamese fruits have been exported to more than 70 countries and many Vietnamese fruits have been continuously licensed for export to "difficult" markets around the world. According to the statistics report of the General Department of Customs, in 2019, Vietnam's fruit and vegetable exports reached 3.75 billion USD, a slight decrease of 1.5% compared to 2018, but Vietnamese fruit still depends heavily on the Chinese market. Chart 1 shows Vietnam's 7 largest export markets in 2019. From this chart, it can be seen that China accounts 717
8. for a very large share of the market (65%), the total market share of the EU, the US and South Korea only accounts for 12%, while ASEAN countries only account for about 6% of the total fruit export value of Vietnam. The 2019 top 7 export markets of Vietnam’s fruits 4% 4% EUROPEAN 6% 13% 3% ASEAN 4% AMERICA 1% JAPAN KOREAN AUSTRALIA 65% CHINA OTHER CONTRIES Source: General Statistics Office of Vietnam (GSO) According to some experts in the agricultural industry, in the past few years, the fruit and vegetable industry has made great strides, being exported to markets with high requirements for product quality such as Korea, Japan, the US, and the export value increases steadily each year. However, tropical fruit is Vietnam's main fruit export item, and most of Vietnam's fruits are exported fresh, the rate of preliminary processing and deep processing is still quite modest. From Table 5 shows the top 10 fruit export items of Vietnam in 2019. With the product group HS081090 accounting for the largest total export value (41%), followed by the HS080450 group with the export value of 9%, and the HS081060 and HS080390 at 7% and 5% respectively; while for other products, the export value was only 1% –2%. Table 5. 10 most exported fruits of Vietnam in 2019 Proportion in the total Export value in Code Description of goods value of fruit exports 2019 (million USD) in 2019 Tamarind, jackfruit, lychee fruit, fresh 081090 1549.4 41% passion fruit, dragon fruit, rambutan, 081340 Dried fruit 14.3 0.4% Fresh or dried guava, mangoes and 080450 341.2 9% mangosteen fruits 080111 Dried coconut 38.9 1% 081190 Frozen fruit 67.2 2% 080119 Peeled fresh coconut 88 2% 081060 Fresh durian fruit 271.2 7% 718
9. 080550 Fresh or dried lemons 31.7 1% 080711 Fresh watermelon 57.5 2% 080390 Fresh or dried bananas 175.8 5% TOTAL 2635.2 70.5% Source: Trend Economy (2020) However, due to the Covid–19 epidemic in the first months of 2020, there are still complicated developments in countries, leading to a stagnant export market, affecting the export value of Vietnamese fruits. According to the Import–Export Department (Ministry of Industry and Trade), although the export value of fruits and vegetables to markets has grown, the export of vegetables and fruits decreased mainly due to the decline in exports to the Chinese market and in 7 months early 2020, the country's fruit export turnover reached nearly US $ 1.98 billion, down 13% over the same period last year, but fruit exports to China alone reached US $ 1.15 billion, down 28.9% compared to that of the previous year. With the current situation until the end of 2020, it will be a prolonged test for Vietnamese fruit exporting enterprises in 2020 and the coming years. Table 6. Exports of fruits and fruit products of Vietnam to Europe in 2016–2019 Unit: Thousand USD Country 2016 2017 2018 2019 Netherland 210,845 317,754 257,761 381,242 Germany 238,302 292,624 280,137 141,246 United Kingdom 121,476 147,088 137,937 112,932 France 56,826 75,839 87,722 70,121 Russia 25,496 50,171 67,078 62,721 Italy 35,347 40,212 49,997 51,375 Source: General Statistics Office of Vietnam (GSO) The consumption of fruit in Europe has increased significantly in recent years due to the increase in demand for healthy and natural products. Among European countries, Vietnam's main fruit export markets are the Netherlands, Great Britain, France, Germany, Italy and Switzerland. In the past 5 years, the Netherlands has always been Vietnam's largest fruit import market because the import of agricultural products into the European market mainly through the Netherlands is the Netherlands as the gateway to the Europe market for fruits and vegetables. Vietnam is still trying to promote and take advantage of opportunities to export to this market and thereby to Europe. 2.4. Competition situation of Vietnamese fruit in Europe It can be seen that, the direct competitors of Vietnam to overcome when exporting fruit to the European market are the countries in this continent. Europe has always been a difficult market with 719
10. strict standards so it is difficult to satisfy these customers outside of themselves. In addition, the European Union (EU) is a long–standing and sustainable alliance, having a great influence on the general economy of both Europe and the world. Favorable goods circulation, legal procedures, tariffs, currencies, are the conditions that promote European countries to become potential customers of each other. Europe is a fresh fruit producing region that accounts for about 11% of the world's production, in which some countries have their own advantages in fruit, which creates an efficient and sustainable network of supply and demand. – Belgium: The most commonly produced fruit: pears, apples and strawberries. – France: The climate is varied, allowing the production of a wide variety of products, including bananas and other tropical fruits. – Germany: The most commonly produced fruits: apples, strawberries, pears; Blueberry production is increasing. – Italy: Major supplier of figs, kiwifruit and tangerines; The largest supplier of pears, nectarines, apricots, kiwifruit, grapes, tomatoes. – Netherlands: An important hub for agricultural trade in Europe; 85% of yields include pears, apples and strawberries. – Spain: Europe's largest producer and exporter of fruits and vegetables; The most commonly produced fruits: apples, tangerines, and watermelon. – Poland: Europe's largest supplier of black grapes and apples: Focusing on fruit juice and nectar production. Narrow scope to Asia, China, Korea, Japan are strong competitors of Vietnamese fruit, especially China, which accounts for 6% –7% market share in the European market. The common characteristics of these countries are all major economies in Asia, with the development of science and technology applied in agriculture and recognized in the world. The fruit export sector of these countries has a certain place in the world map and is fully capable of exceeding the stringent standards of quality of the European market. Thanks to the improvements in science and technology and the creativity and thoughtfulness in each production stage, combined with the original fruit flavors of each country, Korea, Japan, and India always maintain their strength in recent years, accounting for 1%–2% market share of Europe's fruit imports. In addition, as the world's largest exporter in 2019 with $2,500 billion of goods exported abroad (Trademap), China has enough resources to take advantage of the race to export fruit in the fastidious European market. The Chinese fruit industry is very developed and in the future, they are striving to become the largest producer and exporter of fruit in the world. Besides, with many similarities in economy and ecological conditions, Thailand, Malaysia, the Philippines are also potential competitors of Vietnamese tropical fruits. Although there is not yet a large fruit export volume in the European market, but with the advantages of natural conditions available in the developing economy, these countries can become formidable opponents in future. These countries are currently major fruit suppliers in Asia but are continuously improving and diversifying fruit products; promoting the marketing and distribution system, focusing on trade promotion through tourism development; close coordination among State agencies in order to improve the competitiveness of national fruits. Those are the reasons that Vietnam has to both be cautious and have to learn from these opponents. 720
11. 3. OPPORTUNITIES AND CHALLENGES FOR VIETNAM'S FRUIT EXPORT TO THE EUROPEAN MARKET WHEN THE EVFTA AGREEMENT COMES INTO EFFECT 3.1. Opportunities Vietnam has successfully signed the EVFTA Agreement since June 30, 2019 and the agreement comes into effect from 1 August 2020. The entry into force of EVFTA provides great opportunities for Vietnam's exports in general and fruit export of Vietnam in particular. Specifically: Firstly, The EU is currently Vietnam's leading trading partner with the proportion of 18.3% of Vietnam's exports to the EU and 7.2% of its imports from the EU. Fruit products alone account for 7.3% of the total export turnover in 2019. The signing of EVFTA will open opportunities for both sides, including opportunities for Vietnamese agricultural enterprises. When EVFTA comes into effect, all main export products of Vietnam are agricultural products such as rice, coffee, honey, animal husbandry, fruits, and seafood all enjoy preferential treatment from the first year. For fruit products, the EU commits to eliminate 94% of the total 540 tariff lines of fruits and processed products from this item as soon as the agreement comes into effect. Most of the EU tariff lines committed to abolish immediately currently have an average MFN tax of over 10%, especially for fruits subject to tax over 20%. Therefore, this commitment of the EU is considered to create a great price advantage for Vietnamese fruits to easily approach the countries in the alliance and then expand to the non–union countries. Through EVFTA, Vietnamese fruits have the opportunity to further penetrate the EU market with about 500 million people; Vietnamese agricultural enterprises can easily access and trade with other markets with free trade agreements with the EU. Secondly, cooperation between Europe and Vietnam also brings many benefits, helping Vietnamese businesses access European knowledge and technology and providing European companies with a reliable production unit and cost effective in Asia. For fruit products, Vietnam currently has many multinational companies that are investing in the development of production of high quality fruit products. For example, Bayer is a global corporation originating from the Federal Republic of Germany, with presence in over 90 countries worldwide. Bayer's business is dependent on a diversified value chain with research and development activities carried out in multiple locations; production is widely distributed geographically. Over the years, Bayer has applied innovations and advanced technology, improving the capacity of farmers to produce fruit products, contributing to economic sustainability. Thirdly, The signing of EVFTA will create a legal basis for commercial exchange activities for Vietnamese fruit to be exported to Europe, meeting the quality and safety standards that this market requires. Commitments in areas such as trade remedies (anti–dumping, anti–subsidies, safeguards), technical barriers to trade (TBTs), and food hygiene and safety quarantine measures (SPSS) has had certain impacts on Vietnam's fruit export activities in recent times, is expected to have more positive effects, bringing significant benefits to the export fruits of Vietnam in the coming time. Fourthly, attracting direct investment from the EU will encourage projects to invest in high technology and clean technology in the field of fruit production, helping the agricultural sector to develop, creating products that ensure quality requirements, technical standards that exceed the SPS regulations and other technical trade barriers of the EU. Thereby, improving competitiveness for Vietnamese fruit producing and exporting enterprises thanks to better access to technology and improved management capacity. 721
12. 3.2. Challenges In addition to the above opportunities, Vietnam's fruit exports still face many challenges when the EVFTA Agreement comes into effect. Specifically: Firstly, about technical barriers to trade and rules of origin of goods. Due to the competition with imported goods from Vietnam, which enjoy tax incentives, EU member states will pay much attention to technical barriers to trade (TBT) and rules of origin of goods (C/O). In particular, meeting the rules of origin as well as the quarantine regulations (SPS) is currently the most worrying problem for fruit products and businesses doing business in this sector. EVFTA Agreement aims to eliminate import duties up to 99.2% of tariff lines. However, to enjoy this preference, exports to the EU need to satisfy the rules of origin, which can be an obstacle for Vietnamese exports because raw materials for Vietnamese exports is mainly imported from China and ASEAN. If the rules of origin are not met, Vietnam's exports to the EU are only entitled to the most favored nation (MFN) rate, not the 0% rate as in the EVFTA. Regulations on traceability of the importing countries are getting stricter, the risk of Vietnamese goods being "borrowed" for export to the EU has also been warned by economists. This causes many consequences that Vietnamese goods exported to the EU may be subject to high anti– dumping tax. On the issue of SPS to ensure food hygiene and safety for the EU market today, the most important concern is agricultural products, including fruit products. The EU has set maximum residue levels (MRLs) for pesticides in and on fruit. The strict implementation of MRLs and the prevention of bacterial infection are the prerequisites for entering the European market. Moreover, Vietnamese fresh fruits are mainly sold in small Asian stores, not present in major supermarkets in Europe such as Tesco (UK), Kaufland, Macro (Germany), Migros (Switzerland) As can be seen, opening and keeping the market for each type of fruit in the EU market is not easy. Secondly, about information capture by the fruit exporting enterprises about EVFTA. In reality, Vietnamese enterprises' understanding of EVFTA is still limited. Currently 77% of enterprises do not know, or heard about this Agreement for the first time, in which, enterprises producing and exporting fruit are no exception. Many businesses actually have not fully utilized the tariff benefits because they do not know the FTAs, the procedures for issuing certificates of origin are still complicated, especially the majority of enterprises have not met the conditions for rules of origin. Thirdly, about intellectual property: While Vietnam is still quite indifferent to intellectual property issues, this is a top priority from the EU. Even the EU investors' requirements for intellectual property protection are higher than those in the WTO. Vietnam needs to pay special attention to the intellectual property rules in EVFTA in order to benefit from this Agreement. Fourthly, about the use of labor: Despite many efforts, there still exist problems in the application of labor standards in enterprises in general and in fruit exporting enterprises in particular. Common problems related to workers working overtime; regulations on weekends and public holidays; working environment, labor safety and hygiene; the right to participate in social insurance, full health insurance, the right of female workers to work and raise children If not resolved, this issue can be a major barrier for Vietnam's fruit exports to the EU. Fifthly, about environmental protection: Vietnam still has little experience in implementing environmental obligations within the constraints and adjustments of the current multilateral environmental agreements and EVFTA agreements. Accordingly, the following issues are related to environmental protection that Vietnam needs to comply with when exporting fruit to the EU such as: 722
13. Biodiversity and alien organisms; Climate Change; protect the ozone layer; environmental goods and services; corporate social responsibility; voluntary environmental protection mechanism; eco– labeling on fruits for export Moreover, in Vietnam, resources for environmental protection activities are limited, awareness and capacity of managers as well as people are not high, affecting the serious implementation of these obligations related to the environment. This situation poses significant challenges for Vietnam when it comes to implementing the EU's requirements on environmental protection responsibility, because for developed countries such as the EU, environmental protection in production activities is very important, if we do not comply, do not accept EVFTA's requirements will be sued before international arbitration and the penalty is not small and the costs involved are very expensive such as costs of hiring lawyers, costs of arbitration 4. SOME SOLUTIONS To take advantage of the opportunities and respond to the challenges brought by EVFTA, solutions should focus on implementing in the coming time as follows: 4.1. On the part of the fruit production and export enterprises Firstly, in order to effectively take advantage of the incentives provided by EVFTA, enterprises need to actively explore the content of EVFTA, especially commitments related to tariffs and rules of origin, actively adjust the production process of fruit products, sources of raw materials to meet the Agreement's rules of origin, diverting imports to domestic sources or from EVFTA member countries. Secondly, In order to overcome technical barriers, penetrate into EU markets, enterprises need to improve the quality of fruit products, professionalize the sales process, actively build and promote brands. to improve the competitiveness of our products. One of the things Vietnamese enterprises need to do right away is to invest in enhancing product value and quality in order to enhance product competitiveness in the EU market. Thirdly, enterprises also need to change their business thinking in a new context, using competition pressure as the driving force for innovation and development. EVFTA will definitely bring opportunities for enterprises to actively respond to changes in the business environment brought about by international economic integration. Fourthly, Enterprises must have long–term investment plans, focus on reorganizing production, improving the quality of fruit products, meeting clean production standards such as Viet GAP, Global GAP. Enterprises need to focus on food hygiene, to meet the management standards and procedures specified by the EU; attaching importance to social responsibility, transparency of information on labor and production environment, especially ensuring the rules of origin when exporting fruit to the EU. Fifthly, enterprises need to increase investment in technology to improve the quality of food safety and hygiene and ensure other technical standards; investing in waste and gas treatment technologies, ensuring environmental protection standards as committed in EVFTA; to strongly develop the form of financial leasing in the procurement of machinery, equipment and technology in order to raise the development ability and competitiveness of Vietnamese fruit exporting enterprises. Sixthly, enterprises s also need to actively seek cooperation with investors of EU member states to strongly attract direct investment in Vietnam, in order to make effective use of capital and technology transfer from other countries. In the short term, it is necessary to link with major 723
14. European supermarket groups investing in Vietnam to export Vietnamese fruit products sold in overseas supermarket chains so that European consumers can get used to Vietnamese products (in this matter, Vietnamese enterprises have successfully implemented with Metro, Big C in the past and with Aeon now). This is also a good opportunity for enterprises to participate more deeply in the regional and global supply chain. Seventhly, promoting propaganda activities, education activities, raise community awareness about environmental issues, labor and intellectual property; Enhancing awareness of businesses on the importance of switching to clean technology, investing in environmental treatment technology and awareness of the proper use of chemical residues in the production of products from fruits and growing fruit. 4.2. On the side of the State and related Ministries Firstly, It is necessary to develop supporting industries to ensure satisfaction of the origin requirements; completing institutions and raising community awareness about labor and environment; Developing technological capacity and quality management towards organic agriculture. Secondly, since the EVFTA Agreement comes into effect, in the coming time, the Ministry of Industry and Trade should continue to accompany businesses, step up the implementation of activities to support enterprises to take advantage of EVFTA and continue to focus on information market by sectors and fields in order to support enterprises to overcome barriers, contribute to promoting the image, promoting products and building brand names for Vietnam's exported fruit. Thirdly, The State needs to soon improve legal policies related to the issues that Vietnam still faces many difficulties and problems with when implementing the EVFTA Agreement such as: Technical barriers to trade, rules of origin, intellectual property, labor, environment. At the same time, the State also needs to continue to improve the legal framework to ensure compatibility and compliance with international standards in general as well as compliance with EVFTA's regulations in particular. At the same time, it is necessary to stipulate strong and highly deterrent sanctions for violations of the law on intellectual property, origin of goods, food safety, environmental protection Fourthly, The functional agencies of the Ministry of Agriculture and Rural Development, the Ministry of Science and Technology need to have a specific plan in advising farmers on fruit growing techniques and fruit processing, how to store, pack and sign contracts to ensure the output for farmers. Fifthly, The Government needs to support the construction of irradiation plants in the North for commodities such as lychee fruit for export; Support for air transport costs to give enterprises the opportunity to export by air, instead of just exporting by sea, reduce time and bring more efficiency for enterprises as well as farmer. REFERENCES 1. Claudio Dordi (2020), Speech on "European Free Trade Agreements – Key Features and Past Experiences". 2. Commercial map of the International Trade Center (ITC) – 3. European Union – 724
15. 4. General Statistics Office of Vietnam: n. 5. Information portal on vegetables and fruits of the Ministry of Industry and Trade: . 6. Ministry of Industry and Trade: n. 7. MUTRAP (2019), EU fruit and vegetable market report in 2019. 8. MUTRAP (2020), “Free Trade Agreement between Vietnam and EU ”, Summary of MUTRAP Research Report. 9. Reports under Project VIE 61/94 of Department of Trade Promotion: Development strategy for fruit and vegetable industry, Marketing of Vietnamese fruit and vegetable industry. 10. Trade and Industry Information Center: 11. Vietnam Ministry of Agriculture and Rural Development – n; n. 12. Vietnam Trade Promotion Agency: n. 13. Vietnam Trade Promotion Agency (2019), Export Promotion Report. 14. Vietnam Fruit and Vegetable Association – 725