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TPP could cripple agriculture and food industry

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Wednesday, 08/10/2016, 15:54

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Coffee firms want State
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VOV.VN - Following three decades of market reform and trade liberalization, Vietnam has emerged as
one of Asias most dynamic economies, said speakers at a recent business forum in Hanoi discussing
the impact of the Trans Pacific Partnership (TPP) on the domestic agriculture and food industry.

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The TPP in a nutshell involves 12 countries the US, Japan, Malaysia, Singapore,
Brunei, Australia, New Zealand, Canada, Mexico, Chile, Peru and Vietnam. The pact
aims to deepen economic ties between these nations, slashing tariffs and fostering
trade to boost growth.
The agreement has the potential to create a new single market something on the
order of the EU.

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Under its export-led growth strategy, Vietnam has become a leading exporter of

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Under its export-led growth strategy, Vietnam has become a leading exporter of
coffee, rice, cashew nuts, and pepper and a significant exporter of a variety of other
commodities to the global market.
Despite a recent slowdown in growth, the Southeast Asian nation represents
significant market potential for the agri-food industry of the other 11 TPP member

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states and they should benefit significantly from its passage, said Duong Nhu Hung,
vice rector at the University of Economics and Law.
Most notably, Vietnam represents a very large 90 million strong consumer market for
foreign pork and poultry products from other TPP member nations, said Vice Rector
Hung.
With increased urbanization and rising household incomes, Vietnamese consumers
have been increasingly choosing to purchase foreign packaged and processed food
over domestically produced products for convenience, food safety concerns and a
desire for variety.

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As well, Vietnamese farmers are heavily dependent upon feed from foreign sources
and have been steadily increasing their foreign purchases over recent years.
Accordingly, the prospects for trade gains for Vietnam in the agriculture and food
industry is lopsided and benefit foreign imports into Vietnam more so than exports
out of Vietnam, said the Vice Rector.
He said this results in large part, because Vietnam currently has preferential trade
agreements (PTAs) with many of the negotiating TPP countries.
These PTAs already provide low or duty-free rates on imports of Vietnamese
produced goods and the TPP affords no added benefit of any consequence as it
relates to benefits from reduced import tariffs.
Even among trade partners with which it currently lacks a PTA, most of the nations
top exported commoditiessuch as coffee, rubber, cashews, and pepperare not
protected by the TPP, leaving little room for growth.
However, the TPP could provide new opportunities where those PTA agreements did
not liberalize market access, he said.
Smaller export segments such as cassava starch, pepper, processed foods, and
honey could gain from further liberalization of tariffs, and Vietnamese rice might
possibly gain a share of the Japanese market.
However, Vietnam small businesses are still confused about how to compete in the
global market said Ly Kim Chi, president of the Ho Chi Minh City Food and Foodstuff
Association, and its questionable whether they will be able to seize opportunities

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the TPP does afford them.

The import growth of Vietnam of products from other TPP member nations will likely
be concentrated in the consumer-oriented sector, said Ms Chi.
Even though commodities used as inputs for agriculture (soy, cotton, wheat) make
up the largest share of the nations agricultural imports, these commodities already
enter with very low tariffs, thereby lessening the impact of the TPP.
Imports of consumer-oriented foods into Vietnam on the other hand, said Ms Chi,
face significantly higher rates (15-40% ad valorem duties) and thus represent larger
growth potential for the foreign food industries of the other TPP members.
US agricultural exporters, in particular, are well poised to expand their market share
in meats, dairy products, and fruit in Vietnam should the now stalled TPP be ratified,
which could cripple the domestic agriculture and food industry.
VOV

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TAG : TPP, agriculture, food industry, Asia, trade liberalization, PTAs

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Editor-in-chief: PHAM MANH HUNG
Deputy Editor-in-chief: NGUYEN THUY HOA, NGUYEN TUYET YEN

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