On January 14, 2019, the Comprehensive and Trans-Pacific Partnership (CPTPP) Agreement was officially in force for Vietnam. The CPTPP Agreement consists of 11 members including Canada, Mexico, Peru, Chile, New Zealand, Australia, Japan, Singapore, Brunei, Malaysia and Vietnam.
CPTPP is said to have more marketable products and faster and easier time to reduce taxes. So after the CPTPP took effect, Vietnam shrimp export turnover to member markets such as Japan, Canada, Australia and Singapore started to record some positive changes.
Japan is the second largest shrimp import market of Vietnam in the first 4 months of 2019, accounting for 19.2% of the total export value of Vietnam shrimp to markets. In February and March of this year, Japan was the only market among the major import markets for Vietnamese shrimp that recorded positive growth. In April, shrimp export to Japan decreased partly due to reduced demand in the context of economic growth showing signs of deceleration and instability of Japanese Yen. In the first four months of this year, shrimp export to Japan reached US$ 162.5 million, down 7.3% compared to the same period in 2018 while export to EU, US, China and South Korea decreased with 2 - digit rate.
In addition to the Vietnam-Japan Economic Partnership Agreement (VJEPA) and ASEAN – Japan Comprehensive Economic Partnership Agreement (AJCEP), the CPTPP Agreement, effective from January 2019 also helps Vietnamese shrimp to increase their advantages in this market. According to Japan's commitments at CPTPP, most of Vietnam's key seafood products including frozen shrimp (HS 030617) and processed shrimp (HS 160521) are entitled to 0% tax rate right after the agreement being valid.
Canada ranked 6th on Vietnam's shrimp imports, accounting for 4.4% of the total export value of Vietnamese shrimp to the markets. In the first four months of this year, Vietnam shrimp exports to Canada reached US$ 37.6 million, up 4.8% over the same period in 2018. Shrimp exports to Canada showed signs of increasing after the CPTPP took effect earlier this year.
Among the countries participating in CPTPP, Canada is one of the countries with the highest market access commitments with thousands of tariff lines for imported goods returning to 0%, with 95% of tariff lines will be cut of, covering 78% of Vietnam's total export turnover to Canada. Besides, Canada is one of three member countries that Vietnam has no bilateral trade agreement. Under the CPTPP commitment, import duties on aquatic products, including frozen shrimp, processed shrimp, etc. from Vietnam to Canada all fell to 0% immediately after the Agreement came into effect. CPTPP is also an opportunity for Vietnamese shrimp in the Canadian market because competitors such as India, Thailand and Indonesia do not join the agreement.
In recent years, Canada has consumed more warm water shrimp from Southeast Asian countries in the context of declining supply of cold water shrimp. Exporting Vietnamese shrimp to Canada is at the top of the supply of shrimp to Canada and accounting for nearly 1/3 of the market share of imports. With this advantage, CPTPP will be a force to help Vietnam compete better than the above competitors in the Canadian market.
Australia ranked seventh in Vietnam shrimp imports, accounting for 4.8% of Vietnam's total shrimp exports to markets. Australia is a member country in CPTPP. Under the commitment in CPTPP, all exported shrimp products to Australia are at 0% tax immediately after the Agreement came into effect.
One of the member states of CPTPP is Chile. Chile is a small market but it gives an open opportunity for Vietnamese shrimp. According to Chile's commitment in CPTPP, seafood products including shrimp imported to Chile will be reduced from 6% to 0% tax rate as soon as the Agreement came into effect. In the first three months of 2019, Vietnam shrimp export to Chile reached US$ 712.4 thousand, a strong increase of 1.465% compared to the first 3 months of 2018 (turnover only reached US$ 45.5 thousand). Chile rose to 46th position (from the 60th position) in the top markets of Vietnam shrimp imports with the proportion increased to 0.12% from 0.01%.
Effectiveness of CPTPP sets out for enterprises the conditions of technical barriers, quality standards and rules of origin. Enterprises need to improve competitiveness, take market information and barriers into consideration to promptly respond market’s requirements and needs.
Thus, after the CPTPP took effect, its benefits for Vietnam shrimp export are not much, however, they are still considered as necessary support factors to help improve the shortcomings that the previous bilateral and multilateral agreements have not covered yet.