THE URGENCY OF THEME
Promoting the export of Vietnamese agricultural products to the global market, especially the European Union, is a key strategic goal for the Party and Government, focusing on sustainable agricultural development The 12th Party Congress highlighted that from 2016 to 2020, complex global and regional developments will significantly impact Vietnam's export activities As Vietnam deepens its integration with international organizations, it must adhere to international commitments and standards, including technical barriers to trade (TBT), sanitary and phytosanitary measures (SPS), and intellectual property rights, as stipulated in new-generation free trade agreements like the Vietnam Free Trade Agreement (FTA), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the EU-Vietnam Free Trade Agreement (EVFTA) These agreements present both opportunities and challenges for the export of Vietnamese agricultural products.
In recent years, Vietnam's export market, particularly for key agricultural products like coffee, rubber, rice, tea, pepper, and various vegetables, has demonstrated significant and stable growth, outpacing major regional competitors such as China, India, Malaysia, and Thailand Notably, the EU remains Vietnam's largest traditional market for coffee, accounting for 53.58% of exports between 2010 and 2020, with annual export values exceeding 1 billion USD Additionally, the export turnover for vegetables and fruits has also shown remarkable growth, highlighting the increasing demand for Vietnamese agricultural products in the EU market.
EU market increased 2,79 times from $50,39 million in 2010 to $140,45 million in
2020, with an average growth rate of 8,89% in the period 2010-2020 (General Statistics Office - GSO)
Vietnam's agricultural export sector faces several challenges, including low added value due to the predominance of unprocessed raw products and a workforce that does not meet industry standards Additionally, there is a lack of information and clarity in customer acquisition and establishing export distribution channels for essential agricultural products Investment policies for agricultural development remain limited, and the integration within the agricultural value chain is insufficient Furthermore, the EU market imposes strict regulations on imported agricultural products, including bans on items with high levels of toxic antibiotics and stringent food safety standards that must be met for goods to be granted entry.
From now until 2025, Vietnam's government is increasingly integrating into global trade by participating in new generation Free Trade Agreements (FTAs) like the CPTPP and EVFTA These agreements present significant opportunities for Vietnamese exports to boost turnover and market share due to the elimination of tariff barriers However, challenges such as quality standards, food safety, origin verification, intellectual property issues, and anti-dumping measures must be addressed Without appropriate strategies from the government and thorough preparation from exporters, Vietnam risks diminishing its export capabilities, particularly in the EU market To capitalize on these opportunities and mitigate challenges, Vietnamese businesses, along with government ministries, must develop coordinated plans and solutions to enhance the export potential of key products in the international market, especially in the EU.
In light of current circumstances, I conducted a study on "Exporting Agricultural Products of Vietnam to the European Union Market: Situation and Solutions" to analyze the existing state of Vietnam's agricultural exports to the EU and to suggest effective strategies for enhancing these exports in this competitive market.
LITERATURE REVIEW
Numerous studies have employed gravity models to investigate the factors influencing the export of agricultural products from developing countries to developed nations, particularly within the EU market This focus is attributed to the EU's significant consumer income potential, robust demand for agricultural imports, and its maintenance of preferential tariff policies with developing countries, alongside various free trade agreements (FTAs) in place Notable research in this area includes works by Filippin et al (2003), Lehman et al (2007), Atici et al (2011), Murina et al (2014), Potelwa et al (2016), and Yatsenko et al (2017).
Filippini et al (2003) analyze the effects of the "technology gap" on trade between industrialized developing countries in Latin America and Asia and developed nations, including 27 countries with 11 highly developed EU countries, from 1970 to 2000 They classify commodities into industrial and non-industrial goods, proposing that similar technological levels between two countries can enhance trade flows Conversely, a significant technology gap may lead to mismatched goods and demand, resulting in decreased trade volumes The study's findings largely support this hypothesis, indicating that a larger technology gap correlates with reduced trade size.
Lehman et al (2007) examine the effects of tariff barriers on Turkey's exports, particularly agricultural products, to the EU from 1988 to 2002 Utilizing a gravity model with advanced estimation techniques to account for cross-observation correlations, the study reveals that eliminating tariff barriers and subsidies significantly boosts export volumes Consequently, Turkey's agricultural exports to the EU market experienced a substantial increase.
Atici et al (2011) employed a gravity model with time series estimation techniques and cross-sectional data from 2006 to assess the effects of Turkey's EU accession on its agricultural exports Their analysis focused on two key factors: the tariff variable, which reflects trade policy, and the impact of a nominal "EU member" label on Turkey's agricultural export turnover However, the study's limitation lies in its exclusive reliance on 2006 data, resulting in findings that lack comprehensiveness.
Murina et al (2014) utilize the gravity model and 2010 cross-sectional data to analyze the effect of EU-issued SPS standards on agricultural exports from low-income countries to the EU market Their findings reveal that SPS standards impose significant barriers, reducing these countries' agricultural export turnover to the EU by approximately $3 billion annually, or 14% Additionally, the study highlights that entering a Free Trade Agreement (FTA) with the EU enhances countries' capacity to navigate SPS barriers To improve agricultural exports to the EU, the researchers recommend increased technical support and more effective assistance projects from the EU.
Exporting agricultural products from developing countries, particularly Vietnam, to developed markets like the EU encounters significant technical barriers This study highlights the practical importance of addressing these challenges to enhance the export of Vietnamese agricultural products in the current market landscape.
A study by Potelwa et al (2016) examines the factors influencing South Africa's agricultural exports to key partners, particularly the EU, from 2001 to 2014 The EU, accounting for 37% of South Africa's exports, is the country's second-largest trading partner, bolstered by the Comprehensive Trade Development and Cooperation Agreement (TDCA) established in 2000 The research identifies that the primary determinants of agricultural exports include the GDP and population of both the exporting and importing countries, along with the export capacity of South Africa Conversely, factors such as the partner's exchange rate, geographical distance, and political stability do not significantly affect agricultural exports The article suggests that South Africa should strategically target markets with growing GDP and population to enhance its export performance.
Yatsenko et al (2017) analyze the potential impact of the Ukraine-EU Free Trade Agreement (FTA), effective January 1, 2016, on agricultural trade between Ukraine and the EU, using gravity modeling and data from 1999 to 2015 The EU plays a crucial role in Ukraine's agricultural sector; however, Ukraine's agricultural exports face challenges due to outdated production methods and reliance on a limited range of commodities Notably, the gravity model incorporates factors such as GDP and geographical distance, with the latter being influenced by average oil prices, which affect shipping costs The authors propose several strategies to enhance bilateral trade, particularly focusing on increasing Ukrainian agricultural exports to the EU market.
The trade relations between Ukraine and the EU, as well as Vietnam and the EU, share notable similarities, particularly in the context of agricultural exports from developing countries to advanced markets This study highlights valuable insights for Vietnam's agricultural exports in anticipation of the EVFTA agreement's implementation It reaffirms and quantifies the advantages of the EVFTA, providing a foundation for Vietnam to leverage these benefits for enhanced agricultural exports to the EU market.
In Vietnam, research on the EU market remains limited, yet several studies have utilized gravity models to examine the factors influencing agricultural exports and other significant products These studies not only consider fundamental factors but also delve into the impact of valuable resources, such as agricultural land area, and employ innovative measurement techniques to enhance the clarity of their findings.
Ngo Thi My (2016) analyzes array data from 1997 to 2014 to identify factors influencing Vietnam's agricultural exports, focusing on the combined agricultural land area of both exporting and importing countries The findings indicate that this land area coefficient negatively affects agricultural export turnover Consequently, the study offers explanations and suggests solutions to enhance Vietnam's agricultural export performance.
Tran Thi Bach Yen et al (2017) employed the gravity model to examine the influence of various factors, including the area of bare rice land, on Vietnam's rice exports to the ASEAN market from 2000 to 2015 Their findings indicate that GDP, inflation, the exporting country's rice land area, and geographical distance positively affect Vietnam's rice export turnover, while economic distance negatively impacts it The study concludes with recommendations aimed at enhancing Vietnam's rice export turnover in this market.
In his 2006 analysis, Do Thai Tri examines the key factors influencing two-way trade, specifically export turnover between Vietnam and 23 EU countries (EC23) from 1993 to 2004 He emphasizes the importance of assessing these factors effectively, utilizing a pooling variables approach that combines the GDP and population of both exporting and importing countries to represent their economic size The findings from the Fixed Effects Model (FEM) indicate that both gross GDP and gross population significantly and positively affect export turnover This variable pooling technique has been adopted in numerous subsequent studies.
Vu Thanh Huong (2017) uses the gravity model and data for the period 2001 -
The 2015 study on the impact of the EU-Vietnam Free Trade Agreement (EVFTA) highlights the significance of tariff barriers on goods trade between Vietnam and the EU, encompassing 18 industry groups and various commodities, including textiles and agricultural products The findings indicate that the elimination of tariffs is likely to enhance trade relations, particularly boosting Vietnam's agricultural exports to the EU, with notable increases in export turnover for specific products such as plants, live animals, processed foods, beverages, and tobacco While the study offers valuable scientific and practical insights, it acknowledges limitations in quantifying critical factors like institutional quality, suggesting the need for further research to address these gaps.
Do Thi Hoa Nha (2018) conducted a study on the factors influencing Vietnam's agricultural exports to the EU market Utilizing the REM model, the research quantified the significant impacts of various elements, including technology levels, infrastructure quality, and government policies, which are crucial for enhancing agricultural exports in Vietnam and other developing countries.
RESEARCH PURPOSES
This thesis analyzes the factors influencing the export of Vietnamese agricultural products to the EU market using the gravity model approach It aims to identify strategies that enhance positive influences while mitigating negative factors, ultimately boosting the export potential of this commodity group to the EU in the upcoming period.
- Clarifying the theoretical basis of the factors affecting the export of agricultural products from the approach of the gravity model
- Assessing the current situation of Vietnam's agricultural exports to the EU market in the period 2010 - 2020
- Analysis of factors affecting the export of Vietnamese agricultural products to the EU market in 2010 - 2020
- Proposing solutions and recommendations to promote positive factors and limit negative factors, thereby boosting Vietnam's agricultural exports to the EU market from now to 2025.
RESEARCH SCOPE AND OBJECTIVES
The thesis studies the factors affecting the export of Vietnamese agricultural products to the EU market from the approach of the gravity model
- Spatial scope: The thesis studies the export of Vietnamese agricultural products to the EU market, focusing on 27 countries The topic is still looking in the
UK because the data of the topic is up to the end of 2020
- Time range: Information related to the elements in the gravity model used for the period 2009 - 2019
- Scope of content: The topic studies the factors affecting the export of Vietnamese agricultural products to the EU market.
RESEARCH METHODOLOGIES
This thesis conducts a comprehensive analysis by collecting and synthesizing data from various sources, including books, the internet, industry reports, and scientific literature Additionally, it evaluates the impact of different factors on the export of Vietnamese agricultural products to the EU market using the gravity model.
THESIS STRUCTURE
Excepting the abstract, declaration, acknowledgements, table of contents, list of tables, introduction, conclusion references and appendices, the study includes three chapters
Chapter I: Theoretical foundation of agricultural product exporting
Chapter II: The situation of Vietnam’s agricultural product exporting to EU market
Chapter III: Orientations and solutions to promote Vietnam’s agricultural product exporting to the EU market from now to 2025
THEORETICAL FOUNDATION OF AGRICULTURAL
THEORETICAL FOUNDATION OF AGRICULTURAL PRODUCTS
1.1.1 Definition of agricultural products a The view of the World Trade Organization (WTO)
According to the World Trade Organization (WTO), agricultural products are classified into two categories: agricultural goods and non-agricultural goods The Agreement on Agriculture defines agricultural products as those listed in Chapters 1 to 24 of the Harmonized System (HS) code, excluding fish and fish products This broad category encompasses basic agricultural items such as rice, wheat, milk, and coffee, as well as derivative products like bread and cooking oil Additionally, processed items made from agricultural products, including confectionery and dairy products, are included In contrast, non-agricultural products, often referred to as industrial products, fall under different HS code classifications The Food and Agriculture Organization (FAO) also shares insights on this classification.
According to the FAO, agricultural products encompass a diverse range of categories, including tropical items such as tea, cocoa, and coffee; cereal products like noodles, rice, and corn; various meat products including beef, pork, and poultry; fatty products and oils derived from oilseeds like soybean and sunflower; dairy products such as butter and cheese; raw agricultural goods including cotton and natural rubber; as well as fruits and vegetables This classification reflects the comprehensive nature of agricultural production recognized by the European Union.
The European Union has established a comprehensive list of products classified as agricultural, although it does not provide a specific definition This list encompasses a wide range of items, including live animals, various meat products, dairy items, and products of animal origin Additionally, it features live plants, edible vegetables, fruits, cereals, spices, and beverages, along with a variety of processed food items such as sugar, cocoa products, and tobacco.
Analyzing the perspectives of the EU, WTO, and FAO reveals that the EU aligns closely with the WTO in categorizing agricultural products as lists of chemical products organized by HS code However, a key distinction arises in the WTO's inclusion of certain processed products, unlike the FAO, which focuses solely on raw agricultural products without considering processed variants This highlights the differing definitions and classifications of agricultural products among these organizations, including Vietnam's perspective.
Agricultural products are derived from the agricultural industry, which encompasses cultivation, livestock, and agricultural services In a broader context, agriculture also includes forestry and fisheries; however, current perceptions tend to focus more narrowly on products generated from land-based activities Thus, agricultural products are primarily viewed as goods produced through land production means.
Agricultural products are derived from the agricultural production process and encompass both finished and semi-finished goods obtained from crops and livestock, as well as the cultivation of plants and animals, while explicitly excluding products from the forestry and fishery sectors.
Agricultural products are the outcomes of the agricultural industry, stemming from the growth and development of plants and animals These products possess distinct characteristics that reflect the nature of agricultural production activities.
Firstly, agricultural products are seasonal
Agricultural production, harvesting, and consumption are inherently seasonal, influencing various aspects of the industry This article focuses on the supply side of agricultural products, which varies with the seasons and their respective cycles However, advancements in science and technology have helped mitigate some of the limitations posed by these seasonal variations, particularly in the cultivation of flowering plants.
Second, agricultural products depend on natural conditions
Agricultural products are significantly influenced by natural conditions, particularly soil, climate, and weather These products are highly sensitive to external factors, meaning any changes in natural conditions can directly impact plant growth and development Favorable conditions lead to normal growth, high yields, and good quality, while adverse conditions, such as prolonged heat, cold, drought, storms, or floods, can result in decreased productivity and crop output.
Third, the quality of agricultural products directly affects the health of consumers
Consumers prioritize the quality of agricultural products when making purchasing decisions In developed countries, stringent requirements regarding quality, food hygiene, safety, quarantine, and origin are increasingly imposed on imported farm products This focus on quality is crucial as it directly affects consumer health As living standards rise, it is essential that the quality of agricultural products is enhanced to meet these expectations.
Fourth, the richness and diversity of agricultural product categories
Agricultural products exhibit a wide range of types and qualities due to their production in various localities influenced by distinct geographical and natural factors Each household employs different production methods, leading to a diverse array of agricultural products Consequently, this variability results in inconsistent quality, making quality management of agricultural products a challenging task.
Fifth, agricultural products are fresh products
The conclusion of agricultural production does not mark the end of biological activities, making agricultural products susceptible to damage if not processed or utilized promptly To mitigate this issue, it is essential to establish a strong connection between agricultural production and the subsequent processing and preservation efforts.
1.1.3 Classification of agricultural products a Classification basis
Agricultural products are categorized using the SITC system, established by the United Nations in 1950 and revised five times to adapt to the evolving needs of international trade The latest iteration, SITC Rev.4, has been in effect since 2006 This article provides a classification of agricultural products based on the SITC Rev.3 version.
The SITC Rev.3 classification system categorizes goods into five levels, comprising 10 subgroups identified by 1-digit codes, 261 groups represented by 3-digit codes, 1,033 groups denoted by 4-digit codes, and 3,118 groups classified with 5-digit codes.
Table 1.1: Classification of goods with 1-digit code according to SITC System Rev.3
No Product code Product name of the product group
1 SITC 0 Food and live animals
3 SITC 2 Raw materials, not edible, other than fuel
4 SITC 3 Fuels, greases and related materials
5 SITC 4 Animal and vegetable oils, fats and waxes
6 SITC 5 Chemicals and related products
7 SITC 6 Processed goods classified mainly by raw materials
8 SITC 7 Machinery, vehicles and spare parts
10 SITC 9 Goods and transactions not classified in SITC
Agricultural products, like commodities, are categorized into five classification levels In this context, most items are classified using a 3-digit level code, while some are specified with a more detailed 5-digit level code.
Table 1.2: Classification of agricultural products with 1-digit codes according to the SITC Rev.3 System
No Product code Product name of the product group
1 SITC 0 Food and live animals
3 SITC 2 Raw materials, not edible, other than fuel
- {SITC 27: Raw minerals; SITC 28: Piece of metal}
4 SITC 4 Animal and vegetable oils, fats and waxes
THEORETICAL FOUNDATION OF AGRICULTURAL PRODUCT
1.2.1 Definition of agricultural product exporting
Agricultural products are a commodity, so learning about agricultural exports will be derived from commodity exports
According to Clause 1, Article 28 of the Commercial Law 2005, the export of goods refers to the act of transporting goods out of the national territory or into designated special areas within the national territory recognized as separate customs zones under legal regulations.
The export of goods represents the trade between a country and its international partners Specifically, the export of agricultural products involves a country selling its agricultural goods to other nations for profit, utilizing money as the primary method of payment.
The export of goods occurs through various methods, including direct export, intermediary export, on-site export, re-export, and export processing Similarly, agricultural products are also exported using these diverse approaches.
Direct export involves a seller, such as a manufacturer or supplier, and a buyer engaging in direct communication—whether through meetings, correspondence, or telegrams—to negotiate and finalize details regarding goods, pricing, and other trading conditions.
International buying and selling often involves intermediaries, such as agents and brokers, who facilitate the transaction for a fee.
Export rights refer to the ability to sell and deliver services to foreign clients while operating within one's own country This includes the immediate use of locally exported goods by buyers or their transportation abroad.
Re-exporting involves purchasing goods from one country and selling them at a higher price in another country without processing them in the re-exporting nation This practice aims to generate a profit by recovering more capital than the initial investment Re-export activities can be categorized into two types: temporary imports for re-export and border-gate transfers.
An export method involves ordering processing abroad, where the client provides machinery, equipment, raw materials, or finished products based on specific samples and standards The domestic outsourcing company manages the production process tailored to the customer's requirements Upon completion, all products manufactured by the processor are returned to the client for payment.
1.2.3 The role of agricultural product exporting
The export of agricultural products not only brings a large source of foreign currency to the economy but also contributes to solving the social problems of the country Specifically:
- Export of agricultural products brings a large source of foreign currency revenue to the economy, thereby increasing the national GDP
- Contribute to economic restructuring and promote product development towards efficient use of resources and national advantages
- Create an important source of capital to import technology to serve the process of industrialization and modernization of the country
Addressing job-related challenges, boosting employee income, and safeguarding the environment are critical social issues Furthermore, exports play a vital role in strengthening foreign economic relations and elevating the country's standing in the global market.
FACTORS AFFECTING VIETNAM'S AGRICULTURAL PRODUCT
The influence of labor on agricultural production is evident, with the gravity model indicating that the workforce is often reflected by population size An increase in population leads to a larger labor force, enhancing economic productivity and boosting a country's exports Additionally, the qualifications of labor play a crucial role in optimizing agricultural output.
The quality of labor resources has great significance to production productivity
A skilled workforce significantly reduces time and production costs in agriculture by efficiently implementing new technical measures and adhering to standard procedures, ultimately maximizing productivity Additionally, identifying sources of investment capital is crucial for further advancements in the agricultural sector.
Domestic capital consists of four primary types: state budget capital, credit capital, capital from economic organizations, and capital from the population In developing countries, state capital remains crucial for agricultural investment Conversely, foreign capital is categorized into three main types: Official Development Assistance (ODA), Foreign Direct Investment (FDI), and funds raised in the international capital market Additionally, the role of production technology is significant in enhancing these capital sources.
Production technology significantly impacts export turnover by enhancing labor productivity and supply While improving agricultural production to meet international standards can boost quality and efficiency, it also presents challenges Companies must ensure a safe production value chain, from cultivation to harvesting and processing, while adhering to traceability criteria, ensuring worker safety and health, and upholding social and environmental responsibilities.
An increase in the number of sellers in the market leads to a greater export supply Typically, a larger population and higher living standards in the import market make it more appealing to potential partners This attraction draws not only exporters from the country but also businesses from various regions, intensifying competition within the import market As competition rises, enterprises that demonstrate greater competitiveness can secure a stronger position, resulting in an increased number of businesses and products vying for market share.
1.3.2 Objective factors a Size of the economy (GDP)
The size of an importing country's economy significantly affects trade turnover, as a larger GDP typically leads to increased demand for imports However, as GDP rises, so does the country's production capacity, intensifying competition between foreign and domestic products The demand for imports varies based on the essential nature of different commodities, and the classification of goods as secondary, essential, or luxury depends on whether a country is exporting or importing Ultimately, the impact of an importing country's GDP on export turnover is complex and can be both positive and negative, influenced by the importance of the commodity and the country's production capabilities.
The population significantly influences a country's productive capacity, particularly impacting the export turnover of goods, especially agricultural products This relationship can be examined from various perspectives, highlighting the crucial role of population dynamics in shaping economic outcomes.
An increasing population enhances the labor force, boosting production capacity and exports This rise in exports intensifies competition among businesses, driving domestic enterprises to enhance technology, productivity, and product quality, which in turn increases supply and facilitates export growth However, it is essential for labor resources to not only expand in quantity but also improve in quality As science and technology advance, a skilled workforce will gradually replace unskilled labor Therefore, both quantity and quality of labor are crucial for achieving optimal results, indicating that a growing population positively influences export turnover.
Rapid population growth can lead to increased domestic demand for goods, which may negatively impact international sales and reduce the competitiveness of domestic industries This focus on meeting local consumption needs often results in diminished attention to export activities Consequently, the population growth can adversely affect the export turnover of goods, particularly agricultural products Therefore, the size of a country's population can have both positive and negative implications for its agricultural export performance.
As population size increases in the exporting country, the demand for essential goods, particularly agricultural products, rises, which can positively or negatively affect the export turnover of the partner country Specifically, a growing population leads to higher demand for imported goods, boosting the partner's export turnover Conversely, an increase in population enhances the domestic labor force, improving production capacity and potentially reducing the need for imports, which in turn decreases the partner country's export turnover This indicates that the population dynamics of both the importing and exporting countries have similar effects on trade.
* Area of agricultural land in the exporting country
The agricultural land area of an exporting country plays a crucial role in its agricultural production and directly influences the strategies for importing and exporting agricultural products A larger agricultural land area typically enhances the export turnover of these products However, it is essential to consider the current reality of strong urbanization, which poses challenges in expanding agricultural land Additionally, the impact of increasing agricultural land size varies among specific products, as different crops require distinct soil conditions for optimal growth.
* Area of agricultural land in the importing country
The size of agricultural land significantly influences agricultural production in both exporting and importing countries For importing nations, a larger agricultural land area enhances production capacity, resulting in increased agricultural output Consequently, this reduces the reliance on imported agricultural products, leading to a decrease in export turnover for partner countries.
The agricultural area of the importing country inversely affects the export turnover of agricultural products from the partner country To gain a clearer understanding, it is essential to examine each specific agricultural product, as land characteristics vary significantly across different regions Additionally, advancements in science and technology play a crucial role in this dynamic.
Science and technology significantly enhance socio-economic development by increasing material wealth and improving product quality to meet growing consumer demands They directly boost labor productivity, reduce production costs, and contribute to the development of diverse and innovative products In agriculture, advancements in new plant and animal varieties, along with improved processing technologies, lead to higher yields and quality These innovations are crucial for enhancing product competitiveness in the international market, directly influencing a country's import and export activities Therefore, the role of science and technology is vital for improving production outcomes and international business efficiency, shaping government export policies.
Export promotion and management policies significantly influence a country's export turnover, with varying impacts based on the tools employed This article will specifically examine policies that directly affect export activities, highlighting the importance of both tariff and non-tariff measures in shaping export performance.
RESEARCH MODEL ON FACTORS AFFECTING VIETNAM'S
The gravity model is an econometric tool that effectively explains the volume and direction of bilateral trade between countries, making it widely utilized in international trade analysis Initially developed by scientists Tinbergen (1962) and Poyhonen (1963), the commercial gravity model measures export values between nations The general form of this model is applied to two-way commerce, providing insights into trade dynamics.
The gravity model in international trade, represented by the equation T = A * (Yi * Yj) / D, incorporates key variables such as the economic sizes of countries i and j (Yi and Yj), geographical distance (D), and a constant (A) This model is grounded in three primary trade theories: Ricardo theory, Heckscher-Ohlin (H-O) theory, and new trade theory Influential researchers like Linneman, Anderson, Bergstrand, Eaton, Kortum, Deardorff, and Mathur have significantly contributed to its theoretical foundation As a result, extensive research has enhanced the gravity model's effectiveness and reliability in quantifying the factors influencing bilateral trade flows.
The scientific basis for using these factors in the model is explained as below: a GDP per capita (PGDP)
The H-O theory suggests that PGDP indicates a nation's capital abundance and consumer income, which in turn creates a polarizing effect on the supply and demand for agricultural products within the country.
Hypothesis 1: PGDP has a positive impact on Vietnam's export turnover to the
These are the basic elements of the model, representing both labor size and market size, thus positively affecting the supply and structure of agricultural products
Hypothesis 2: Population has a positive impact on Vietnam's import and export turnover into the EU market c Geographic Distance (DIST)
The base element of the model highlights the significance of shipping costs, which are influenced by geographical distance As the distance between Vietnam and its trading partners increases, transportation costs rise correspondingly This creates a negative correlation between geographical distance and the export value of agricultural products.
Hypothesis 3: Geographical distance has a negative impact on Vietnam's export turnover to the EU market d Area of agricultural land met (AGRIAREA)
Agricultural land is an important input of agricultural production Similar to PGDP and population, this coefficient has a positive effect on both supply and structure of agricultural products
Hypothesis 4: The area of agricultural land has a positive impact on the export turnover of Vietnam's agricultural products to the EU market e Institutional Quality (INST)
Institutional quality significantly impacts the export of agricultural products from transition economies, such as Vietnam, to the advanced EU market Consequently, it is essential to quantify this influence within the model to better understand its effects on trade dynamics.
Hypothesis 5: Institutional quality has a positive impact on Vietnam's agricultural exports to the EU market f Technology Gap (TECHNESS)
A study by Filippini et al (2003) highlights that a significant technology gap between developing and developed countries can hinder trade exchange When the technological differences are substantial, the products manufactured in developing nations often do not align with the needs and preferences of developed countries Consequently, this technology disparity adversely affects export turnover, limiting the economic potential of exporting nations.
Hypothesis 6: The technology gap has a negative impact on Vietnam's agricultural exports to the EU market
This article explores an enhanced gravity model that incorporates six key factors: GDP per capita, population size, geographical distance, the proportion of agricultural land, institutional quality, and the technological gap between exporting and importing nations.
Table 1.3: Description of the parameters of the extended gravity model
Target name Description of the target
(Meaning, unit of measure) Variation Data source Export turnover from country i to country j at time t; thousand USD
Gross domestic product of country i and country j at time t; USD/person
Per capita income The World
Population of country i and j at time t; thousand people
- Labor size -Market size Mandate Distance between country i and country j; kilometer
The ratio between the area of agricultural land and the surface area of a country; %
The World Economic Forum (WEF)
Technology readiness index of country i and j at time t; take values from 1 to 7, where 7 is the best
Technological gap between country i and j at time t
Technological differences between the two countries
Institutional quality of country i and j at time t; take values from 1 to 7, where 7 is the best
Based on the selection of impact factors, the gravity model has the following form:
i = 1 is the exporting country (Vietnam)
j=1,2…27: is the corresponding index for 27 importing countries (EU members)
is the export value of agricultural products from country to country i to country j in year t
is the gross domestic product per capita of countries i and j at year t, respectively
is the population of country i and j at year t, respectively
is the geographical distance between country i and j
is the share of agricultural land of country i and j in year t, respectively
is indices reflecting the institutional quality of country i and j at year t, respectively
is the technological gap between country i and j at year t
The regression coefficients indicate the significance of each independent variable on agricultural export turnover For independent variables i = 1, 2, …, 5, a positive coefficient (>0) reflects a direct relationship, showing that a 1% increase in the independent variable results in a corresponding percentage change in export turnover Conversely, a negative coefficient ( 005: there is no basis to reject the hypothesis, => no array effect exists, the OLS model is more suitable
If the p-value is less than 0.05, the null hypothesis is rejected, leading to the selection of a model that accounts for array effects, either the Random Effects Model (REM) or the Fixed Effects Model (FEM) Following this, the Hausman Test is employed to determine the appropriate choice between FEM and REM for the study.
: Independent variable and uncorrelated error
: The independent variable and the error are correlated
If p-value > 005: accept hypothesis : there is no correlation between independent sea and model error, REM is more suitable In contrast, the FEM model is selected
The first chapter provides an overview of agricultural export activities, defining agricultural products and highlighting their key characteristics, including seasonality, natural conditions, freshness, variety, and stringent quality requirements for consumer health It emphasizes the significance of agricultural exports in driving economic development and their impact on various countries and businesses The chapter also analyzes the factors influencing the efficiency of agricultural exports from both subjective and objective perspectives Additionally, it introduces the extended gravity model, which is utilized to evaluate the factors affecting agricultural product exports.
THE SITUATION OF VIETNAM’S AGRICULTURAL
VIETNAM - EU TRADE RELATIONSHIP
2.1.1 Overview of Vietnam - EU trade relationship
The European Union stands as one of Vietnam's key trading partners, with bilateral trade experiencing an impressive annual growth rate of 15-20% Additionally, numerous EU member states and major corporations have made significant investments in Vietnam, highlighting the strong economic ties between the regions.
Trade is a crucial component of Vietnam-EU relations, with the EU representing a significant portion of Vietnam's trade with Europe From 2010 to 2020, trade between Vietnam and the EU surged over 13.7 times, escalating from $4.1 billion to $56.45 billion During this period, Vietnam's exports to the EU rose 14.8 times, reaching $41.54 billion, while imports from the EU increased by more than 11.4 times to $14 billion The EU serves as a major market for Vietnam's key exports, including footwear, apparel, seafood, furniture, electronics, and consumer goods Conversely, Vietnam primarily imports machinery, equipment, pharmaceuticals, chemicals, and transportation means from the EU.
The signing and implementation of the EU-Vietnam Free Trade Agreement (EVFTA) on August 1, 2020, marks a significant milestone in the bilateral relationship between Vietnam and the EU This agreement includes extensive commitments that enhance cooperation and create new opportunities for both parties It reflects a mutual effort to foster international economic integration and promote sustainable development.
The EVFTA Agreement emerged from the strengthening economic and trade ties between Vietnam and the EU, positioning the EU as one of Vietnam's key trading partners In 2019, the two-way trade turnover between Vietnam and the EU reached an impressive 56.45 billion USD, with Vietnamese exports accounting for 41.5 billion USD.
In 2023, imports from the EU to Vietnam amounted to 14.9 billion USD, highlighting the significant trade relationship between the two regions The EU-Vietnam Free Trade Agreement (EVFTA) is a comprehensive and high-quality pact designed to create a balanced framework of benefits for both Vietnam and the EU, while also addressing the varying levels of development between the two parties.
The negotiation and implementation of these Agreements highlight Vietnam's commitment to deep integration into the global economy, especially amid the complexities and unpredictability of the current geopolitical landscape.
On December 1, 2015, EVFTA officially ended negotiations, and on February
The EVFTA, which was initially published in 2016, reached a significant milestone on June 26, 2018, when it was divided into two agreements: the Trade Agreement (EVFTA) and the Investment Protection Agreement (EVIPA) The legal review process for the EVFTA was concluded, followed by the completion of the EVIPA review in August 2018 Both agreements were signed on June 30, 2019, with the European Parliament approving them on February 12, 2020, and the National Assembly of Vietnam ratifying them on June 8, 2020 The European Council also approved the EVFTA on March 30, 2020, leading to its official implementation on August 1, 2020.
EVFTA is a comprehensive, high-quality agreement that balances benefits for both Vietnam and the EU and is in line with the regulations of the World Trade Organization (WTO)
The Agreement encompasses 17 Chapters, 2 Protocols, and various memorandums of understanding, covering essential topics such as trade in goods, rules of origin, customs and trade facilitation, and trade in services It also addresses investment, trade remedies, competition, state-owned enterprises, government procurement, intellectual property, and sustainable development Additionally, the Agreement emphasizes cooperation, capacity building, and legal and institutional matters, highlighting its significant implications for Vietnam's economic growth and international trade relations.
The EVFTA Agreement reflects the commitment of Vietnam and the EU to enhance bilateral relations, fostering significant and meaningful development between the two parties Its signing and ratification align with Vietnam's foreign policy and strategic goals for deeper economic integration.
Vietnam's participation in the EVFTA Agreement underscores its dedication to the global free trade system, enhances its FTA negotiations with key partners, and signifies a significant phase of comprehensive international integration and expansion for the country.
Following the implementation of the EVFTA, two-way trade and investment between the EU and Vietnam are expected to experience significant growth, positively impacting economic development and generating employment opportunities This increase in trade will also enhance state budget revenues in both the medium and long term.
The EVFTA Agreement significantly influences various industries within the economy, driven by factors such as openness, competitive advantages, and productivity levels Each industry exhibits unique strengths, resulting in differing impacts Furthermore, the agreement fosters positive economic effects through institutional reform pressures, enhancing overall economic performance.
THE SITUATION OF VIETNAM'S AGRICULTURAL PRODUCT
2.2.1 Characteristics of the EU agricultural market a Market capacity
The European Union (EU), comprising 27 member states, stands as one of Vietnam's largest trading partners, boasting a market size of $17 trillion, which represents 20% of the global GDP With a population of 447 million and a per capita income of $38,031 per year, the EU's total annual trade turnover approaches $4 trillion Additionally, it accounts for nearly 40% of global outward investment capital, contributing to 24.7% of the world's export market share and 21.2% of imports This significant scale and capacity of the EU market present substantial opportunities for trade and investment with Vietnam.
The European Union has emerged as a significant market with a high demand for imports from around the globe, particularly highlighting the strong potential for agricultural products in this region.
An analysis of the European Union's agricultural product trade reveals a consistent high growth rate in imports and exports By 2020, the total turnover for agricultural products reached 265 billion euros, comprising 145 billion euros in exports and 120 billion euros in imports.
The remarkable growth of the EU in recent years can be attributed to successful negotiations and the signing of Free Trade Agreements (FTAs) with various countries Notably, the Comprehensive Economic and Trade Agreement with Canada was implemented in September 2017, followed by an agreement with Japan Additionally, the FTA with Singapore was finalized in December 2017, and the agreement with Vietnam took effect in February 2021 Ongoing negotiations with Indonesia and Malaysia are also showing promising outcomes Key factors influencing this growth include customs regulations, evolving consumer preferences, and effective distribution channels within the EU market.
Consumer habits and preferences significantly influence Vietnam's capacity to export products to the EU market Ultimately, the success of these exports hinges on aligning products with the tastes and consumption patterns of European consumers.
The European Union (EU) represents a vast and cohesive market that facilitates the free movement of labor, goods, services, and capital among its member states Each country within the EU exhibits unique consumption characteristics, resulting in a diverse array of product needs across the region Despite variations in consumption habits and preferences among the 27 member nations, there are notable economic and cultural similarities that bind them together.
- EU consumers have a habit of using world-famous products The consumer view of the EU market holds that brands are often associated with quality
The EU market resembles a national market, comprising three distinct consumer groups: (1) High-income consumers, making up nearly 20% of the population, who prefer top-quality, high-priced, or unique products; (2) Average-income consumers, representing 68% of the population, who opt for slightly lower-quality products at reduced prices; and (3) Low-income consumers, exceeding 10% of the population, who purchase lower-quality and more affordable goods.
2 Products meet the above consumption needs This market includes both high-end and affordable goods for all audiences
The EU distribution system mirrors that of individual countries, comprising both wholesale and retail networks Typically organized by groups, direct purchases from foreign exporters by large supermarkets or independent retailers are rare The established partnerships between wholesalers and retailers are rooted in credit relationships and mutual shareholding, fostering long-term business ties These entities prefer to engage with known suppliers to maintain product quality and stable supply, prioritizing customer satisfaction The intricate and well-established nature of the EU distribution system poses significant challenges for Vietnamese exporters seeking access.
Intra-regional trade policy aims to establish and enhance the European single market by removing national territorial and customs borders This initiative seeks to eliminate tariff and non-tariff barriers, facilitating the free movement of goods, labor, services, and capital Additionally, it focuses on harmonizing the economic and social policies of member countries to promote seamless trade and cooperation.
The EU's intra-EU trade policy fosters equal opportunities within the single market and mitigates competition distortions To ensure the smooth functioning of the single market, it is essential to maintain uniform competitive conditions Consequently, EU member states have established a framework designed to safeguard free competition across the market.
The European Union (EU) maintains a unified foreign trade policy for all member states when engaging with non-EU countries, with the European Commission (EC) acting as the sole representative in trade negotiations, agreements, and dispute resolutions This policy encompasses both autonomous and agreement-based approaches, grounded in principles such as non-discrimination, transparency, reciprocity, and fair competition Key measures employed within this framework include tariffs, quantity restrictions, technical barriers, anti-dumping regulations, and export subsidies.
The European Union is advancing a product expansion initiative aimed at promoting trade liberalization by gradually reducing tariffs on imports and exports while working towards the elimination of quotas Presently, all 27 EU member states enforce a common tariff on goods entering and leaving the region.
The European Union has established various measures to promote fair competition in trade, including anti-dumping policies, anti-export subsidies, and anti-counterfeiting regulations These initiatives aim to address trade barriers with developing countries and protect the market from the importation of counterfeit goods, thereby ensuring a more equitable trading environment.
The European Union not only implements measures to combat unfair competition in trade but also actively promotes trade with developing and less developed countries through the Generalized System of Preferences (GSP), which serves as a crucial tool for enhancing economic opportunities.
EU to support the aforementioned countries d EU trade barriers
The EU trade barrier system is completely based on the provisions of the WTO GATT Agreement, which is divided into two categories:
The common tariff regime in the EU applies uniformly across member states, with tax rates determined by the type and origin of imported goods This system is designed to exempt or reduce taxes on products that cannot be sufficiently produced domestically or are essential for industrial development Conversely, goods that are adequately produced within the EU face higher tax rates to promote local production Consequently, most raw materials entering the EU enjoy low or no import duties, while agricultural products and foodstuffs are typically subject to higher or special tariffs.
In addition to tariff barriers, the EU also uses other non-tariff barriers to protect the market in the bloc, such as:
GENERAL ASSESSMENT OF THE SITUATION OF VIETNAM'S
AGRICULTURAL PRODUCT EXPORTING TO THE EU MARKET
Exporting Vietnam's essential agricultural products to the EU market in the 2010-2020 period has achieved the following successes:
(1) Exports have consistently grown at a high rate;
(2) The growth rate of exports to the EU is higher than the growth rate of exports to the rest of the world in recent years;
(3) EU maintains its position in the two largest export markets;
(4) Vietnam has increased its export market share in the entire market of 27 EU countries, especially in the unfavorable context of the EU economy
However, in the export of agricultural products to the EU market in the recent period, there are still limitations such as:
Firstly, the export market of Vietnamese agricultural products to the EU is less diversified and depends on a number of key partners, including Germany, France, the
Vietnam's agricultural exports to the EU are at risk of becoming vulnerable and reliant on market fluctuations due to significant disparities in turnover and trade growth rates compared to the UK, Italy, the Netherlands, Spain, Austria, and Belgium.
Second, the structure of trade by similar industry groups is less diversified
Vietnam's agricultural exports to the EU predominantly consist of unprocessed products, with raw agricultural goods representing nearly 70% of the total export turnover This heavy reliance on unprocessed items leads to low added value and makes these exports particularly vulnerable to restrictions and bans.
EU tightens pesticide residues in agricultural products
Human resources in the agricultural export sector are insufficient, leading to challenges in sourcing information and confusion in identifying customers Additionally, there is a notable difficulty in establishing effective export distribution channels for enterprises involved in producing and exporting agricultural products.
The import of agricultural products into the EU market is subject to stringent regulations, including a complete prohibition on items with high levels of toxic antibiotics Additionally, emergency trade remedies must be applied, and imported goods must undergo inspection to ensure compliance with food hygiene and safety standards.
The investment policy for agricultural development remains inadequate, resulting in a low degree of integration within the agricultural value chain Additionally, funding from state budgets and foreign loans has not prioritized agricultural investments Furthermore, the industry's infrastructure is outdated and has not undergone necessary improvements or modernization.
2.3.3 Causes of limitations a Subjective reasons
The agricultural sector in Vietnam, employing 17.5 million people and representing 39.96% of the national labor force, remains largely fragmented and lacks specialization While this workforce is a crucial resource for agricultural production, most workers operate individually or within households, with a limited presence of farms, cooperatives, and agricultural enterprises.
The quality of human resources in Vietnam remains low, presenting significant challenges despite efforts in vocational training for key export industries Skilled workers constitute a small percentage of the workforce, with a notable deficiency in both quantity and quality Dr Nguyen Thi Lan Huong highlighted at the Spring Economic Forum 2017 that Vietnam's human resource competitiveness index stands at only 3.39 out of 10, indicating a substantial gap compared to regional counterparts Among over 53.4 million laborers aged 15 and above, only about 49% have received training, with those undergoing vocational training for three months or more representing just 19%.
Access to financial resources remains a significant challenge for many small and medium-sized enterprises (SMEs) in the private sector A recent survey by the Vietnam Institute of Small and Medium-Sized Management Science revealed that only 32.38% of these enterprises can successfully obtain traditional loans, while 35.24% find it difficult to access funding Alarmingly, the remainder of the surveyed businesses reported being unable to secure any loans at all, highlighting the critical need for improved capital access for SMEs.
Vietnam's agricultural production technology remains underdeveloped and lacks specialization, relying heavily on manual labor rather than mechanization While a few enterprises engage in high-tech production, the majority still utilize traditional methods, leading to low-quality agricultural products with minimal processing This reliance on outdated practices has hindered the ability to meet international standards.
Fifth, the number of suppliers is modest, and the competitiveness is low The number of export enterprises in Vietnam is relatively low In 2020, Vietnam had about
150 coffee exporting enterprises For pepper, Vietnam currently has more than 120 pepper exporting enterprises
Vietnamese enterprises face significant challenges in competitiveness, primarily due to several factors These include the limited competitiveness of Vietnamese agricultural products, a small number of exporters to the EU market, and the generally small size of most companies Additionally, many enterprises struggle with outdated technology and lack a strong market position, resulting in weak connections within the industry Furthermore, Vietnamese businesses often lack adequate information on EU regulations and standards, fail to understand consumer preferences, and do not have a systematic approach to supply and demand.
First, there is a significant difference in economic potential, namely GDP
Vietnam and the EU represent distinct groups of countries with varying developmental potentials, impacting their GDP and trade dynamics As the GDP of EU nations rises, their production capacity and demand for imports also grow, prompting increased intra-regional production and encouraging other countries to enhance their exports to the EU This scenario intensifies competition among products within the EU and from external markets.
The lack of specialized and modern production techniques in Vietnam's agricultural sector hampers product quality and safety The European Union enforces stringent quality and production standards, necessitating the use of specialized production lines However, outdated machinery and equipment in Vietnam result in low productivity and inferior product quality, making it challenging to meet these requirements.
The current policy system aimed at enhancing the export capacity of Vietnamese products, especially critical ones to the EU market, remains inadequate and unstable There is a lack of clarity and transparency in the policies designed to support product exports, and the overall framework is still being refined Consequently, essential policy adjustments are necessary However, these developments are often not effectively communicated through mass media, making it challenging for businesses to access comprehensive legal information, further highlighting the need for improved clarity and transparency in export policies.
Besides, the policy of export and import products has not been linked together
In recent years, Vietnam's policies on imported products have not effectively promoted exports, as tax and investment incentives primarily support import-substituting production rather than export-oriented initiatives Policymaking regarding exports and imports lacks alignment with market economy signals, often reflecting the personal preferences of policymakers at various levels, including central, sectoral, and local authorities, as well as businesses, rather than a thorough assessment of each product's competitive potential.
Geographic distance significantly impacts the exportation of agricultural products, which are perishable commodities with limited shelf life Increased transportation times due to long distances can lead to damage from collisions, spoilage, or deterioration caused by inadequate storage conditions.
ORIENTATIONS AND SOLUTIONS TO PROMOTE THE VIETNAM’S AGRICULTURAL PRODUCT EXPORTING TO THE EU
ORIENTATION OF VIETNAM’S AGRICULTURAL PRODUCT
In recent years, the State has implemented various policies to enhance the country's export strategy, with the latest being Decision No 2471/2011/QD-TTG This decision outlines the "Approval of the Commodity Import-Export Strategy for the period 2011-2020, with a vision to 2025." Beyond its overarching goals, this document details specific objectives regarding export markets and a comprehensive list of goods to be exported.
A strategic approach to commodity exports emphasizes the importance of diversifying export markets and engaging in global production networks and value chains This strategy aims to enhance the development and promotion of high-value-added, branded goods in both domestic and international markets.
Regarding the overall goal: The total export turnover of goods by 2020 will more than triple in 2010, per capita will reach over 2000 USD, it is necessary to balance trade
To effectively restructure export goods towards industrialization and modernization, it is essential to prioritize the rapid increase of high added-value products This includes focusing on deeply processed items, high-tech goods, and environmentally friendly products within the export structure.
Decision 2471 emphasizes the need for a strategic focus on agricultural, forestry, and fishery products, which possess long-term competitive advantages despite currently offering low added value The proposal aims to enhance productivity, quality, and value addition while restructuring export goods towards deep processing Furthermore, it advocates for the development of export products that leverage advanced scientific and technological applications.
+ Diversify export markets; consolidate and expand the market share of Vietnamese goods in the traditional market, creating a breakthrough in expanding potential new export markets
Vietnam aims to enhance its role in international and regional organizations while bolstering economic diplomacy to broaden export markets The country is focused on developing a network of trade promotion agencies in key market areas, which will significantly strengthen the protection of Vietnamese goods and businesses in both regional and international markets.
+ Make good use of foreign market-opening opportunities and tariff reduction roadmap to boost exports and improve export efficiency of Vietnamese goods to markets that have signed FTAs
+ Organize the construction and gradually develop the distribution system of Vietnamese goods in foreign markets
+ Orientation on the market structure to 2020; Asia accounts for about 46, Europe about 20%, America about 25%, Oceania about four and Africa about 5%.
SOLUTIONS TO PROMOTE VIETNAM’S AGRICULTURAL PRODUCT
From now until 2025, the EU market is expected to present favorable conditions that could give Vietnamese enterprises a competitive pricing advantage However, this advantage is limited and heavily reliant on the EU's international economic integration process To fully leverage the opportunities provided by the EVFTA, Vietnamese businesses must focus on enhancing product quality rather than solely depending on tax reductions It is crucial for these enterprises to prepare effectively to capitalize on export opportunities to the EU Given the complexities of the current EU landscape, companies should gain a deep understanding of individual EU markets, monitor evolving consumer needs, and stay informed about the FTAs the EU has signed and is negotiating, as well as the EU's priorities in these agreements Additionally, businesses must align with the long-term cooperation goals of Vietnam to ensure sustainable growth in the EU market.
To enhance competitiveness in the EU market, Vietnamese enterprises must collaborate with the government to implement effective strategies Ensuring high-quality products is essential for standing out against regional competitors with similar export structures Key measures for improving quality include investing in advanced technology, adhering to international standards, and fostering innovation within the industry.
- Step by step, invest in modern technology, improve labor productivity and product quality
- Diversify products, limit the export of raw and semi-processed products; gradually increase the proportion of processed products
- Strictly complying with regulations on quality inspection system, applying international quality measurement standards such as ISO, HACCP, right from the production and processing of export products
To successfully execute high-value contracts in the agro-forestry-fishery sector, it is essential to invest in a reliable and substantial supply source This investment will facilitate stable production and export activities Additionally, developing a strategic plan for farming and resource exploitation is crucial for optimizing output and ensuring sustainability.
- Attracting raw materials from ASEAN countries to produce products for export to the EU to meet product origin requirements and take advantage of tax incentives
*Businesses also need to be proactive in trade promotion and market development by:
- Participating in market survey groups, trade fairs and exhibitions guided by the Chamber of Commerce and Industry to find customers and introduce products to the EU market
- Coordinate with Vietnamese state organizations in EU countries and organizations of these countries in Vietnam to find the complete information about the
EU market, with special attention to policy import and export changes, regulations on customs procedures of EU countries and other regulations for commercial business activities
Vietnamese businesses seeking to enter the EU market should collaborate with lawyers from trade promotion organizations, legal consulting firms, and foreign law offices operating in Vietnam Currently, these businesses primarily engage with small and medium-sized enterprises in the EU, missing opportunities to connect with multinational corporations To enhance their market access, it is essential for Vietnamese companies to partner with the Chamber of Commerce and Industry, as well as legal consulting centers, to obtain reliable information and insights into various sectors.
To enhance trade resilience, Vietnamese businesses should diversify their import-export markets and explore niche markets within the EU, focusing on dynamic yet smaller markets Strong export efforts should be directed towards Germany and the UK, while maintaining established trade relationships with the Netherlands, France, Italy, Spain, Austria, and Belgium Additionally, businesses should tap into niche markets like Sweden, Malta, Latvia, Cyprus, and Slovenia to leverage opportunities from the EVFTA With the UK's exit from the EU, it is crucial for Vietnamese exporters to adjust their strategies and consider other EU countries to maximize EVFTA benefits On the import side, diversifying supply sources is essential to mitigate risks associated with reliance on major markets, while continuing to engage with Germany, Italy, France, and the Netherlands Moreover, increasing imports from niche markets such as Malta and Cyprus, particularly in pharmaceuticals, could be beneficial.
Enhancing product quality significantly boosts the competitiveness of Vietnamese goods in the EU market while establishing a reputation for high and stable quality on the international stage Additionally, it is essential to focus on innovation in product design and packaging, as these elements create the first impression for consumers.
3.2.2 For Government a Strengthen the organization of export activities of Vietnamese agricultural products to the EU market
*Strengthening information work and market search
The Government should support businesses with market information and finding customers by:
- Forming product export promotion subcommittees for each product, including officials from the Ministry of Industry and Trade and relevant ministries and branches
In addition to the function of managing, directing and guiding the implementation of export promotion to the EU market, this agency can also provide paid marketing services for businesses
The Vietnam Chamber of Commerce and Industry actively promotes its branch activities abroad to enhance cooperation with the Trade Office, serving as a central hub for Vietnamese businesses aiming to enter the EU market This initiative facilitates timely information exchange and offers essential support to other companies seeking to expand internationally.
- Having policies to support enterprises to set up representative offices in EU countries, especially those with small import-export turnover but with potential for development
Foreign enterprises, particularly those from the EU, benefit from significant capital, international business experience, and robust government support, including financial aid and market information, reinforced by bilateral and multilateral agreements In contrast, Vietnamese enterprises face challenges such as limited competitiveness, insufficient capital, and a lack of international market experience, highlighting the crucial need for government assistance to enhance their market capacity.
* Brand building for agricultural export products
Product branding plays a crucial role in conveying product specifications to consumers and enhancing a product's position in the global market It serves as an effective strategy for safeguarding producers' interests in international competition while showcasing compliance with technical standards Despite its significance, brand development for export products has often been overlooked Moving forward, it is essential to implement targeted solutions to address this gap and strengthen brand presence in international markets.
First, identify the strengths of the key products of each region to focus on building those strengths for the region
To establish a successful brand for export products, an asynchronous coordination strategy is essential This strategy should encompass a comprehensive plan that includes specific actions involving scientists, the workforce, business leaders, promoters, product banks, and authorities Collaborative efforts among these stakeholders are crucial for building a renowned brand.
Third, local authorities need to continue to have many programs to support business development, including branding programs
Fourth, promote trade in agricultural products with the Netherlands The
The Netherlands serves as a crucial gateway for agricultural products entering the EU, making it essential for Vietnamese exporters to enhance trade promotion channels and broaden their market reach By expanding their product offerings in the Netherlands, Vietnamese agricultural goods can achieve deeper penetration into the European market.
To enhance market reputation, it is essential for processing enterprises to swiftly establish and register trademarks for their products Additionally, it is crucial to refine and update mechanisms and policies to ensure alignment with the EVFTA.
* About technical barriers and epidemiological hygiene
Synchronous planning in the production of key agricultural products involves a comprehensive approach that integrates all stages of the supply chain, including production, harvesting, processing, packaging, preservation, transportation, warehousing, and port entry This strategic investment enables enterprises to effectively leverage Vietnam's comparative advantages in agriculture, fostering the development of a concentrated, high-quality export product base while addressing the current fragmentation in agricultural production.
Promote the research, review, and implementation of SPS/TBT fences to align with international commitments while safeguarding domestic agricultural production and protecting consumer interests.
The government must ensure equal treatment for both domestic and foreign enterprises by minimizing investment barriers and promoting transparency in investment processes Additionally, it is essential to safeguard domestic investments while encouraging foreign investment to create a balanced economic environment.
- Orient and focus foreign investment sources in agricultural products in which Vietnamese enterprises do not have the advantage and ability to implement
RECOMMENDATIONS
To maximize the potential of agricultural trade between Vietnam and the EU, it is essential to leverage the differences in development levels and comparative advantages highlighted by the EVFTA Initial analysis indicates that inter-sectorial trade will drive increased agricultural exports, particularly in high-potential areas such as vegetables, fruits, and seafood Vietnamese agricultural exporters must invest in production and enhance the quality and diversity of processed products to meet EU standards Understanding technical barriers to trade (TBTs) and sanitary and phytosanitary (SPS) requirements is crucial for overcoming non-tariff barriers and competing effectively in the EU market Focusing on improving product quality will provide sustainable benefits, not only from the EVFTA but also from other free trade agreements.
Second, agricultural product exporters need to seize the opportunities from the
The EVFTA is set to enhance intra-industry trade between EU agricultural enterprises and local businesses by encouraging the diversification of high-quality processed foods, beverages, and live animals To maximize benefits from horizontal intra-industry trade with the EU, companies should pursue strategies that involve forming partnerships and joint ventures with EU firms This approach will not only attract EU investment but also expand production capabilities, facilitate knowledge transfer, and leverage economies of scale in the development of potential industries.
To succeed in the EU market, agricultural enterprises must stay informed about non-tariff barriers, including TBTs, SPSs, RoOs, anti-dumping measures, and intellectual property regulations This knowledge is crucial for seafood, coffee, and processed food businesses to navigate and leverage new opportunities arising from these commitments Companies should prioritize adjusting their production processes, ensuring high product quality, investing in sustainable production practices, and addressing environmental concerns Additionally, attention must be given to animal quarantine standards, food safety, hygiene, and the careful selection of inputs during production.
Fourth, building and developing brands for Vietnamese agricultural products
Building a strong brand is just the beginning; the real challenge lies in developing and maintaining it Ensuring the quality of agricultural products to meet consumer and market demands is crucial Vietnamese businesses should focus on establishing key agricultural brands with global strengths, such as rice, coffee, pepper, and cashew nuts, enabling direct exports to markets without intermediaries Creating large-scale agricultural production and trading enterprises, along with robust supply chains, will serve as the foundation for building powerful brands for Vietnamese agricultural products in the international market.
Vietnamese agricultural product exporters must gain a deep understanding of each EU market and the EU's priorities under the EVFTA, while staying updated on international economic integration developments It is crucial for enterprises to recognize the differences in export and import growth across various industries and products to formulate effective policies and investment strategies Establishing a coordination mechanism for information exchange between the Government and businesses regarding the EU market and the EVFTA is essential for enhancing Vietnam's integration with the EU.
To enhance Vietnam's agricultural exports in the EU market, a thorough assessment of the competitiveness of key agricultural products is essential This includes identifying and addressing weaknesses to leverage the benefits of the EVFTA Emphasizing technical and economic solutions will help align Vietnam's agricultural products with EU market standards It is crucial to define primary export categories and ensure the availability of quality varieties for export crops A targeted list of agricultural products should be developed, focusing on those in high demand within the EU that are easy to cultivate and not prioritized by neighboring countries, thereby minimizing competitive pressure Additionally, applying science and technology will boost export production For processed goods, selecting products with broad appeal in EU member states and diversifying processing options will be vital for success.
To enhance the operational efficiency of the market information system, the government should establish market information centers in key agricultural production areas and coordinate their activities with agricultural extension organizations and industry associations This will involve strengthening monitoring and research on the EU market to provide timely updates to businesses and farmers Additionally, maintaining comprehensive websites dedicated to agricultural products and enterprises is essential The government should engage with international organizations for technical assistance in creating agricultural trading platforms and improving trade promotion capabilities Furthermore, adopting policies that encourage localities and businesses to participate in domestic and international agricultural fairs will help showcase Vietnamese agricultural products in the EU market.
The Vietnamese government must seek solutions to leverage the developmental disparities between Vietnam and the EU, capitalizing on comparative advantages and trade complementarity to prevent a widening gap with EU nations and the global market By utilizing the EVFTA, Vietnam can enhance inter-sectoral trade with the EU, focusing on specialization and fostering the growth of manufacturing sectors with competitive advantages This approach will facilitate efficient resource allocation, strengthen Vietnam's comparative advantages, and further harness the EU's strengths in trade, particularly in agricultural products.
The Government should prioritize the development of reasonable non-tariff policies that align with international commitments, focusing particularly on processed agricultural products, fresh vegetables, and processed foods This approach aims to protect the domestic market and production while ensuring the quality of imported products in Vietnam It should be informed by thorough research and the experiences of countries worldwide, including the European Union.
The Government must enhance awareness and provide timely information to agribusinesses regarding the technical barriers of the EU market and the commitments outlined in the EVFTA concerning TBT and SPS The EU market is known for its stringent and complex technical barriers, which can be challenging to identify and respond to promptly To assist Vietnamese agricultural producers and exporters in navigating these technical barriers, it is essential to leverage the opportunities presented by the EVFTA to boost agricultural product exports.
The government must implement supportive policies to enhance awareness and provide information to businesses regarding Technical Barriers to Trade (TBT) and Sanitary and Phytosanitary Measures (SPS), as well as the EU's commitments related to these standards within the framework of the EU-Vietnam Free Trade Agreement (EVFTA).
In today's globalized economy, competition in the world market is intensifying Effective development orientation is essential for the success of both nations and enterprises By establishing new strategic directions, organizations can devise appropriate solutions that maximize efficiency and drive growth.
Developing orientation and providing solutions in agriculture is crucial for sustainable efficiency, as emphasized by our Party and State's commitment to high and clean technology in the coming years Enhancing agricultural exports is essential for Vietnam's industrialization and modernization, with a focus on entering demanding markets like the EU, the United States, and Japan to showcase quality and competitiveness while building a national brand Additionally, exploiting potential niche markets requires a thorough analysis of market dynamics and a clear understanding of strengths and weaknesses by the state and import-export businesses, enabling the development of strategies to enhance the quality and technology of our agricultural products.
Vietnam, with its rich agricultural heritage, holds significant advantages in producing and exporting agricultural products In today's economic landscape, the export of these goods is crucial for national development and plays a vital role in the country's industrialization and modernization efforts.
Vietnam is globally recognized not for its industries or finance, but for its agricultural products, which are now exported to over 100 countries, including those in the EU The globalization trend and the EVFTA Agreement have strengthened the relationship between Vietnam and the EU, making the latter a key trading partner and importer of Vietnamese agricultural goods However, an analysis of EU consumer preferences reveals specific requirements for these products, highlighting the challenges Vietnam faces in exporting to this competitive market To successfully navigate trade barriers and increase market share in the EU, concerted efforts from the government, import-export businesses, and consumers are essential.