ESSAY TOPIC OPPORTUNITIES AND CHALLENGES OF EVFTA FOR SEAFOOD ENTERPRISES IN VIETNAM

TON DUC THANG UNIVERSITY FACULTY OF BUSINESS ADMINISTRATION MAJOR: INTERNATIONAL BUSINESS ESSAY TOPIC: OPPORTUNITIES AND CHALLENGES OF EVFTA FOR SEAFOOD ENTERPRISES IN VIETNAM Lecturer: Le Duc Nha Group: – shift (Thursday) Ho Chi Minh City, 20th of November, 2021 0 LIST OF GROUP MEMBERS Full Name Student ID Role Nguyen Thi Hong Ngoc 719D0105 Leader Huynh Muoi Luy 719D0082 Secretary Huynh Thi Thanh Hoai 719D0105 Member Nguyen Mai Linh 719D0077 Member Hinh Van Ty 719D0221 Member Tran Kha Nhi 719D0124 Member Le Duong Thi Thanh Thanh 719D0155 Member 0 COMPLETION LEVEL EVALUATION TABLE Full name Student ID Huynh Thi Thanh Hoai 719D0052 Nguyen Mai Linh 719D0077 Huynh Muoi Luy 719D0082 Nguyen Thi Hong Ngoc Assignment of duties 719D0105 Tra Kha Nhi Le Duong Thi Thanh Thanh Chapter (2.2.2 & 2.3.1) 100% Signed - Chapter (2.1 & 2.2.1) 100% Signed - Chapter (2.3.2 & 2.4) 100% Signed - Chapter (1.2) Chapter Reviewing the whole content essay 100% Signed Chapter (1.1.2 & 1.1.3) 100% Signed - Chapter (2.5) 100% Signed - Introduction Chapter (1.1.1) Conclusion 100% Signed - Hinh Van Ty 719D0124 719D0155 719D0221 - Signature - Evaluation THANK YOU The first thing we want to say on behalf of the entire group is that this subject is important; it has provided us with a general overview of the worldwide business field This is a significant subject in university programs since it not only provides broad knowledge about the industry but also provides real data on business needs We have gathered a lot of lessons, positive experiences, and skills from this subject over the last few months We'd want to thank PhD Le Duc Nha, who taught and shared vital knowledge and experiences with us over the course of the study The professors' knowledge and fact-sharing stories will undoubtedly lay the groundwork for us to be successful in our future occupations However, preparing essay, report or presentations while researching will almost always result in errors As a result, we expect that our professors and classmates would comment and assess more so that we can progress in other disciplines Thank you for everything 0 COMMENTARY OF LECTURER - 0 TABLE OF CONTENTS INTRODUCTION CHAPTER 1:OVERVIEW OF KNOWLEDGE RELATED TO REGIONAL ECONOMIC INTEGRATION AND A GENERAL INTRODUCTION TO EVFTA 1.1 AN OVERVIEW OF KNOWLEDGE ABOUT REGIONAL ECONOMIC INTEGRATION (FTA) 1.1.1 Definition and levels of regional economic integration 1.1.2 The benefits and limitations of regional economic integration 1.1.3 Governance implications for businesses (in general) in the framework of economic integration between regions 1.2 OVERVIEW OF THE EVFTA AGREEMENT BETWEEN VIETNAM AND THE EUROPEAN UNION (EU) 1.2.1 General introduction about EVFTA Agreement 1.2.2 Trade cooperation relationship between EU and Vietnam CHAPTER 2: THE IMPACT OF THE EVFTA ON THE VIETNAMESE SEAFOOD INDUSTRY AN EXAMINATION OF THE OPPORTUNITIES AND PROBLEMS THAT BUSINESSES IN VIETNAM CONFRONT 10 2.1 OVERVIEW OF THE SEAFOOD INDUSTRY IN VIETNAM 10 2.2 OVERVIEW OF VIETNAM'S SEAFOOD PRODUCTION, CONSUMPTION AND EXPORT SITUATION 12 2.2.1 Before EVFTA comes into effect 12 2.2.2 After the EVFTA comes into effect 16 2.3 OVERVIEW OF SEAFOOD CONSUMPTION IN THE EUROPEAN MARKET 17 2.3.1 Import demand and the primary sources of seafood supply in Europe17 2.3.2 People's tastes and consumption trends before and after the COVID-19 pandemic 18 2.4 IMPACT OF EVFTA ON FISHERIES INDUSTRY IN VIETNAM 19 2.5 OPPORTUNITIES AND CHALLENGES THAT SEAFOOD ENTERPRISES IN VIETNAM ARE FACING WHEN PARTICIPATING IN THE EVFTA AGREEMENT 20 2.5.1 Opportunities 20 2.5.2 Challenges 21 0 CHAPTER 3: SOLUTIONS FOR VIETNAMESE SEAFOOD BUSINESSES TO TAKE FULL ADVANTAGE OF THE EVFTA AGREEMENT 23 3.1 VIETNAMESE SEAFOOD ENTERPRISES NEED TO FOCUS ON DEVELOPING DOMESTIC RAW MATERIALS 23 3.2 VIETNAMESE SEAFOOD ENTERPRISES NEED TO WORK CLOSELY WITH GOVERNMENT INSTITUTIONS IN EFFORTS TO IMPLEMENT EVFTA 23 3.3 ENTERPRISES NEED TO MAKE EFFORTS TO LEARN ABOUT EVFTA AND KNOW HOW TO APPLY TECHNOLOGICAL INNOVATION TO IMPROVE PRODUCT QUALITY 23 CONCLUSION 25 0 TABLE OF TABLE TABLE 1: SUMMARY OF LEVELS OF REGIONAL ECONOMIC INTEGRATION TABLE 2: MILESTONES IN THE RELATIONSHIP BETWEEN VIETNAM AND THE EU TABLE OF FIGURES FIGURE 1: OUTPUT OF A QUACULTURE AND FISHING IN VIETNAM (THOUSAND TONS) 10 FIGURE 2: A QUACULTURE PRODUCTION OF VIETNAM FROM 1995 TO 2020 11 FIGURE 3: FISHING PRODUCTION OF VIETNAM FROM 1995 TO 2020 12 FIGURE 4: VIETNAM SEAFOOD EXPORT FROM 1997 TO 2020 13 FIGURE 5: VIETNAM’S SEAFOOD EXPORT STRUCTURE BY REGION 2019 14 FIGURE 6: TOTAL SEAFOOD EXPORT TURNOVER OF VIETNAM AND TO THE EU 15 FIGURE 7: STRUCTURE OF VIETNAM’S SEAFOOD EXPORT INDUSTRY TO THE EU IN 2019 15 FIGURE 8: EU SEAFOOD IMPORTS FROM OUTSIDE THE BLOC IN 2020 - 2021 18 0 INTRODUCTION International business is a fundamental subject that provides us with knowledge about business issues such as globalization, foreign direct investment, international trade theories or entry strategies, and strategic alliances to help students accumulate foundational lessons for their own future work, such as supporting businesses and countries in the process of economic linkage, international market integration, and expanding cooperation relations Specifically, my group found the material of the chapter on regional economic integration to be particularly engaging during the research because the theories discussed were closely related to reality After studying this chapter, my team realized that the essence of regional economic integration was free trade agreements, which were created to remove barriers to most trade activities while also promoting trade exchanges between member countries, thereby creating opportunities for import and export enterprises as well as helping them improve their competitiveness and contribute to the country becoming rich Many free trade agreements have been reached between our country and other countries on a worldwide scale, including the ASEAN-Japan agreement, EVFTA, Vietnam-Korea, CPTPP, and others However, after much discussion, my team opted for the EVFTA because it not only serves the interests of the two parties (Vietnam and the EU), but it also provides significant prospects for our country to be linked into the global value chain and deepen international integration Furthermore, according to Mr Pham Binh Minh (Politburo member - Deputy Minister, Ministry of Foreign Affairs), Europe is Vietnam's second-largest export market, third-largest economic - trade partner, and fourth-largest foreign investor As a result, analyzing the EVFTA agreement for this essay allows my team to have a more thorough understanding of its laws, rules, opportunities, and problems for Vietnamese firms, resulting in some recommendations for making good use of this agreement However, we can see in the EVFTA agreement that there are numerous industries that will gain as soon as the EVFTA goes into force, such as rice, fish, vegetables, textiles, coffee, timber, etc milk, thus assessing all such content will be tough As a result, my group opted to focus on a certain area to simplify the analysis, and my group's choice was seafood because it is a vital industry in our country, with the benefits of Under natural conditions, Vietnam has the ability to grow the aquaculture and fishing industries and deliver their own products to the international market In summary, in this short essay, my group will summarize the outstanding knowledge learned in the subject of International Business, specifically the chapter on regional economic integration, from which to analyze the current situation as well as the 0 opportunities and challenges of the EVFTA to Vietnamese seafood enterprises The essay will be classified into three major chapters, which are as follows: Chapter 1: Overview of knowledge related to regional economic integration and a general introduction to EVFTA Chapter 2: The impact of the EVFTA on the Vietnamese seafood industry An examination of the opportunities and problems that businesses in Vietnam confront Chapter 3: Solutions for Vietnamese seafood businesses to take full advantage of the EVFTA agreement 0 Figure 3: Fishing production of Vietnam from 1995 to 2020 The data also reveals that, over the same time period, there was an increase by more than fourfold of Vietnam's fishing productivity, with an average yearly rise of 6% from 929 thousand tons to 3.85 million tons In conclusion, we can see that the growth of the fisheries industry not only helps enterprises financially but also contributes significantly to the economic sector of our nation 2.2 Overview of Vietnam's seafood production, consumption and export situation 2.2.1 Before EVFTA comes into effect First, according to data from the Vietnam Association of Seafood Exports and Producers, Vietnam's seafood export situation has essentially improved from 1997 to 2020 (before the EVFTA took effect on August 1, 2020), with an average annual growth rate of 10% from 758 million USD to 8.5 billion USD and a tendency to increase in the coming years We can see from the graphic below that fisheries are an important economic sector in our nation with a lot of promise in the future 12 0 Colombia, Ecuador, and Peru Although this arrangement complicates policy coordination among member countries, its strength is that it allows us to avoid complexities relating to rules of origin Next, the third level is known as the common market; at this level, participating countries will enjoy the preferential policies of two levels, as well as the novel feature of allowing free movement of elements of production such as capital and labor According to my team, such a single market was established in Europe in 1957 under the Treaty of Rome (effective January 1, 1958) by countries such as the Federal Republic of Germany, Italy, France, Belgium, the Netherlands, Luxembourg, or the common market of East and South Africa in 1994 The fourth level is termed economic union, and it includes levels one through three, as well as the extra characteristic of member countries using the same currency or having a similar monetary and fiscal policy The European Union (EU) has now been founded with the goal of boosting collaboration and connectivity among member nations in order to grow Europe into a world economic superpower And the final level is called political alliance; this is a level that includes all of the levels mentioned above, as well as a government/administrative state that links the forces together to form a unified block to achieve common political goals such as education culture, but there are no examples of0 this in reality at the moment 1.1.2 The benefits and limitations of regional economic integration Regional economic integration or participation in accords provides significant benefits to that country First, it stimulates the economy by removing tariff barriers for the majority of participating countries' exports, allowing firms to reduce costs and so improve competitiveness, people's living standards, and the country's prosperity Furthermore, it serves to strengthen the voice of the area (groups of member nations) since they can find an appropriate place in the new world order, thereby increasing their reputation, credibility, and development in the region and around the world Although there are numerous benefits to participating in regional economic integration, there are also drawbacks Firstly, a country may be in difficulties if its partner country is in problems This is especially evident in the last two years of the COVID-19 outbreak, when Vietnam has faced many challenges because China is a large partner that helps us export a lot of commodities, but it is also the source of numerous epidemics The second disadvantage is that people's right to self-determination is under threat as a result of regional economic integration, which has increased the possibility of national identity and traditional culture being undermined and overrun by foreign cultures We surely remember the event that the UK officially left the EU after 45 years of attachment on November 13, 2018, because they believed that the EU had strict regulations, that many people took advantage of the EU to immigrate illegally 0 permission, that the EU single currency isn't working, that their government is being overwhelmed, and that they don't want to survive annual contributions, which has huge consequences because Britain is one of the world's great powers 1.1.3 Governance implications for businesses (in general) in the framework of economic integration between regions Regional economic integration provides businesses with more and more opportunities to expand their market; through the signing and implementation of trade agreements, participating countries can expand their export markets to partner countries from which we can easily penetrate deeper into the global value chain bridge Next, it assists businesses in expanding the production value chain by allowing them to locate their company headquarters and processing factories in the agreement's partner countries, lowering the cost of transportation and production of goods, and especially allowing finished products to be brought to market quickly after being manufactured in the country where the head office is located However, businesses should understand that the more opportunities there are the more challenges For example, when an enterprise in this country participates in investment and production in the partner country, there are still other businesses with similar goals, and it is clear that less developed countries will suffer more negative consequences Enterprises with the same product line, as well as clients from developed countries that benefit from more advanced manufacturing techniques, have steadily dominated the market The competition from partner countries can be seen as very large and is always a risk that we can see, which is why businesses must make efforts to improve their competitiveness as well as improve the quality of their products/services so that they can still develop sustainably regardless of who they rely on 1.2 Overview of the EVFTA Agreement between Vietnam and the European Union (EU) 1.2.1 General introduction about EVFTA Agreement The EU-Vietnam Free Trade Agreement (EVFTA) is a new generation FTA between Vietnam and 28 EU member countries It is one of two agreements with the broadest breadth of commitments and the highest level of commitment from Vietnam The circumstances of this agreement are most likely when our country understands tha 0 many commodities imported and exported from Europe are subject to excessively high tax rates, resulting in considerable price increases, such as automobiles Tax rates in pas years were as high as 70%, therefore the EVFTA is seen as a complete, high-quality deal that benefits both Vietnam and the EU The EVFTA signing process can be divided into three key phases: the preparatory negotiating phase (from 2010 to 2017), the review and approval phase (from 2018 to 0 2019), and the current official period My team has concluded the following key milestones time in the signing procedure of this EVFTA agreement through the selfresearch process as follow: a) The preparatory negotiating phase (from 2010 to 2017): • The Prime Minister of Vietnam and the President of the European Union have agreed to begin discussions on the EVFTA Agreement in October 2010 • In June 2012, Vietnam's Minister of Industry and Trade and the EU Trade Commissioner officially confirmed the commencement of negotiations for the EVFTA Agreement • Vietnam and the EU completed negotiations and began a legal assessment in December 2015 in preparation for the signing of the Agreement • In June 2017, the two parties concluded the technical legal evaluation • In September 2017, the EU officially requested that Vietnam divide the discussion material into two separate accords, namely the free trade agreement (EVFTA) and the investment protection agreement (IPA) b) The review and approval phase (from 2018 to 2019) • Vietnam and the EU have legally agreed to split the two distinct agreements, completing the whole legal review process of the EVFTA agreement and agreeing on all of the elements of the IPA agreement in June 2018 • In August 2018, the IPA Agreement will have undergone a thorough legal assessment • On October 17, 2018, the European Commission formally approved the EVFTA and IPA • On June 25, 2019, the European Council approved the signing of the Agreement c) The current official period (2019 - now) • On June 8, 2020, the Vietnamese National Assembly ratified the EVFTA with 457/457 votes • On July 27, 2020, Prime Minister Nguyen Xuan Phuc spoke by phone with European Commission President Ursula von der Leyen • The EVFTA Agreement will go into force on August 1, 2020 Essentially, the EVFTA agreement's content consists of 17 chapters, two protocols, and several memorandums of understanding, with the four main parts mentioned being banking, insurance, telecommunications, and tax rates - this part being the most important because it has a significant impact on Vietnam's economy The agreement includes provisions for trade in goods, laws of origin, customs and trade sustainable development 0 1.2.2 Trade cooperation relationship between EU and Vietnam Since 1990, Vietnam and the European Union have had diplomatic ties The two sides are primarily interested in politics, economy, trade, investment, and development cooperation, as well as education, science, and technology Looking back on this voyage, we can observe that Vietnam-EU relations have expanded rapidly in both breadth and depth Since becoming global partners, the two sides have united, collaborated, and signed numerous agreements that benefit or create greater chances for the expansion of ASEAN-EU collaboration Several accords, such as the EU-Vietnam Partnership and Comprehensive Cooperation Agreement (PCA), the EVFTA and EVIPA agreements, the textile and garment agreement, and so on Table below allows us to reflect back on key concerns in Vietnam and the EU over the years: 0 Table 2: Milestones in the relationship between Vietnam and the EU (Source: Nhan Dan Newspaper) Mr Josep Borrell (Vice-President of the European Commission and High Representative of the EU) stated that the EU-Vietnam relationship has achieved remarkable achievements and exponential growth, with GDP per capita currently at $2,700 USD, total international trade at more than 550 billion USD, and trade relations at more than 50 billion USD This demonstrates that, in addition to the EU's support in many areas, Vietnam has had to make significant efforts, thanks to the economic reform of the Doi Moi strategy (Renovation) to achieve the success it has today 0 Furthermore, at the recent COP26 conference, Prime Minister Pham Minh Chinh met with the President of the European Commission (EC), Ursula von der Leyen, and he emphasized that the EU is one of the world's leading partners, strategic partner role in regional and international security, peace, economic development in domestic and international In response to that affirmation, Ms Ursula von der Leyen, President of the European Commission (EC), stated that the EU will continue to support Vietnam through two channels, direct vaccine export through the COVAX mechanism, and directed EU agencies to actively consider Vietnam's proposal to remove the IUU yellow card declaring illegal, undeclared, and unregulated seafood Thus, we anticipate that in the future, there will undoubtedly be more tremendous successes between our country and the EU, not only on the aforementioned problems but also on other matters linked to climate change and sustainable development 0 0 CHAPTER 2: THE IMPACT OF THE EVFTA ON THE VIETNAMESE SEAFOOD INDUSTRY AN EXAMINATION OF THE OPPORTUNITIES AND PROBLEMS THAT BUSINESSES IN VIETNAM CONFRONT 2.1 Overview of the seafood industry in Vietnam Vietnam in general has the advantage of a dense river system with a coastline of more than 3,260 kilometers with an exclusive economic zone of more than million square kilometers, all of which provide several commercial prospects to expand fishing and aquaculture operations in the fisheries industry Figure 1: Output of Aquaculture and Fishing in Vietnam (thousand tons) Looking at the graph above from VASEP, Vietnam's seafood output witnessed a considerable increase at an annual rate of 8% year after year, in which aquaculture production contributes for 54% of total output, while fishing accounts for 46% According to the Directorate of Fisheries report, the value of seafood production climbed by 2.79 percent in the first six months of 2020, with total output estimated at 3.86 million tons, a rise of around 1.6 percent over the same period last year In the year 2019, fishing output reached 1.88 million tons and aquaculture production reached 1.97 million tons, up 1.4% and 1.8% respectively 0 10 0 Figure 2: Aquaculture production of Vietnam from 1995 to 2020 Looking at the graph above, it is apparent that Vietnam's aquaculture production rose dramatically from 1995 to 2020, with an average yearly growth of 10% from 415 thousand tons to approximately 4.6 million tons Aquaculture for export accounts for 95 percent of total pangasius output and 80 percent of shrimp production, primarily in the Mekong Delta 11 0 Figure 3: Fishing production of Vietnam from 1995 to 2020 The data also reveals that, over the same time period, there was an increase by more than fourfold of Vietnam's fishing productivity, with an average yearly rise of 6% from 929 thousand tons to 3.850million tons In conclusion, we can see that the growth of the fisheries industry not only helps enterprises financially but also contributes significantly to the economic sector of our nation 2.2 Overview of Vietnam's seafood production, consumption and export situation 2.2.1 Before EVFTA comes into effect First, according to data from the Vietnam Association of Seafood Exports and Producers, Vietnam's seafood export situation has essentially improved from 1997 to 2020 (before the EVFTA took effect on August 1, 2020), with an average annual growth rate of 10% from 758 million USD to 8.5 billion USD and a tendency to increase in the coming years We can see from the graphic below that fisheries are an important economic sector in our nation with a lot of promise in the future 12 0 ... THE OPPORTUNITIES AND PROBLEMS THAT BUSINESSES IN VIETNAM CONFRONT 10 2.1 OVERVIEW OF THE SEAFOOD INDUSTRY IN VIETNAM 10 2.2 OVERVIEW OF VIETNAM'' S SEAFOOD PRODUCTION, CONSUMPTION AND. .. Minister of Vietnam and the President of the European Union have agreed to begin discussions on the EVFTA Agreement in October 2010 • In June 2012, Vietnam'' s Minister of Industry and Trade and the... linked to climate change and sustainable development 0 CHAPTER 2: THE IMPACT OF THE EVFTA ON THE VIETNAMESE SEAFOOD INDUSTRY AN EXAMINATION OF THE OPPORTUNITIES AND PROBLEMS THAT BUSINESSES IN