Impacts of EVFTA on trade flows of fruits and vegetables between vietnam and the EU

TRƯỜNG ĐẠI HỌC NGOẠI THƯƠNG KHOA KINH TẾ QUỐC TẾ Impacts of EVFTA on trade flows of fruits and vegetables between Vietnam and the EU Pham Thi Huong Ly Foreign Trade University, Hanoi, Vietnam Pham Thi Thuy Trang Foreign Trade University, Hanoi, Vietnam Dao Ngoc Phuong Linh Foreign Trade University, Hanoi, Vietnam Le Thi Nam Thanh Foreign Trade University, Hanoi, Vietnam Tran Huyen Trang Foreign Trade University, Hanoi, Vietnam Vu Thu Ha Foreign Trade University, Hanoi, Vietnam Nguyen Quynh Anh Foreign Trade University, Hanoi, Vietnam Nguyen Hoang Minh Ngoc Foreign Trade University, Hanoi, Vietnam Abstract: The research aims to identify the impacts of EVFTA on trade flows of fruits and vegetables between Vietnam and the EU The research follows a qualitative approach to analyze the agreement and its opportunities drawn on text and data analysis, as well as a literature review This research has confirmed that there is a positive relationship between EVFTA and trade flows of fruits and vegetables between Vietnam and the EU The report gives recommendations on trade flows of fruits and vegetables between Vietnam and the EU in the context of EVFTA Keywords: EVFTA, import, export, fruit, vegetable Introduction: The EU - Vietnam Free Trade Agreement (EVFTA) is a new generation FTA between Vietnam and the 28 EU member states EVFTA has officially taken effect from August 1, 2020 With a wide range of commitments, deep liberalization and high standard commitments, the EVFTA is forecasted to have strong impacts on the entire economic situation as well as business activities of Vietnamese enterprises Vegetables and fruits are one of the economic sectors that are forecasted to take the most benefits from EVFTA with opportunities opened up for both export and import and attract investment To support Vietnamese fruit and vegetable enterprises to seize opportunities, realize potential benefits from EVFTA, new generation FTAs and their impacts are therefore primarily to be analyzed in this study The methodological approach of this report is qualitative methods, which analyze the agreement and its opportunities drawn on text and data analysis, as well as a literature review In this report, impacts of EVFTA on fruits and vegetables trade flow would be clarified through main sections: literature review, background, research methodology, results and discussion Literature review 2.1 Trade impacts of an FTA The implications of FTAs have been a topic of interest for many economists Trade impacts of an FTA have widely been accepted among scholars to include static and dynamic effects FTAs enhance trade flows among countries through trade creation and trade diversion effects, which were first clarified by Viner (1950) as a fundamental theory of international economic integration Trade creation occurs when domestic production in an FTA member is replaced by lower-cost production from another FTA member as a result of trade liberalization Consumers gradually shift from higher-priced domestic products to lower-priced products from other FTA members (Baier & Bergstrand, 2007) The formation of a creation FTA therefore promotes trade between member states, improves the efficient allocation of resources and create a greater specialization in producing comparative advantage goods As a result, a creation of an FTA leads to the increase in consumer surplus and finally the welfare of member nations On the contrary, a FTA can divert trade flows due to its nature of discrimination between member nations and non-member nations, resulting in resource misallocation This statement has also been applied by many researchers such as Cline et al (1978), Francois & Reinert (1997), Ju & Krishna (2000), and Cuyvers & Dumont (2005) Besides the static effects, FTAs also bring about dynamic effects that take a longer time to be exposed in the economy but tend to continue generating benefits overtime even after the withdrawal of a country from an FTA With the development of new-generation FTAs, they also promote cooperation in other areas such as property right protection, job creation and sustainable development However, there are some challenges from FTAs that member nations should take into consideration, Vietnam is an example The study of Vo et al (2018) mainly emphasized the negative aspects of EVFTA, showing the difficulties that Vietnam has to face in joining the FTA It is stated that the Vietnamese legal system was not yet capable of coping with many changes Joining multiple FTAs simultaneously has brought many challenges for businesses and the Government in complying with the rules of origin and legal framework (Minh et al., 2018) Nguyen et al (2014) stated that anti-dumping policies had adverse impacts on the volume and value of Vietnam's footwear exports, forcing many businesses to shift their export targets from the EU to the United States market 2.2 EVFTA’s impacts on Vietnam’s economy and trade Only a few papers have been published investigating the impacts of EVFTA on the Vietnamese economy since data collection in developing countries has many limitations, such as the lack of available data for research purposes The EVFTA is a new-generation FTA signed between Vietnam and the 28 EU’s Member States Phillip et al (2011), Baker et al (2014), and Nguyen (2014) examined the effects of tariff reductions under EVFTA on the entire Vietnamese economy, including domestic demand, saving, investment, trade, employment, and state budget through using the Computable General Equilibrium (CGE) model and qualitative approach The first four papers focused on analyzing the effects of tariff reduction under the EVFTA on the whole Vietnam’s economy such as state budget, domestic demand, price, saving, investment, trade, employment and economic growth, and pointed out opportunities and challenges for Vietnam while Vu (2015) used trade indicators such as Revealed Comparative Advantage, Export Specialization and Trade Inten-sity to anticipate the potential benefits and losses of the EVFTA Philip et al (2011) and Baker et al (2014) using the computable general equilibrium (CGE) also tried to estimate changes in Vietnam’s imports from EU in several sectors such as rice, garments, sugar, electronics, machinery, chemicals, transport and communication Nguyen (2014a) adopted the gravity model to estimate changes in overall trade flows between two nations Philip et al (2011), Baker et al (2014) and Nguyen (2014a) provided qualitative analysis of current development of some sectors such as automotive, electronics, garments, furniture, coffee and fisheries in the context of upcoming EVFTA According to the findings, the agreement would increase Vietnam’s GDP growth rate from 2.7% to 3.7%, and exports would rise by an average of 4% per year Background 3.1 EVFTA and Impacts of EVFTA on trade The impacts of FTAs on trade have been widely accepted among many economists (Võ, Lê Quỳnh and Hoàng Thu, 2018) By creating a more integrated trading area, FTAs eliminate trade barriers on goods between member nations Thus, the agreement increases trade volume among the member countries through trade creation and diversion effects - this is known as the static impact presented by Viner (1950) The trade creation effects arise from the fact that new trade is created as a result of the greater purchasing power of consumers due to the lowering of tariffs Since the goods are often obtained for cheaper prices because of the lack of restrictions and tariffs, consumers can purchase the goods at a reduced price creates a redirection of the flow of goods to a different country that uses imported goods instead of those produced locally This brings about a better allocation of resources (Laird & Yeats, 1986) Trade diversion refers to trade which is deflected from the most efficient supplier in favour of a country that is less efficient but which benefits from lower tariff barriers Before FTAs, when a country applies the same tariff to all nations, it will always import from the most efficient producer, since the more efficient nation will provide the goods at a lower price With the establishment of FTAs that may not be the case If the agreement is signed with a less-efficient nation, it may well be that their products become cheaper in the importing market Consequently, the importing country would acquire products from a higher-cost producer This leads to ineffective allocation of resources (Laird & Yeats, 1986; Othieno & Shinyekwa, 2011) Generally speaking, as Vietnam liberalizes its tariffs, it will experience trade creation with the EU (where the EU will benefit from market opening) and trade diversion (where trade which originally was sourced from more efficient suppliers) will now enter Vietnam The effects are relatively small overall, but significant for some sectors The size of revenue loss arising from reducing tariffs to zero is quite negligible for the selected sectors Table Revenue losses of different sectors after EVFTA takes effect Sectors Revenue Losses Footwear -1 Wood -3 Fishery Handicrafts -4 -4 Hi-Tech -5 Agriculture Textiles -6 -14 Agro-Processing -51 Automotive -130 3.2 Fruits and Vegetables Sector Overview 3.2.1 Fresh Fruit and Vegetables The area used to grow fruit and vegetables has been inexorably increasing in recent years (accounting for the bulk of cultivation area, at the average growth rate of 6%/year In 2020, Vietnam had about a total 2-million-hectare fruit and vegetable growing area, with a total output of more than 25 million tons per year Fruit trees: have reached 1.1327 thousand in 2021, an increase of 3.2% mainly in the group of citrus trees and groups of high value trees Fruits with large planting areas are: mango, durian, jackfruit, guava, avocado,… Vegetable: in the two first quarters of 2021, the whole country has grown about 995,000 hectares of vegetables of all kinds (2019 - 996.000 hectares), with a yield of 186 quintals/ha and an output of 18.5 million tons From the beginning of 2021 until now, the output of vegetables of all kinds reached about 12.5 million tons, an increase of 2.2% over the same period last year Particularly in the South, the output is estimated at 7.2 million tons Vegetables with large planting areas are: potatoes, corn, cassava, peanuts, soybeans, leafy vegetables,… Figure Production of fruits & vegetables (in different areas in Vietnam) Source: Vietnam Fruit and Vegetable Association (member of Vietnam Chamber of Commerce and Industry - VCCI) 3.2.2 Processed Fruit and Vegetables Consumer demand in the domestic and export markets for processed fruits and vegetables are increasing Vietnam has developed a fruit processing industry, which now accounts for about 10% of the country's total fruit production However, the processed fruit and vegetable industry has not yet received adequate attention and investment In particular, there are more than 150 standard fruit and vegetable processing enterprises with a capacity of more than one million tons of products per year In which, the rate of raw materials put into processing is low, only about to 10%, average capacity utilization rate is 56.2% Popular processed fruit and vegetable products of Vietnam are dried fruit, fruit juice and canned vegetable juice In the long term, processed fruits and vegetables will still be a potential product category for economic growth because of their convenience and long shelf life The concentration on exporting of processed products will increase the export value of the entire fruit and vegetable industry, especially in the context of the complicated development of the Covid-19 epidemic in many countries and territories around the world 3.3 Overview of Fruits and Vegetables Trade Flows 3.3.1 Overview of Vietnamese fruits and vegetables exports Export volume and value Vegetables and fruits contributed to the total export turnover of 24 billion USD in the first half of the year of the whole agricultural sector Fruits and vegetables exports of Vietnam have witnessed a steady growth over recent years According to the Vietnam Fruit and Vegetable Association, in the first months, the total export value of vegetables and fruits reached over 2.063 billion USD, up 17.7% over the same period in 2020 Figure Total exports of Vietnam’s fruits and vegetable throughout the years In 2020, due to the impact of COVID 19 pandemic, vegetables and fruits exports dropped sharply as a result of the significant decrease in imports from China, a decline of about 25% compared to 2019 In the meantime, average total exports of all goods in Vietnam still underwent a growth rate of 11% Clearly, fruits and vegetables are one of the most negatively affected sectors by the impact of COVID 19 Export market Though Vietnam fruits and vegetables now are available in over 60 countries and territories, the leading export market of Vietnam regarding this sector remains China, accounting for nearly 70% of Vietnam’s total fruits and vegetables exports However, the structure of the export market for vegetables and fruits continued to have a positive shift, gradually reducing dependence on the Chinese market, increasing the proportion of exports to demanding markets such as the EU, the US, the Korea and Japan Until now, China is still the largest consumer market, accounting for 56% of Vietnam’s total fruit and vegetable export value In the first months of the year, fruit and vegetable exports to China reached over 1.25 billion USD, up 16.2% over the same period in 2020 Figure Export Market Structure of Vietnam vegetables and fruits in 2020 Source: Ministry of Industry and Trade 3.3.2 Overview of Vietnamese fruit and vegetable imports Import volume and value Vietnam's fruit and vegetable imports have increased continuously in recent years The average growth rate in the period 2013-2019 is 29.3%, especially turnover of fruit and vegetable imports in 2017 increased by 67% compared to 2016 In the period 2017-2019, the growth of Vietnam's fruit and vegetable imports did not witness any significant change In 2019, import turnover of Vietnam's vegetables and fruits reached 1.78 billion USD, only a slight increase of 2.0% compared to 2018 In 2020 and 2021, due to the impact of the COVID-19 pandemic, Vietnam's fruit and vegetable imports also decreased In the first 10 months of 2020, total import value of vegetables and fruits was 1.04 billion USD, a decline of 30.9% over the same period in 2019 Import turnover of vegetables and fruits to Vietnam in June 2021 reached 117.66 million USD, decreased by 0.2% compared to May 2021 and by 8% compared to June 2020 Generally for the first months of 2021, the import turnover of vegetables and fruits to Vietnam reached US$691.48 million, down 3.6% over the same period in 2020 Figure Import turnover of vegetables and fruits of Vietnam in the period of 2013-2019 Source: General Statistics Office Import market Before 2014, China was always the largest fruit and vegetable import market of Vietnam From 2014 to 2019, Thailand became the number one fruit and vegetable supplier in Vietnam However, in the first 10 months of 2020, the import of vegetables and fruits from Thailand only reached nearly 45 million USD (decreased by 80% over the same period) Therefore, the largest fruit and vegetable supply to Vietnam in 2020 was China In the first months of 2021, Vietnam's fruit and vegetable imports from China reached 196.97 million USD (accounting for a market share of 28.49%), a rise of 37.9% over the same period in 2020; US reached 155.36 million USD (accounting for 22.47%), increased by 4.8% over the same period in 2020; Australia reached 54.4 million USD (accounting for 7.8%), a rise of 8% over the same period in 2020 Some imported items increased such as apples (a surge of 50.2% over the same period in 2020), grapes (increased by 50.2% over the same period in 2020), grapes (a grow of 23.9%), strawberries (an increase of 32%); On the contrary, some imported items decreased such as chestnuts, almonds, bonbon, etc Research methodology 4.1 Qualitative research approach Qualitative research is also described as an unfolding model that occurs in a natural setting that enables the researcher to develop a level of detail from high involvement in the actual experiences (Creswell, 1994) Qualitative research can also be described as an effective model that occurs in a natural setting that enables the researcher to develop a level of detail from being highly involved in the actual experiences (Creswell, 2003) In this research paper, the group of authors decided to collect in-depth data from trade activities & import and export of agricultural products of Vietnam, then used content analysis method to interpret from the data collected and give recommendations on the outcomes 4.2 Qualitative research methodology Quantitative research in this study will not be able to give an overview as well as accurately reflect the current status of trade activities and the effects of the EVFTA on import and export of agricultural products in Vietnam Instead, qualitative research allows the research team to dig deeper by analyzing & selecting data from the available data collection to achieve the highest objective analysis possible and involves identifying the body of material to be studied and defining the characteristics or qualities to be examined In this research paper, the group of authors analyzed the materials and put them in a frequency table as each characteristic or quality was mentioned Second, the researchers conducted a statistical analysis so that the results were reported in a quantitative format The research report has main sections: The Terms of the Agreement regarding Fruit and Vegetable sector; Impacts of EVFTA on Vietnam’s Fruit and Vegetable Imports from the EU; Impacts of EVFTA on Fruit and Vegetable Exports from Vietnam to the EU 4.3 Data collection method In this study, the collection of qualitative data is done through data study of the Department of Trade - Ministry of Industry and Trade of Vietnam, General Statistics Office of Vietnam, data from International Trade Center, Report on import and export statistics of fruits & vegetables from provinces and some other statistical sources The research team collects data based on main timelines: Before, during and after Vietnam officially signed & the EVFTA agreement was put into action The data included in the article were selected based on criteria: timeliness, accuracy, relevance to the study 4.4 Data analysis method Once the data was collected, duplicates were made to convert all the data from raw text into documents Collected data has been arranged and hierarchical information Several citations obtained during data collection were selected to be used for direct citation in the study During data analysis, data taken from different sources is also compared and contrasted to ensure accuracy and highlight similarities and differences Qualitative data were discussed using content analysis because it supported the systematic conversion of large amounts of text into an organized summary of key findings (Erlingsson & Brysiewicz, 2017) In addition, content analysis is a flexible reflective process to support research in the ongoing work with data to find connections and relationships (Krippendor, 2004) Results and discussion 5.1 The Terms of the Agreement regarding Fruits and Vegetables sector It is vital to pay attention to the following terms while exporting Vietnamese fruits: Tariff barriers; rules of origin; and sanitary and phytosanitary (SPS) measures According to Chapter of EVFTA - National Treatment and Market Access for Goods, the EU will eliminate tariffs immediately after the agreement enters into force (94% of the total 547 tariff lines), with the majority of products currently subject to the 10% MFN rate and some with 20%; the remainder will be gradually reduced to 0% after 7–10 years After the EVFTA takes effect, the EU promises to eliminate tariffs on fruit products EVFTA has been helping fruit products acquire a price competitive advantage since then Meanwhile, the COVID-19 pandemic makes it difficult to reduce demand while also enhancing supply competitiveness; as a result, exports to markets in general, and the EU in particular, are currently declining in the short term The attraction of investment projects is another key development brought about by the EVFTA Agreement for Vietnam's agriculture sector It paves the way for technology transfer and production organization, allowing Vietnamese fruits to boost output and export quality while also meeting demanding EU industry standards Before the EVFTA, Vietnamese fruit was more expensive in the EU than its competitors, but thanks to tariff reductions since the Agreement's implementation, importers are favoring Vietnamese products The tax incentives offered by the Vietnam-EU Free Trade Agreement (EVFTA) give Vietnamese fruits and vegetables a significant price advantage in the EU import market, especially in comparison to those from other countries that not have an FTA with the EU, such as Thailand, China, Malaysia, and Indonesia Vietnamese fruit has more potential to enter the EU market thanks to the EVFTA Agreement However, as previously stated, firms must overcome technical challenges, quality standards, food safety, and traceability to compete in this competitive global marketplace Low or no residue levels are required for all types of vegetables and fruits If the EU's rules are broken, products will be returned, affecting businesses and possibly Vietnam's import and export industries Traceability is required for fresh fruit and vegetable imports; hence the EU will need verification of origin for all fruits As a result, enhancing the quality of vegetables and fruits in Vietnam following the Agreement has garnered considerable attention In terms of import duties, Vietnam has committed to eliminating most levies on items imported from the EU Reduced tariff income in Vietnam will result in a significant and better supply of fruit products imported from the EU, meeting Vietnamese demand for quality and variety In addition, the decrease of numerous import and export tariff lines has aided Vietnam in attracting more EU foreign direct investment (FDI) Following the enactment of EVFTA, the agriculture industry in general, and the vegetables and fruit sector in particular, has focused on quality standards and packaging design in order to comply with not only EVFTA but also other FTAs It is because no standardization only leads to unsustainable integration Furthermore, both the Vietnamese and EU governments have established numerous policies to nudge enterprises towards exporting fruit, as well as rules to safeguard vegetables and fruits in order to protect domestic businesses' market share It is apparent that the importance and implications of the EVFTA Agreement must be considered by not only enterprises but also Vietnam and the EU as a whole 5.2 Impacts of EVFTA on Vietnam’s Fruits and Vegetables Imports from the EU Regarding import duties of Vietnam, Vietnam commits to abolish most of the taxes on goods imported from the EU Reducing Vietnam’s tariff revenue will result in a larger and better 10 supply of fruit products imported from the EU, which will meet Vietnamese’s demand for quality and diversity in the products After the EVFTA Agreement takes effect, Vietnam commits to cut tariffs for fruits and vegetables imported from the EU Most of the fresh and semi-processed vegetable products that Vietnam imports are: potatoes, garlic, peas, some vegetables, olives, mushrooms, onions These products are imported because Vietnam is not capable of producing them or can only produce at a limited level, which is not enough to meet the needs of consumers In the EVFTA, Vietnam commits to eliminate import tariffs within years for all the products above and right after 01/08/2020 for seedlings of these products imported from the EU The fresh and semi-processed fruit products that Vietnam imports the most from the EU are: tropical and temperate fruit products such as apples, kiwis, grapes, pears, plums, apricots… In the top 10 groups of fresh and semi-processed fruit products (HS numbers), most of which are subject to MFN tax 2020 is 30%, only kiwi 7%, fresh grapes and fresh pears (10%) According to EVFTA, Vietnam will eliminate tariffs for this group of products within years, only kiwi tariffs will be cut immediately and fresh pears will be free of tariffs on a 4-year schedule This is a group of fresh and semi-processed fruit products that Vietnam imports a lot and tends to increase in recent years due to increased consumer demand Currently, Vietnam is importing many tropical fruits and temperate from countries that have FTAs with Vietnam such as Australia, New Zealand, Japan, Korea… According to EVFTA, Vietnam will cut tariffs for fresh fruits imported from the EU and open more opportunities for Vietnamese consumers to access these products at lower prices Table Comparison between EVFTA tariffs and average MFN tariffs for the top 10 fresh and semi- processed fruit products that Vietnam imported from EU in 2019 HS Code Name of the product Value imported in 2020 (USD thousand) EVFTA Agreement Average MFN tariff in 2020 eliminate after years 10% 081050 Fresh kiwifruit eliminate right 431 after EVFTA took effect 7% 080610 Fresh grapes 203 eliminate after years 10% 081190 Frozen fruit and nuts, uncooked or cooked by steaming or boiling in water, whether or not sweetened (excluding strawberries, raspberries, 438 eliminate after years 080810 Fresh apples 8,078 30% 11 blackberries, mulberries, loganberries, black, white or red currants and gooseberries) 080830 Fresh pears 42 eliminate after years 10% Frozen raspberries, blackberries, mulberries, loganberries, black-, white- or red currants and 081120 gooseberries, uncooked or cooked by steaming or boiling in water, whether or not sweetened 91 eliminate after years 30% 081320 Dried prunes 29 eliminate after years 30% 080410 Fresh or dried dates 15 eliminate after years 30% 081310 Dried apricots 21 eliminate after years 30% eliminate after years 30% 080420 Fresh or dried figs The top 10 processed fruit and vegetable products that Vietnam imports from the EU are mainly juice products, canned or preserved products These products are currently subject to a very high 2020 MFN tariff rate: from 15 to 40% and will be eliminated by Vietnam according to the 6–8-year roadmap under EVFTA depending on the product This opens up new opportunities for Vietnam's market in the future Table Comparison between EVFTA tariffs and average MFN tariffs for the top 10 fresh and processed fruit products that Vietnam imported from EU in 2019 HS Code Name of the product Potatoes, prepared or preserved 200410 otherwise than by vinegar or acetic acid, frozen Value imported in 2020 (USD thousand) 7,921 EVFTA Agreement eliminate after years Average MFN tariff in 2020 15% 12 Peaches, incl nectarines, prepared or preserved, whether or not containing 200870 added sugar or other sweetening matter or spirit 3,030 eliminate after years mainly eliminate after years 35% Jams, jellies, marmalades, purées or pastes of fruit, obtained by cooking, 200799 whether or not containing added sugar or other sweetening matter 738 Olives, prepared or preserved 200570 otherwise than by vinegar or acetic acid (excluding frozen) 861 eliminate after years 25% Grape juice, incl grape must, unfermented, Brix value > 30 at 200969 20°C, whether or not containing added sugar or other sweetening matter (excluding containing spirit) 653 eliminate after years 30% Mixtures of fruit juices, incl grape must, and vegetable juices, unfermented, whether or not 200990 containing added sugar or other sweetening matter (excluding containing spirit) 1,235 eliminate after years 25% 816 eliminate after years 25% Apple juice, unfermented, Brix value > 20 at 20°C, whether or not containing added sugar or other 200979 sweetening matter (excluding containing spirit) others: eliminate after years mainly eliminate after years Juice of fruit or vegetables, unfermented, whether or not 200989 containing added sugar or other sweetening matter 580 200210 Tomatoes, whole or in pieces, prepared or preserved otherwise than 383 eliminate after years others: eliminate after years 40% 25% 30% 13 by vinegar or acetic acid Unshelled beans "Vigna spp., Phaseolus spp.", prepared or 200559 preserved otherwise than by vinegar or acetic acid (excluding frozen) 5.3 288 eliminate after years 35% Impacts of EVFTA on Vietnam’s Fruits and Vegetables Imports from the EU Statistics from the General Department of Customs show that the value of Vietnam's fruit and vegetable exports to the EU in June 2021 reached 19.58 million USD, up 29% compared to June 2020 Accumulated in the first months of 2021, the export value of Vietnamese fruit and vegetable products to the EU reached US$93.64 million, up 8.2% over the same period in 2020 The proportion of Vietnam's fruit and vegetable exports to the EU reached US$93.64 million The EU accounted for 4.6% of the country's total export value of this item in the first six months of this year EU export products have large, stable and year-round import demand for fresh fruit and vegetable products, especially off-season vegetables and tropical fruits and vegetables that the EU cannot grow For processed fruit and vegetable products, the EU's import demand has also increased steadily in recent years due to the convenience nature of these products and the increasing preference of EU consumers for processed products as healthy as fruit and vegetable products Fresh and processed fruit and vegetables products that the EU imports a lot from Vietnam are also products that Vietnam has export strengths in Change in export Fresh and semi-processed vegetables: In 2020, Vietnam exported the most products to the EU of Vegetables, uncooked or cooked by steaming or boiling in water, frozen Looking at the chart, we can see that most of the products after applying to EVFTA have had a marked increase in export year by year 14 Figure Change in export of fresh and semi-processed vegetables from 2017 to 2020 Fresh and semi-processed fruits: Vietnam exports the most products to the EU of Coconuts, Brazil nuts and cashew nuts, fresh or dried, whether or not shelled or peeled This type of fruit is exported in a much higher quantity than the rest because, according to the reports from the markets, the cashew nut products originating from Vietnam have quite good quality, high nutrition and ensure food safety It can be seen that after the EVFTA agreement was signed, there was not much change in the export of these items Figure Change in export of fresh and semi-processed fruits from 2017 to 2020 15 Processed vegetables: Fruit juices, including grape must, and vegetable juices, unfermented, not containing added spirit, are still the main processed fruit and vegetable products from Vietnam to the EU; followed by fruits, nuts and other edible parts of plants, prepared or preserved, whether or not containing,… ;finally, vegetables, fruit, nuts and other edible parts of plants, prepared or preserved by vinegar… Figure Change in export of processed fruits from 2017 to 2020 Overall, although after EVFTA, the export situation of Vietnam's agricultural products only has positive changes in some products, the rest increase slightly or insignificantly because Vietnamese enterprises have not yet been able to produce fruits and vegetables to meet the needs of the Vietnamese market meet strict regulations in Europe Change in vegetables and fruit’s quality Vietnamese enterprises need to overcome the mandatory requirements on technical barriers such as food safety, labeling, environment, of the EU These regulations are very strict and the requirements are high, so Vietnamese goods have to improve a lot in terms of quality to be able to overcome these barriers Firms must overcome technical barriers, quality requirements, food safety, and traceability in order to succeed in this demanding industry As a result, enhancing the quality of vegetables and fruits in Vietnam following the Agreement has gotten a lot of attention In order to export Vietnamese vegetables and fruits sustainably, it is necessary to focus on quality and specifications fruit and vegetable preservation Moreover, it is necessary to constantly apply technology to enrich the product category In addition to fresh fruit, dried fruit and fruit juice, there must be more variety than other forms of processing to suit the needs and markets hospitality of a large number of international customers everywhere 16 Conclusion and recommendations The EU - Vietnam Free Trade Agreement (EVFTA) has provided the Vietnamese fruits and vegetables sector with favorable opportunities for promoting export growth, while also posing challenges in terms of the implementation of the agreement Prior to the EVFTA, Vietnamese fruit was more costly in the EU than its rivals, but importers are selecting Vietnamese imports due to tariff reductions after the Agreement's implementation The tax breaks provided by the Vietnam-EU Free Trade Agreement (EVFTA) provide Vietnamese fruits and vegetables a major pricing advantage in the EU import market, especially when compared to those from other non-EU FTA nations such as Thailand, China, Malaysia, and Indonesia However, at the moment, Vietnam's export of processed fruits and vegetables accounts for less than 19% of total export value of vegetables and fruits, so if these products not increase rapidly, the fruit and vegetable sector is likely to miss out on a sizable portion of the tax benefits that EVFTA provides EU import regulations for food products in general and vegetables in particular are very strict and not easy to meet While Vietnam's fruit and vegetable products are mainly produced by small households and farms, knowledge and ability to practice green and clean production processes to ensure compliance with EU standards are still very limited regime Moreover, detailed EU import regulations can change quite often, requiring manufacturers and exporters to constantly update The EU's sanctions for food safety and biosecurity violations are very strict Goods found to be in breach of mandatory EU import requirements are at risk of forcible return or on-site destruction EU consumers have very high requirements for the quality and appearance of products Meanwhile, many Vietnamese fruit and vegetable products have not yet ensured stability, consistency in quality and are often limited in terms of form, design, type, or lack of understanding/little attention to the point of view of aesthetics America of the EU Besides, not many Vietnamese fruit and vegetable enterprises can meet the additional requirements of EU customers such as certifications on safe growing and processing processes, GlobalGAP, HACCP EU customers are very interested in social issues such as labor, environment, while many Vietnamese businesses may not be interested in these issues Europe prefers processed products, so in order to increase the quantity of goods as well as export turnover, the fruits sector needs to focus on strongly developing the processing industry in the coming time Specifically, Vietnam's tropical fruit products are very welcome in Europe but the geographical distance makes it difficult to transport and preserve fresh produce Therefore, the development of post-harvest preservation and processing technologies is the "golden key" to help Vietnamese fruits penetrate the EU market, especially in the context of the tax rate of 85.6% of processed fruit and vegetable products from Vietnam to the EU having been reduced to 0% once EVFTA came into effect Recommendations to enterprises processing and exporting fruits and vegetables The analysis shows that the EU fruit and vegetable market is very potential for Vietnamese fruit and vegetable enterprises However, the market also has a lot of strong competitors, so in order to approach and develop sustainably in this market, fruit and vegetable exporters, 17 especially new ones, need a strategy effective competitive strategy for its products Here are some suggested solutions to improve the competitiveness of Vietnamese fruit and vegetable products when exporting to the EU market: Market and consumer tastes research: EU consists of 27 member countries, consumers in each member country may have different needs and tastes Therefore, fruit and vegetable exporters need to carefully understand the needs and tastes of consumers in each EU member market In particular, it is necessary to pay attention to the niche markets in which there are not many competitors, and businesses can penetrate more easily Focus on building brands and promoting products: This is the problem Vietnamese fruit and vegetable enterprises often pay little attention With the EVFTA, Vietnam has 20 products that are automatically protected by geographical indications without having to go through the procedures to apply for GI protection according to EU regulations Businesses need to take advantage of this rare opportunity to promote the brands of related products to EU consumers, thereby enhancing the value and competitive effectiveness of these products Applying clean and safe vegetable and fruit production processes: Although not a mandatory import regulation, the GlobalGap standard has been almost a common standard for vegetables and fruits imported into the EU that most people don't know Any EU purchase will require it Therefore, to be able to export vegetables and fruits to this market area, Vietnamese businesses need to invest in applying GlobalGap standards for growing areas to achieve this certification In addition, EU importers may require additional types of certifications that Vietnamese fruit and vegetable exporters need to learn to fully satisfy Investment in fruit and vegetable production and processing technology: Processed fruit and vegetable products are considered to have the greatest opportunity from the EVFTA due to the high demand from the EU, the relatively high EU tariffs currently applied, and the EVFTA will help eliminate these taxes for Vietnam However, Vietnam's fruit and vegetable processing industry is still limited, product categories and designs are still poor Therefore, processing enterprises need to increase investment in technology, machinery and equipment to improve competitiveness so that Vietnam's processed fruit and vegetable products can access the EU market and take advantage of the EVFTA In addition, because EU importers often have additional requirements, exporters need to discuss specifically with importers to find out their requirements to consider and calculate the ability to meet them as well as costs are incurred, and plan for implementation (especially if response requires adjustment of the manufacturing or processing processes involved) At the same time, businesses can also actively learn the requirements of potential customers, so that they can proactively adjust, thereby looking for new opportunities 18 References Võ, T., Lê Quỳnh, H and Hoàng Thu, H (2018), Effects of EVFTA on Vietnam’s apparel exports: An application of WITS-SMART simulation model, Journal of Asian Business and Economic Studies, 25(2), pp.4-28 Baker, P., Vanzetti, D and Pham Thi, L (2014), Sustainable Impact Assessment EU-Vietnam FTA, Ministry of Industry and Trade, pp.75-80 Cổng thông tin điện tử - Hội Nông Dân Việt Nam (2021), Việt Nam xuất tỷ USD rau quả, đến lúc cần hình thành sản xuất “có trách nhiệm” để vươn tầm giới [online] Available at: [Accessed 24 November 2021] Cổng thông tin điện tử Bộ NN PTNT (2021), Fruit and vegetable exports will reach billion USD [online] Available at: [Accessed 24 November 2021] Cổng thông tin điện tử Bộ NN PTNT (2021), Vegetables and fruits exports reached 3.26 billion USD in 2020 [online] Available at: [Accessed 24 November 2021] Creswell, J.W (2003), Research design, United States: SAGE Publications Creswell, J.W (1994), Research design: Qualitative and quantitative approaches, Thousand Oaks, CA: SAGE Publications Krippendorff, K (2004), Content analysis: An introduction to its methodology, 2nd edition, London:SAGE Erlingsson, C & Brysiewicz, P (2017), “A hands-on guide to doing content analysis”, African Journal of Emergency Medicine, Vol 7, pp 93 - 99 Publications Office of the European Union (2020) Official Journal of the European Union [Ebook] Retrieved December 2021, from https://eur-lex.europa.eu/legalcontent/EN/TXT/PDF/?uri=OJ:L:2020:186:FULL&from=EN#page=173 TRAN, D T et al (2021) “Impact of EVFTA on Trade Flows of Fruits between Vietnam and the EU,” The Journal of Asian Finance, Economics and Business Korea Distribution Science Association, 8(5), pp 607–616 doi: 10.13106/JAFEB.2021.VOL8.NO5.0607 TTWTO VCCI - (FTA) EVFTA ngành rau Việt Nam: Các quy định nhập vào thị trường EU Trungtamwto.vn (2021) Retrieved December 2021, from https://trungtamwto.vn/chuyen-de/18930-evfta-va-nganh-rau-qua-viet-nam-cac-quydinh-nhap-khau-vao-thi-truong-eu Agroberichtenbuitenland.nl 2021 Vietnam’s agriculture grows up thanks to EVFTA [online] Available at: [Accessed December 2021] 19 Nguyen, T., & Trinh, T (2020), “Impacts of EVFTA on the exportation of Vietnamsese agricultural products to the EU market” [Ebook], Journal of International Economics and Management, Vol 21 No baodientu.chinhphu.vn (2021), Tiềm lớn xuất rau sang EU [online] Available at: [Accessed December 2021] 20 ... that the importance and implications of the EVFTA Agreement must be considered by not only enterprises but also Vietnam and the EU as a whole 5.2 Impacts of EVFTA on Vietnam? ??s Fruits and Vegetables. .. of the Department of Trade - Ministry of Industry and Trade of Vietnam, General Statistics Office of Vietnam, data from International Trade Center, Report on import and export statistics of fruits. .. countries and territories around the world 3.3 Overview of Fruits and Vegetables Trade Flows 3.3.1 Overview of Vietnamese fruits and vegetables exports Export volume and value Vegetables and fruits contributed