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Doors open for EU agri-food firms with lower tariffs

European enterprises are expected to intensify their agri-food presence in Vietnam thanks to slashed tariffs for EU-sourced agri-food items under the EU-Vietnam Free Trade Agreement.

Doors open for EU agri-food firms with lower tariffs

According to Miriam Garcia Ferrer, head of section from the EU Delegation to Vietnam, many EU firms stand ready to invest in Vietnam’s agri-food sector once the EU-Vietnam Free Trade Agreement (EVFTA) takes effect in 2018.

EVFTA is expected to help Vietnam attract more EU agri-food investment and products thanks to the reduction and elimination of tariffs by Vietnam for EU agri-food products, Ferrer said at a recent Hanoi-based meeting between EuroCham and Vietnamese government representatives.

Agricultural items’ average tariffs will drop from the existing 67.7 per cent to 31.3 per cent in the third year of EVFTA’s entry into force, then to 17.9 per cent in the fifth year, 4.7 per cent in the seventh year, and finally to 4.6-2.6 per cent in the 10th year.

Meanwhile, fishery items’ average tariffs will drop from the current 86.7 per cent to 0.4 per cent in the third year, and 0 per cent in the 10th year.

Forty-two EU agri-food firms came to Vietnam recently, in search of investment and business opportunities. It is expected that another wave of EU agri-food firms will come to the country in 2017, according to Phil Hogan, EU Commissioner for Agriculture and Rural Development.

These 42 firms have total revenue of €170 billion ($188.8 billion) per year, and seek to ink multi-million dollar deals to either establish joint ventures or distribution channels with Vietnamese enterprises.

Last year, firms in Vietnam spent $11.1 billion importing goods from the EU, of which only around $1 billion was for buying agri-food items, while the rest was for importing machinery, equipment, services, and other industrial products. However, Hogan said under EU agri-food firms’ general business strategies, they will use Vietnam as their main consumer base, and from there they can boost exports to other ASEAN markets.

Graeme Dear, president of European Live Poultry and Poultry Hatching Egg Association (ELPHA), said that ELPHA wants to co-operate with Vietnamese firms in producing and exporting poultry products to the EU.

In addition, the UK’s Aviagen Ltd., a firm that Dear is the general manager of, is also seeking to co-operate with Vietnamese partners in providing poultry breeding services. In Europe, Aviagen has an average annual revenue of €500 million ($532 million).

Many other agri-food associations (such as Freshfel Europe, Spirits Europe, AVEC, EUCOFEL, and EDA), and firms (such as Belgian Fruit Valley, Sortovi Semena, Polar Oats, Valio, and Fairefield Foods) have and will come to Vietnam in search of opportunities.