Abstract: The EVFTA Agreement, a free trade agreement between the European Union and Vietnam, has officially taken effect since August 2020, having a strong impact on Vietnams import and export turnover, especially for agricultural products. products symbolic items of the country. One of the famous and successful agricultural products after the EVFTA is lychee, a particularly delicious fruit that has impressed markets on all continents. This study will refer to the lychee export market to European countries under the impact of the EVFTA Agreement, especially in the period of 10 years 20122022, the qualities, opportunities, and challenges and offer some practical solutions to help the lychee export industry. better development. Data is collected from a large source of information from articles, research articles, articles, forums on this topic. When analyzing data, the main method is qualitative research. In general, the lychee export industry has made great strides, going beyond traditional markets like China to penetrate more demanding markets in Europe. However, the standards from partner countries are very strict, requiring the cultivation and packaging process to be improved, strictly managed and maintained for a long time. To promote development requires government support in trade policies to protect producers and consumers as well as litchi farmers. Besides, packaging and delivery must also be strictly implemented between farmers and exporting companies. Keywords: EVFTA, EU, Vietnam, Vietnam’s lychees
FOREIGN TRADE UNIVERSITY FACULTY OF FINANCE & BANKING RESEARCH ON VIETNAM’S LYCHEES EXPORT TO THE EUROPEAN UNION(EU) IN THE CONTEXT OF EVFTA P a g e | 26 Abstract: The EVFTA1 Agreement, a free trade agreement between the European Union and Vietnam, has officially taken effect since August 2020, having a strong impact on Vietnam's import and export turnover, especially for agricultural products products - symbolic items of the country One of the famous and successful agricultural products after the EVFTA is lychee, a particularly delicious fruit that has impressed markets on all continents This study will refer to the lychee export market to European countries under the impact of the EVFTA Agreement, especially in the period of 10 years 20122022, the qualities, opportunities, and challenges and offer some practical solutions to help the lychee export industry better development Data is collected from a large source of information from articles, research articles, articles, forums on this topic When analyzing data, the main method is qualitative research In general, the lychee export industry has made great strides, going beyond traditional markets like China to penetrate more demanding markets in Europe However, the standards from partner countries are very strict, requiring the cultivation and packaging process to be improved, strictly managed and maintained for a long time To promote development requires government support in trade policies to protect producers and consumers as well as litchi farmers Besides, packaging and delivery must also be strictly implemented between farmers and exporting companies Keywords: EVFTA, EU, Vietnam, Vietnam’s lychees, export Introduction 1.1 Reason for choosing topic Vietnam has long been known for its luscious lychees, a popular fruit that is enjoyed not only in its home country but around the world In recent years, Vietnam has emerged as a major player in the global lychee market, with the country's export volumes steadily growing year by year With the recent signing of the European Union-Vietnam Free Trade Agreement (EVFTA), Vietnamese lychee exporters are poised to take advantage of new opportunities to expand their reach into the EU market This agreement marks a significant milestone for Vietnam's lychee industry, as it opens up new avenues for growth and development in an increasingly competitive global marketplace In this context, it is important to explore the potential benefits and challenges facing Vietnam's lychee exporters as they navigate the complex landscape of international trade and global supply chains The European Union (EU) has long been a highly attractive market for agricultural exports, and with the recent ratification of the European Union-Vietnam Free Trade Agreement (EVFTA) in August 2020, a new era of opportunity has arisen for Vietnam's lychee industry Known for its succulent and aromatic lychees, Vietnam has cultivated a strong reputation for producing high-quality, delicious fruits, which have garnered significant EVFTA: EU-Vietnam Free Trade Agreement P a g e | 26 demand in both domestic and international markets As a result, Vietnam's lychee export sector has experienced substantial growth in recent years, with the potential for even greater expansion into the European market under the auspices of the EVFTA This comprehensive trade agreement, which aims to eliminate tariffs and non-tariff barriers, will undoubtedly provide Vietnamese lychee exporters with a competitive edge and facilitate access to a wider consumer base within the EU However, it is important to consider the various challenges that this new context may present, such as navigating complex regulatory frameworks, maintaining stringent quality standards, and addressing environmental and social concerns In light of these factors, this discussion seeks to analyze the potential implications and opportunities for Vietnam's lychee industry as it embarks on this exciting new chapter of exportation to the EU under the EVFTA In the scope of this research, the author team will analyze lychee export during the period before and after the EVFTA agreement was signed (10 years from 2012 to 2022), evaluating challenges, predicting near future prospects, then some practical solutions for improvement and further promotion in international trade 1.2 Objective of the study To provide a more complete picture of the impact of the EVFTA on the export turnover of Vietnamese lychee and the Vietnam agriculture sector in general, this research is focused on analyzing the opportunities and challenges that the Vietnam's lychee export faces under the EVFTA It also investigates the constraints and problems of the current context and suggests ways to improve the promotion of Vietnam's lychee exports to the EU There are parts to this, which are arranged as follows: Introduction Literature review Methodology Theoretical basis Discussion Recommendations Conclusion References Literature review Participating in new generation Free Trade Agreements (FTAs) has been creating many opportunities for Vietnamese agricultural products to enter potential markets The EU is currently Vietnam's third largest trading partner and a rapidly growing agricultural product import market after the EVFTA agreement was put into effect in August 2020 According to Maliszewska et al (2019), the EVFTA2 Agreement will have a great impact on Vietnam, even surpassing the Comprehensive and Progressive Agreement for Trans-Pacific EVFTA: EU-Vietnam Free Trade Agreement P a g e | 26 Partnership (CPTPP)3 Although Vietnam's agricultural product exports to the EU are 5.4% lower than in 2019 due to the impact of the COVID-19 pandemic, exports to the EU in general tend to direction improvement, reflected in the growth rate of some items shallow production into the EU increased markedly.According to data from the Ministry of Industry and Trade, in August 2020, the export turnover of agricultural products to the EU increased by 11.9% compared to July 2020 In September 2020, the value of agricultural exports to the EU increased by 35% compared to August 2020 On average, in the period from August 2020 to June 2021, the value of agricultural exports to the EU market has grown by 10% to reach 486 million USD.2021 is also an important milestone for Vietnamese fruit and vegetable products, such as lychee, which has been introduced into a series of supermarket food chains in the Netherlands, Belgium, France and Germany.(Customs Newspaper 2021) Two famous Vietnamese lychees come from two provinces, Bac Giang and Hai Duong The figures for 2022 are published in the forum "Vietnamese Lychees go global - Vietnam's lychee reaches out to the world organized by the Ministry of Information and Communications in conjunction with the two provinces of Bac Giang and Hai Duong, the output in Bac Giang is about 180000 tons, Hai Duong with a smaller area, the output is expected to be 60000 tons So far, Duong lychee has been exported to over 20 countries, including some markets such as Japan, the US, and Europe, accounting for about 10% of the province's export output, 40% of exports to the domestic market traditions such as China, Laos, Cambodia Bac Giang province's export output accounts for about 40% to markets such as Japan, the United States, and the EU Lychee is produced in the direction of VietGap, GlobalGAP, increasing standards The Chinese market is a market that accounts for a large proportion of lychee export turnover, but since the Covid-19 pandemic, China has taken measures to prevent and control the epidemic, causing certain difficulties for export activities There is a phenomenon of stopping customs clearance of many agricultural products, so finding and developing new markets is essential, ensuring the stability and growth of lychee exports, and keeping the reputation of quality of Vietnamese Lychees To summarize, lychee export in Vietnam has an optimistic prospect Lychee's export potential in international trade and several suggestions are also included in existing studies However, there is a scarcity of research that shows the condition of lychee export in a long period, which, owing to the scatterings of data Besides, the solutions suggested are relatively theoretical Hence, this report would combine the findings of other studies while selecting for the best, with the addition of accumulated trade-related knowledge to give a more overall look; as well as more practical suggestions for development Methodology 3.1 Type of research CPTPP: The Comprehensive and Progressive Agreement for Trans-Pacific Partnership P a g e | 26 In this paper, we mainly apply the Qualitative method Qualitative research is a research method that collects non-numerical data Typically, it goes beyond the information that quantitative research provides because it is used to gain an understanding of underlying reasons, opinions, and motivations The strengths, weaknesses and challenge and opportunity are included in this research through SWOT model, which can be supportive for later on this same topic. 3.2 Data collecting and research A majority of data are collected via articles, reports, previous research and paper from verified sources Afterward, the data was sorted and analyzed to select out the core idea Qualitative research is open to non-numerical data, so several speeches and opinions were cited and analyzed The research team may encounter two main obstacles while processing these types of content The first one is that they are not as uniformed as a survey with a questionnaire or a direct interview with the farmers and exporting agencies, which makes it harder to see the general trend or view The second one is the authors’ subjective point of view as we may have false assumptions due to lack of field experience Nevertheless, the new data that was reduced from the primary source is guaranteed to provide an insightful and compact view Theoretical basis 4.1 EVFTA Participation in new generation Free Trade Agreements (FTAs) has created numerous opportunities for Vietnamese agricultural products to enter potential markets Following the implementation of the EVFTA agreement in August 2020, the EU is now Vietnam's third largest trading partner and a rapidly expanding agricultural import market EVFTA stands for European-Vietnam Free Trade Agreement, is an agreement signed among 27 member countries of the European Union and Vietnam EVFTA, along with TransPacific Partnership Agreement (TPP) are the two FTAs with the widest scope of commitments and the highest level of commitment of Vietnam so far On December 1, 2015, EVFTA officially ended negotiations and on February 1, 2016, the text of the agreement was announced On June 26, 2018, EVFTA was split into two agreements, one is the Trade Agreement (EVFTA), and the other is the Investment Protection Agreement (EVIPA); at the same time officially ending the legal review process for the EVFTA Agreement and the two Agreements were signed on June 30, 2019 ready RoK, 4.2 The concept of EVFTA The EVFTA is a comprehensive, high-quality agreement that balances benefits for both Vietnam and the EU, thereby contributing to the bilateral relationship's strengthening in a strategic, comprehensive, and long-term direction The EVFTA helps EU businesses get for major shifts in the global supply chain in the long run For instance, the rule of origin under the EVFTA may encourage Vietnam to reorganize its textile production industry to reduce its heavy reliance on Chinese raw materials (58 percent), and benefit more from the agreement Regarding the regionalization of supply chains, the EVFTA and the other free trade agreements that the EU has signed with major Asian economies, namely Japan, the and Singapore, together give the EU more institutional flexibility to participate in the P a g e | 26 increasingly integrated intra-Asian market In the textile sector, the EU’s fully liberalized exports to Vietnam under the EVFTA give it an advantageous position in exporting luxury and technical textile materials to meet the fast-growing Asian demand The EVFTA should create more investment opportunities in the Vietnamese logistics sector, which matches Vietnam’s goal to become a regional logistics hub by 2025 The FTA and the EU-Vietnam Investment Protection Agreement allow the EU to offer various maritime transportation services, including shipping agent services, cargo/container handling, storage, and warehousing.The EU-Vietnam Free Trade Agreement is expected to boost Vietnamese exports to the EU by 42.7 percent by 2025, according to Vietnam’s Ministry of Planning and Investment The European Commission predicts a 29 percent increase in EU exports to Vietnam by 2035 In terms of market opening, this Agreement will provide significant opportunities for the agricultural sector by gradually reducing the tax on a variety of agricultural products exported to the EU to 0% over a short time frame Specifically, once the Agreement takes effect, 70.3% of Vietnam's export turnover to the EU will be tax-free After seven years, 99.7% of Vietnam's export turnover will be tax-free; the remaining items will be imported into the EU under a tariff quota with a 0% import tax.There are also several agricultural products whose tariffs will be completely removed after 3-5 years no According to Prime Minister of Agriculture and Rural Development Nguyen Xuan Cuong, other non-ratified FTA has received as much attention and drastic implementation as the EVFTA Other agreements used to be signed, completed, and converted automatically, but times have changed, and careful planning is now required The agricultural sector, in particular, benefits greatly from the EVFTA, with most tax groups reduced to 0% in the shortest route Making full use of the benefits from the EVFTA, Vietnam has exported the first batch of Thieu lychees to Europe on June 7th, 2021 and many more batches have been exported since then. 4.3 Demand for lychees in Europe Figure EU imports of lychee, tamarinds, cashew apples, jackfruit, passion fruit, saphodilla plums, carambola, and pitahya P a g e | 26 Every year, Europe imports about 20,000 to 25,000 tonnes of lychees Many of them come by sea through Zeebrugge port, which makes Belgium a key player in the distribution and re-export of lychees to France But in 2017, France got more direct supply and Belgium imported only 7,000 tonnes, compared to 14,000 tonnes in 2016 This data indicates a shift in logistics and a more direct trade with France For exporters, it is crucial to understand that France drives most of the demand for lychees in Europe, and that there is also a market for lychees that are shipped by air Figure Main European importers of lychees, tamarinds, cashew apples, jackfruit, saphodila plums, passion fruit, carambola, and pitchaya from non-EU countries The demand for lychee in the European Union is growing, as European consumers have a growing interest in new flavours and fruit varieties The import value of exotics such as fresh lychees, passion fruit, carambola and pitahaya (HS 08109020) increased 40% over the past five years to 142 million euros in 2019 Other exotic fruit (HS 08109075), mainly pomegranates, experienced a growth of 21% and reached a total value of 202 million euros in 2019 According to the chart above, it can be seen that Netherlands and Germany are the two countries with the largest import volume of lychees (~13 thousand tons) in the 4-year period from 2013 to 2017, before the EVFTA agreement was signed Along with that, the EU also has countries such as France and Germany that start importing this type of fruit The origin of lychee imports of the EU in this period is mostly from Madagascar and China, therefore, by taking advantage of the benefits in this agreement and the proposals that we make below, Vietnam will be able to compete with the current lychee importing countries for the EU, at the same time, create a solid foundation for the future of exporting lychees to the world of our country Discussion 5.1 Overview of Vietnam’s lychee export from 2012 to 2022 5.1.1 Current status of lychee consumption: Domestic consumption Lychee is one of the popular fruits and brings high economic value in our country It is widely grown in the Northern provinces, especially Hai Duong and Bac Giang with Thieu’s lychee. P a g e | 26 Figure The main area for growing lychees To avoid becoming reliant on a single market, small and local businesses are aiming to open more consumption channels, promote the domestic market, and focus on modern distribution channels on e-commerce platforms Lychee trading activities are carried out by enterprises, establishments that purchase and pack lychees through distribution channels and focal points in cities such as Hanoi's Southern Wholesale Market Business Center, Long Bien wholesale market, and Ho Chi Minh City's wholesale market specializing in fruit and vegetable distribution business It is also available in the majority of domestic supermarket chains, including Hanoi Trading Company, Saigon Trading Corporation, However, due to the abundance of fruits in the Vietnamese market, lychee faces stiff competition in the domestic market Long-term weather-saving climate change has impacted lychee growth and development in 2022, causing litchi fruit to ripen faster than usual in a period of 15-20 days However, the province directed all levels and branches to well in project work, specifically calculating the output and time frame for harvesting litchi teas; market forecasting work was soon studied, organized, and evaluated thoroughly and methodically; The Covid-19 epidemic management is interested in researching why and why it does not occur in the community, ensuring disease safety from production to transformation to consumption; the application of science and technology in the farming process is interested in promoting product quality improvement, with the consistent and transparent goal of achieving exceptional quality Despite facing difficulties and significant pressure in exporting, lychee prices remained stable in the middle of the season, with the average lychee selling price for the entire P a g e | 26 season estimated at 22,100 VND/kg (an increase of 2,300 VND/kg compared to 2021) Total revenue from lychee and ancillary services is estimated at 6,785 billion (approximately the revenue of recent years; 6,830 billion dong in 2021, 6,821 billion dong in 2021), of which revenue from lychee reached approximately VND 4,411 billion (VND 137 billion higher than 2021), and revenue from ancillary services and activities reached approximately VND 2,374 billion (VND 173 billion lower than 2021 due to fabric output) In 2022, the shortage is more than 15,000 tons lower than in 2021) Export consumption Lychee has been commercially available in over 30 countries and regions and is exported to fastidious markets such as the United States, Italy, Japan, and Singapore, as well as some new markets such as New Zealand, Australia, and Canada, in addition to the traditional export markets of Thailand, Indonesia, Malaysia, the Netherlands, and Taiwan China, the United States, Australia, Japan, the Republic of Korea (RoK), the Middle East, and a few Southeast Asian countries were among the major importers, with the Japanese and European markets expanding in terms of scale and volume with impressive export volume and growth rates containers will be exported by sea Furthermore, units must overcome the problem of Covid 19 virus on lychee and containers The lychee market is expanding because people in emerging and developing countries all over the world want more fresh food.Favorable government initiatives and rising trade from major producers drive the market's expansion Jam, juice concentrates, canned lychee, dried lychee, and other products are also in high demand Vietnam signed an agreement with lychee farmers to export lychees to Japan at the end of 2019 Figure Export consumption of Vietnam's lychee Natural disasters, animal and plant diseases, and human diseases pose significant requirements and challenges for the export of agricultural products in general, and lychee in particular, in the context of new-generation free trade agreements signed and implemented; importing countries introduce increasingly stringent regulations on food safety and animal and plant quarantine; and natural disasters, animal and plant diseases, and human diseases pose significant requirements and challenges for the export of P a g e | 26 agricultural products in general, and lychee in particular As a result, businesses improve their capacity and awareness of market technical regulations and SPS requirements; shift the approach to food safety from final product safety inspection to monitoring at every stage of the production chain; According to the Ministry of Agriculture and Rural Development, in 2021, total lychee output exceeded 199,500 tonnes Of this volume, over 61,000 tonnes were early-ripening lychees and the rest were from the main crop. 5.1.2 Export revenue Lychee has long been a staple of Vietnamese cuisine, and it unquestionably provides numerous benefits to the Vietnamese economy It is an important export product for the fruit and vegetable industry Although it contributes significantly to the Vietnamese economy in terms of value and income, prices and earnings fluctuate from time to time It is expected to grow and develop quickly in the coming years Unfortunately, due to Covid-19, demand for lychee has decreased slightly 2021 and the first two months of 2022 is such a tough period of time when we had to face up with the pandemic of COVID-19 COVID-19 has had a significant impact on lychee exports to China and other countries When the road system became congested, many units and enterprises diverted to the natural sea route, raising the cost of exporting and reducing exporters' and lychee farmers' profits As a result, the Ministry must have and develop a plan to select the official method of exporting goods via sea and rail Despite facing export difficulties, the 2022 lychee crop still enjoyed high prices Furthermore, the Ministry of Industry and Trade has directed and supported Hai Duong and Bac Giang provinces in the process of popularizing, promoting, and connecting lychee consumption in collaboration with the Ministry of Agriculture and Rural Development and specialized agencies Lychee has a wide range of prices due to differences in types, markets, and quality Lychee export prices are stable at a high level, ranging from 30-55,000 VND/kg, the selling price of lychee in some foreign markets such as Japan, the United States, Australia, and some EU countries (France, Germany, Italy, Belgium, Netherlands ) has a high selling price and is suitable for consumption, with prices ranging from 350 to 550,000 VND/kg depending on the market Lychee is highly valued by consumers in potential and demanding markets for its high quality and well-received P a g e 10 | 26 Group Description Sour lychee Tall tree, big leaves, big leaf blade When flowering, the inflorescence from stalk to flower bud is covered with black hairs The fruit usually ripens in April and early May When ripe, the skin is bright red, the skin is thick, the seeds are large, the pulp is thin and very sour, the pulp rate accounts for 60-65% of the fruit weight This type of lychee is mainly grown in midland and mountainous provinces such as Phu Tho, Ha Tay, Tuyen Quang, Quang Ninh Sweet lychee The tree has a raspberry-shaped canopy 10-15m high, small leaves, long glossy leaf blades, and good drought tolerance When flowering, the inflorescences are not covered with black hairs but are yellowwhite, in the nine main seasons (June) The fruit skin is thin, the seeds are small, the pulp is thick, the edible rate is 70-80%, the pulp is more fragrant and sweeter than the two groups of litchi above Medium sized lychee Average in size, with a canopy that is usually 5-7m wide, egg-shaped leaves, large leaves, strong growth, and inflorescences that lack black hairs, but flowers that grow sparser than canvas The fruit matures later than sour litchi but earlier than Thieu’s lychee Table Types of Vietnamese lychee 5.1.3 Non-tarriff barriers Tax policy: Lychee is regulated under HS code: 08109020, is an item with no export tax, and no VAT on exports Import of fresh lychees from third countries to the EU must conform to general marketing standards for Fresh Fruits and Vegetables, and Vietnam is not an exception We must adhere to the following guidelines: Quality The general marketing standards for fresh fruit and vegetables contain minimum quality requirements Products should be: Intact, clean and sound; (Practically) free from pests, damage, abnormal external moisture, internal browning; In a condition to withstand transport and handling These requirements are consistent with the CODEX Alimentarius standard for Litchi Lychees must be sufficiently developed and mature to withstand transportation and arrive in good condition at their destination Lychees are divided into three quality categories: "Extra Class" products are of the highest quality Products in this category must have the typical shape, development, and coloration of the variety or varietal type Extra Class produce is defect-free, with the exception of very minor superficial flaws Slight flaws should not affect the overall appearance, quality, keeping quality, or presentation in the package Class I lychees are of high quality and can only have minor flaws (slight misshaping, coloration, or skin flaws not exceeding 0.25 cm2) Lychees that meet the minimum requirements but not qualify for Class I or Extra Class can enter the EU market under the "Class II" classification The market for Class II produce, on the other hand, is extremely limited Skin P a g e 12 | 26 damage, for example, is permissible in Class II lychees if it does not exceed 0.5 cm2 Size and color The maximum equatorial diameter of the fruit determines size according to the CODEX Alimentarius standard for Lychees The "Extra" Class has a minimum size of 33 mm Class I and II have a minimum size of 20 mm Each package may have a maximum size range of 10 mm between fruits Size tolerances for all classes are 10% in terms of the number or weight of lychees that not meet the minimum size requirements In all classes, the diameter cannot be less than 15 mm, and the maximum size range is 10 mm Size is usually specified as a range in millimeters Thailand, for example, has developed agricultural standards that indicate size codes (1-3) for different varieties Lychees can range in color from pink to red when untreated, and from pale yellow to pink when fumigated with sulfur dioxide Packaging Usually in to 2.5kg boxes Larger boxes may also be used, especially if the produce is repackaged in Europe Check the desired packaging with your customer Each package's contents must be uniform, containing only lychees of the same origin, variety or varietal type, quality, size, and color The visible part of the package's contents must be representative of the entire contents To ensure proper handling, shipping, and preserving of the lychees, the containers must meet quality, hygiene, ventilation, and resistance standards Packages (or lots for produce presented in bulk) must be free of all foreign matter and odor Labeling Consumer package labeling must adhere to the rules and regulations in force in the European Union Regulation (EU) No 1169/2011 establishes general principles, requirements, and responsibilities governing food information, specifically food labeling Toxic ink or glue cannot be used on labels Each package (non-retail package) must bear the following information, legibly and indelibly marked on the same side, and visible from the outside: Identification: Name and address of exporter, packer and/or dispatcher Identification code (optional); The nature of the product: Name of the product if the contents are not visible from the outside Name of the variety or commercial type (optional); Origin of product: Country of origin and (optional) district where grown or national, regional or local place name; Commercial identification: class, and optionally size (code), and/or net weight; Traceability code; Official Inspection Mark (optional) Furthermore, if the produce is not visible from the outside, each retail package must be labeled with the name of the produce and may also be labeled with the name of the variety or varietal type In the case of private label products, any certification logo or retailer logo may be included on the labeling if requested 5.2 Vietnam’s lychee export situation before and after EVFTA came into effect Before EVFTA, Vietnam exported around 100,000 tonnes of fresh lychees worth more than $30 million to China, Japan, Australia, the EU and the US Also, The EU imposed P a g e 13 | 26 an import tariff of 8.5 percent on Vietnamese lychees Vietnam faced challenges such as high transport costs, strict food safety and phytosanitary standards, and limited preservation technology After EVFTA, the percentage of Vietnamese exporters using certification of origin to reap preferential duties provided by the EVFTA expanded from 14.8 percent in the first year to 20.7 percent in the second year The EVFTA provides an advantage for Vietnamese fruits by reducing or eliminating import tariffs compared to other countries that not have an FTA with the EU Prior to the implementation of the EVFTA, Vietnamese fruits and vegetables exported to the EU benefited from preferential tariff rates under the Generalized System of Preferences (GSP), but they remained relatively high at 10-20% As of August 1, 2020, approximately 94% of the total 547 tax lines for fresh and processed fruits and vegetables in the EU, including many competitive export products from Vietnam, were reduced to 0% The EVFTA tariff preferences have increased the export of many Vietnamese goods to the EU, including fruits and vegetables As a result, according to Eurostat, Vietnam became the 59th largest supplier of fruits and vegetables to the EU in the first 11 months of 2022, with an estimated value of $235 million, up nearly 8% in volume and 35% in value from the same period in 2021. The EVFTA is viewed as an opportunity for Vietnamese agricultural products to deeply integrate into a large, high-priced market, but it also poses a challenge that will necessitate even more changes in production and export businesses in order to achieve sustainable export growth to this market However, with tariff advantages and increasing demand in the EU for high-quality and diverse agricultural products, Vietnamese fruit and vegetable exports are expected to grow in the coming years 5.3 Market structure Vietnam’s lychee export achieved a remarkable success in 2022, making more than 188 million USD in revenue This amount accounted for 19% of the world’s total lychee trade volume, which showed the high demand and popularity of Vietnamese lychee products in the global market The data from the Industry and Trade Information Center and General Department of Vietnam Customs revealed that China was the leading market in importing Vietnam’s lychee products, accounting for 91% of Vietnam’s lychee export turnover This was due to the geographical proximity and cultural similarity between the two countries Vietnam also exported lychee to other countries such as the EU, Japan, Australia, UAE, … These countries had stricter standards and regulations for agricultural products, which required Vietnam to improve its quality and traceability of lychee products Hai Duong and Bac Giang were the two leading areas specialized for lychee production in Vietnam They had favorable natural conditions and experienced farmers who could grow high-quality lychee varieties They also followed good agricultural practices and applied modern technologies to ensure the safety and freshness of lychee products They expected to make Vietnamese lychee a global name thanks to its world-class quality, according to the Vietnam News Agency China: China is a leading global consumer of lychees Every year, it purchases approximately 1.55 million tonnes from abroad for local consumption, making up 50% of global output The International Trade Center (ITC) reported that China's import of P a g e 14 | 26 fresh lychees rose by 4.64% annually in the 2015 - 2019 period In the first four months of 2023 alone, China imported up to 173 tonnes of lychees worth US$190,000, up 77% in volume and up 288.7% in value over the same period last year Due to the impact of the COVID-19 pandemic and the raise in standard for lychee quality, China’s lychee imports from Vietnam fell considerably over the same period in 2019 Vietnam’s lychee is also in intense competition with Thailand and is losing its advantage overtime The price of lychees imported from Thailand during the first four months of 2020 was 3.3 times higher than that of Vietnam In April 2020, the price of Thai lychees was traded at US$1.17/kg, while that of Vietnamese just stood at US$0.35/kg Australia: Vietnam’s lychee exports to Australia have increased significantly despite the challenges posed by the COVID-19 pandemic on transportation According to the Ministry of Industry and Trade, Vietnam exported 1,600 tonnes of lychees to Australia in 2020, which was 188% higher than the 556 tonnes exported in 2019 This showed the strong demand and preference for Vietnamese lychees in the Australian market Market surveys conducted by the Vietnam Trade Office in Australia revealed that Vietnamese lychees were popular among Australian consumers thanks to their special taste, which was different from other lychee varieties Recently in 2022, the price of lychee in Australia reached a record high, ranging from 21-23 USD/Kg This was attributed to the limited supply of lychees from other countries and the high-quality standards of Vietnamese lychees The EU: Despite still being a new and unexplored market, Vietnamese exporters still see the potential in the EU market and have attained some early successes: Source: Synthesized from General Statistics Office Table Vietnam’s lychee exports to the EVFTA market After EVFTA, the first batch of Thanh Ha lychees was officially shipped to Europe on June 7, 2021 The fruit will reach the Czech Republic in a few days This was possible because Vietnam and the EU agreed on some standards and procedures for Vietnamese lychees to enter their market The EU is a big market with about 430 million people, and it is the fourth biggest market for Vietnamese vegetables and fruits This advantage, as well as the import tax exemption and reduction as committed in the EVFTA, will help to increase the competitiveness of Vietnamese lychee compared to other regional markets that not have an FTA with the EU Apart from Thanh Ha lychee, a batch of Luc Ngan lychee (Bac Giang) will also set out to conquer this community of 27 countries In 2023, P a g e 15 | 26 the first batch of lychees freshly exported to the EU were warmly welcomed by consumers in France, Belgium, Germany, the Netherlands, the Czech Republic, and other countries The Thanh Ha lychees with traceability stamps were imported for the first time in France and quickly sold out at Asian supermarkets in Paris in mid-June, despite their high price Trade Counselor in Belgium, EU and Luxembourg, Mr Tran Ngoc Quan, said that almost 50 tons of lychee have been delivered and consumed in many European countries in this year’s lychee season 5.4 SWOT assessment of Vietnam's lychee exports in the context of EVFTA Strengths o Great lychee varieties Vietnamese lychee holds a special place in the hearts of the Vietnamese people, cherished for its unique qualities Particularly, the Luc Ngan lychee from Bac Giang Province and the Thanh Ha lychee from Hai Duong Province have garnered considerable acclaim for their outstanding flavor, aroma, and nutritional benefits These two varieties are progressively establishing themselves and gaining attention in upscale markets, such as the United States, the European Union, Japan, Korea, Singapore, and even in China, which has historically been a significant export destination for Vietnamese lychee Figure Most favored lychee varieties by country While traditionally popular in domestic markets, both Luc Ngan and Thanh Ha lychee varieties have begun to gain international recognition They have found their way into high-end markets such as the United States, the European Union, Japan, Korea, Singapore, and other countries This growing acceptance and embrace by international markets signify the rising appeal and quality of Vietnamese lychee The expanding export market for Vietnamese lychees demonstrates the increasing appreciation for the unique flavors and qualities of Luc Ngan and Thanh Ha varieties This recognition opens new opportunities for Vietnamese lychee farmers P a g e 16 | 26 and exporters to cater to the discerning tastes of consumers worldwide and establish a strong presence in the global lychee market o Favorable natural conditions Vietnam's lychee production benefits from its tropical climate and advantageous soil conditions, which create an optimal environment for cultivating abundant lychee fruits each year The country's high humidity, generous rainfall, and well-defined seasons, including cold and dry winters, establish the ideal circumstances for largescale lychee production These natural elements play a crucial role in nurturing Vietnam's thriving lychee industry, enabling the cultivation of expansive lychee orchards and ensuring a reliable and plentiful supply of this delightful fruit Furthermore, notable lychee farming regions such as Luc Ngan and Thanh Ha are strategically located near lakes and rivers, which serve as accessible and convenient sources of natural freshwater for irrigation This close proximity to freshwater resources optimizes the efficiency and efficacy of irrigation systems in these areas, guaranteeing a reliable and ample water supply for the lychee trees The abundant availability of natural freshwater plays a significant role in enhancing the overall productivity and prosperity of lychee cultivation in these regions o Stable diplomatic relation Vietnam has established diplomatic relations with countries across all continents, establishing stable and enduring partnerships with potential high-end markets Leveraging these connections, Vietnam has actively engaged in negotiations for significant trade agreements such as the EVFTA, CPTPP, RCEP, and others These agreements have delivered substantial economic benefits to Vietnam, including tariff elimination, reduced trade barriers, increased investment opportunities, and intellectual property protection These trade agreements play a vital role in facilitating the export and distribution of Vietnam's agricultural products, including lychee fruits, to global markets They provide a favorable framework that allows Vietnamese exporters to access foreign markets more effectively, benefiting from reduced trade barriers and improved market entry By leveraging these trade agreements, Vietnam can seize the opportunities they offer to expand the global presence of its agricultural products, including lychee exports The elimination of tariffs and trade barriers, along with enhanced investment conditions, enhance Vietnam's competitiveness in the international arena and solidify its position as a dependable and appealing supplier of high-quality Vietnam's fruit export industry has made significant strides since the EVFTA was implemented In the first 11 months of 2021, the total value of fruit exports to the EU reached 173 million USD, reflecting a 7.6% increase compared to the same period in the previous year This growth signifies the positive impact of the EVFTA on Vietnam's fruit sector, as it has facilitated improved market access and reduced trade barriers between Vietnam and the EU The agreement has created more favorable conditions for Vietnamese fruit exporters, enabling them to expand their P a g e 17 | 26 presence in the EU market and meet the rising demand for high-quality fruits among European consumers Weaknesses o Small-scale production Vietnam's agriculture sector is marked by a notable prevalence of small-scale production, with numerous farmers operating family or household farms These small-scale agricultural enterprises play a significant role in shaping the country's agricultural landscape While small-scale production provides employment opportunities and contributes to local food security, it also poses challenges Farmers encounter obstacles in accessing advanced technologies, inputs, and financial resources, which hampers their productivity and competitiveness Furthermore, the absence of economies of scale makes it difficult for small-scale farmers to take advantage of export prospects or secure favorable prices in the market o Limited logistics and technology Vietnamese farmers currently encounter limitations when it comes to accessing advanced technology, adopting modern procedures, and establishing efficient distribution channels However, the implementation of the EU-Vietnam Free Trade Agreement (EVFTA) has opened up new prospects for Vietnamese businesses to expand their market access and distribution channels in the demanding and highly regulated EU market, which places a strong emphasis on food safety and quality standards¹ Forecasts indicate that the EVFTA is expected to significantly boost Vietnam's export turnover to the EU, with estimated increases of about 42.7% in 2025 and 44.37% in 2030 compared to a scenario without the agreement¹ The EVFTA provides a framework that aligns standards and regulations between Vietnam and the EU, urging Vietnam to enhance its food safety and quality control systems to meet European standards This alignment not only enhances the competitiveness of Vietnamese agricultural products but also improves their acceptance in the EU market Additionally, the agreement addresses non-tariff barriers and trade facilitation issues, streamlining customs procedures and reducing administrative burdens to facilitate smoother trade flows between Vietnam and the EU o High delivery cost Vietnam's heavy reliance on air transport, particularly during the COVID-19 pandemic, has proven to be costly and risky Air transport plays a vital role in Vietnam's transportation system, enabling domestic and international connections for both passengers and cargo However, this dependence on air travel has its drawbacks, primarily related to expenses Airfare and cargo shipping rates are generally higher compared to alternative modes of transportation like sea or land transport This presents financial challenges for individuals and businesses relying on air transport services P a g e 18 | 26 The COVID-19 pandemic has had a significant impact on the global aviation industry, including Vietnam Travel restrictions, reduced flight schedules, and stringent health protocols have caused disruptions and a decline in air travel demand Consequently, airlines have faced financial difficulties, resulting in route cancellations, reduced services, and increased ticket prices These factors have further compounded the financial burden associated with air transport in Vietnam o Low brand awareness The awareness and promotion of Vietnam's lychee brand in the EU market are currently limited Despite Vietnam's reputation for producing high-quality lychees, there is a lack of awareness and promotion of the brand in the EU market As a result, many European consumers may be unfamiliar with Vietnam's lychee offerings or may not strongly associate them with the Vietnamese lychee brand The insufficient level of awareness can be attributed to inadequate promotional efforts and marketing campaigns that fail to highlight the unique characteristics, quality, and benefits of Vietnamese lychees The absence of targeted promotional activities has hindered the visibility and recognition of Vietnamese lychees among EU consumers To address this issue, Vietnam should prioritize strategic marketing initiatives aimed at increasing awareness and promoting the lychee brand These initiatives could involve targeted advertising, participation in international trade shows and exhibitions, product demonstrations, and collaborations with importers, distributors, and retailers specializing in exotic fruits By forming partnerships with influential stakeholders and implementing comprehensive marketing campaigns, Vietnam can improve visibility, educate consumers about the quality and flavor of Vietnamese lychees, and ultimately stimulate demand in the EU market Additionally, leveraging digital platforms and social media channels can play a significant role in raising awareness By utilizing online marketing strategies such as content creation, collaborations with influencers, and targeted advertisements, Vietnam can effectively reach a broader audience and create a positive perception of its lychee brand Through investment in promotional activities and a proactive marketing approach, Vietnam has the potential to enhance the awareness and reputation of its lychee brand in the EU market This, in turn, will lead to increased demand and a larger market share for Vietnamese lychee exports Opportunities o New potential export market The EU market, comprising around 430 million consumers, holds significant potential and stands as the fourth largest export market for Vietnamese fruits and vegetables This market segment exhibits a strong demand for Vietnam's lychee fruits due to EU consumers' preference for exotic and tropical fruits, including lychee P a g e 19 | 26 Vietnamese farmers are gradually embracing international standards and implementing good agricultural practices However, in the EU market, there is a particular emphasis on organic and certified products such as GlobalGAP lychee fruits European consumers are willing to pay higher prices for these products, given their adherence to stringent quality and safety requirements As Vietnamese lychee farmers adopt these standards and practices, it opens up opportunities to tap into the EU market and cater to the preferences and demands of European consumers By focusing on the production of organic and certified lychee fruits, Vietnam can establish itself as a dependable supplier of high-quality products that align with the preferences of the EU market This situation presents a favorable chance for Vietnamese lychee farmers and exporters to gain a larger market share and command premium prices by meeting the requirements and preferences of the EU market The increasing adoption of international standards and good agricultural practices in Vietnam reflects a commitment to quality and sustainability, which strongly resonates with the expectations of EU consumers seeking premium and certified products o EVFTA Vietnam encountered significant obstacles in exporting agricultural products to the EU market prior to the establishment of the EU-Vietnam Free Trade Agreement (EVFTA) Challenges such as high tariffs, strict quality control, and expensive transportation hindered Vietnamese businesses from effectively competing with agricultural products from other countries in Europe Vietnamese products became costlier for European consumers due to tariff barriers, while meeting stringent quality standards required substantial investments Furthermore, the costs associated with shipping products over long distances added to the difficulties faced by Vietnamese exporters However, the EVFTA was specifically designed to address these issues by reducing tariffs, improving market access, and promoting regulatory cooperation As a result, Vietnamese agricultural businesses now have improved opportunities to expand their exports to the EU market and enhance their competitiveness The EVFTA has created a favorable trade environment that offers new prospects for Vietnamese agricultural businesses By reducing trade barriers and facilitating market access, the agreement has leveled the playing field for Vietnamese agricultural products in the EU market Consequently, Vietnamese exporters now have better prospects for expanding their agricultural exports to Europe and competing effectively against products from other nations Threats o Compliance with EU Standards The European Union (EU) places significant emphasis on upholding strict standards and regulations to ensure the safety, quality, and traceability of food products Vietnamese lychee exporters must demonstrate a strong dedication to meeting these P a g e 20 | 26