Opportunity for Vietnam seafood into the United States

Many shrimp processing enterprises are ready to ship to the US. Photo: T.H.

Reduction of anti-dumping tax

The US Department of Commerce (DOC) has issued preliminary conclusions on the anti-dumping duty of Vietnam catfish during the 14th administrative review period (POR 14), the period from August 1, 2016 to 31 July 7, 2017 with a sharp reduction in tax rates compared to the end of the POR 13. Specifically, the preliminary rate for the two respondents is 0 and 1.37 USD/kg. At the same time, the tax rate for voluntary respondents is $ 0.41 per kilogram and the national tax rate is $ 2.39 per kilogram. This tax is much lower than the end result of the previously published POR 13. Specifically, the highest tax rate of the POR 13 is up to $7.74 per kg. The POR 13 tariff is $ 3.78 per kilogram. It is known that the DOC will issue a final decision within four months of the date of the preliminary findings, the final conclusion of the POR 14 will be published by the DOC in January 2019.

According to Vietnam Association of Seafood Exporters and Producers (VASEP), exports of catfish in the first eight months of 2018 reached $ 1.4 billion, up 20% over the same period last year. In particular, exports of pangasius to the US market reached over $ 255 million in the first seven months, up 15.6% over the same period last year. Mr Truong Dinh Hoe, Secretary General of VASEP said that in 2018, export value of pangasius is expected to exceed $ 2 billion.

Not only with Pangasius, the opportunity is also open for Vietnamese shrimp export to the United States. On 10/9/2018, DOC announced the final result of anti-dumping duty for Vietnam shrimp during the 12th administrative review period - POR12 (from 1/2/2016- 31/1/2017), with much lower taxes than the preliminary results. Accordingly, Sao Ta Food Joint Stock Company (Fimex VN) - the sole defendant of the administrative review this time has a tax rate of 4.58% - the tax rate applied to more than 30 enterprises of Vietnamese shrimp, the other is the defendant of the lawsuit. Thus, the final tax rate of 4.58% was much lower than the 25.39% preliminary rate notified by the US DOC on March 8, 2018. This result is also better than the tariff of final POR11.

In 2017, exports of Vietnamese shrimp to markets increased sharply with export prices higher than previous years, exports to the US market fell 7% to 659 million USD due to the impact of anti-dumping price tax. The imposition of this tax has affected the export of shrimp in Vietnam. The US market has lost its leading position, becoming the fourth largest market for shrimp imports from Vietnam. Export of shrimp to the US market in the first 8 months of 2018 continued to decrease 10.5% to about $ 372 million. With the POR12 final results lower than the preliminary results and POR11 results, Vietnam shrimp exports to the US market in the coming months is expected to recover, bringing the results of shrimp export in 2018 to this market to about $ 615 million, down slightly by 6.5% compared to 2017.

The opportunity for seafood into the United States

According to VASEP, the US-China trade war is expected to have a direct impact on the economies of the world, including Vietnam. Vietnamese seafood, including shrimp products, will also be impacted. US will apply a 10% tax on shrimp products from China with the HS codes 03061700, 16052105, 16052110, 16052905, 16052910. These are also strong Vietnamese products in the US market, the US importers will select Vietnam shrimp in this context. These products are able to compete on price and tax rates with China’s products in the US market. So this can be considered as an advantage for Vietnam to export these goods to the US. Moreover, Vietnam shrimp has a certain position with US consumers, so when the supply from China drops, US importers will choose Vietnam shrimp as an alternative supply. However, VASEP said, due to high taxation when exporting to the US, China will also reduce the import of raw shrimp for processing and re-export. This may affect the export of Vietnam shrimp raw materials to China. Meanwhile, imports of live and frozen shrimp raw materials accounted for 94% of total shrimp export to China in 2017.

In the context of trade war, both the United States and China are suspicious of each other, so they will set more stringent technical barriers to Vietnam’s products when they are exported to both markets. The United States will strictly examine the origin of shrimp from Vietnam. VASEP said that it is also possible that Chinese shrimp companies will "borrow" by way of Vietnam for changing origin and export to the US. However, this is also an opportunity for Vietnamese enterprises to assert their position, improve the quality and transparency of their origin in order to gain market share from China in the US market.

At present, the seafood enterprises have many opportunities to export seafood to the US as they increase the number of farms and factories certified for good farming practices, food safety and environmental and social standards. Increasing the number of factories with upgraded processing lines that meet European retail standards. The large investments in super-intensive shrimp farms are ensured and strictly controlled. However, businesses also noted the challenges when the EU authorities tightly control antibiotics. Along with that, production costs increase continuously, not proportional to the price of export shrimp.