Seafood exports to Russia: Still having bigger opportunities thanks to FTAs (14-06-2019)
Vietnam - Eurasian Economic Union Free Trade Agreement (VN-EAEU FTA) officially took effect in 2016, opening up many opportunities for Vietnamese seafood to enter the Russian market. However, in fact, domestic enterprises have not fully utilized this opportunity.
According to commitments in VN-EAEU FTA, Vietnamese seafood exported to this area will be eliminated 100% tax, of which 95% of tariff lines will be completely removed with a 10-year roadmap; 75% of tariff lines were removed immediately after the Agreement came into effect. However, exporting Vietnamese shrimp to Russia has not taken advantage of this Agreement. Since the time of VN-EAEU FTA has come into effect so far, exporting Vietnam shrimp to this market has continuously decreased. In 2016, exporting shrimp to Russia reached US$ 20.3 million, in 2017 dropped to US$ 18.2 million and reduced to US$ 15.2 million in 2018.
Vietnam Association of Seafood Exporters and Processors (VASEP) said that in recent years, Vietnam shrimp export enterprises still focus on traditional markets such as the US and EU, but not sufficiently pay attention to the Russian market. Besides, shrimp export price from Vietnam to Russia is quite high compared to other competitors in the market such as India, China, Ecuador, etc. so it is not attractive to Russian importers.
For tra and basa fish, Vietnam is the second largest market for whitefish in Russia (after China). In particular, 100% of imported tra fish products to Russia are from Vietnam and mainly in the form of frozen tra and basa fillet.
According to VASEP, Russia is an unpredictable export market due to erratic fluctuations in import activities. In the past 10 years, from 2011-2019, the value of exporting tra and basa fish to Russia has been unstable and tends to decrease. In the first three months of 2019, the total value of tra fish export to the Russian market reached US$ 4.88 million, down 12.6% compared to the same period in 2018.
Currently, China’s strength is tilapia, Vietnam’s is tra and basa fish and Argentina’s is hake fish. These three whitefish are vigorously competing in the Russian market. But in terms of trade history, the Russian market still gives more favor to Chinese tilapia products. Therefore, Vietnamese tra fish exporting companies still have not paid much attention to increase export to this market.
Another signal taking place in the picture of shrimp export in the first 3 months is that Vietnam shrimp export to Russia reversed with a turnover of US$ 1.9 million, up by 109% year on year. This is good news for shrimp industry while exporting to major markets declined. In the context of VN-EAEU FTA has taken effect and created incentives for exporting Vietnam shrimp to Russia, while competitors in the Russian market have not FTAs with EAEU yet, VASEP recommended Vietnamese shrimp export enterprises to seek and develop domestic raw materials to meet the requirements of traceability, while improving the competitiveness of enterprises and products to meet the quality and technical standards of the Russian market.
According to experts, promoting exports to Russia and Northern Europe require a thorough market research to determine the potential and desires of partners.