Exporting agricultural products of vietnam to the european union market situation and solutions

STATE BANK OF VIETNAM MINISTRY OF EDUCATION AND TRAINING BANKING ACADEMY FACULTY OF INTERNATIONAL BUSINESS - - LE LAN ANH EXPORTING AGRICULTURAL PRODUCTS OF VIETNAM TO THE EUROPEAN UNION MARKET: SITUATION AND SOLUTIONS Major: International Business Code: 734.01.20 BACHELOR’S THESIS INSTRUCTOR: DR TRAN NGOC MAI Hanoi, May 2021 Tai ngay!!! Ban co the xoa dong chu nay!!! 17014126247861000000 i ACKNOWLEDGEMENT The thesis is completed at Banking Academy of Vietnam While accomplishing the study, I have received much help from people, and I would like to express my gratitude to them I would like to express my sincere thanks to Dr Tran Ngoc Mai - Lecturer of the Faculty of International Business, Banking Academy enthusiastically guided and helped me complete this thesis At the same time, I would also like to thank the lecturers of the Faculty of International Business, Banking Academy, who have equipped me with much helpful knowledge in the past four years so that I can complete my thesis graduation Due to many limitations in knowledge, documents and practical experience, the thesis inevitably has shortcomings, and I hope that teachers can give me suggestions to make my thesis more complete Best regards, Dr Tran Ngoc Mai and all lecturers of the Faculty of International Business, Banking Academy have good health and success in the career of growing people and this life ii DECLARATION I assure that "Exporting Vietnam agricultural products to the EU market situation and solutions" is an independent study of my research under the guidance of Dr Tran Ngoc Mai Data used in the study are honest and have clear origins with full references credited I would take all responsibilities for my thesis Hanoi, May 24, 2021 Student Le Lan Anh iii TABLE OF CONTENT ACKNOWLEDGEMENT .i DECLARATION ii TABLE OF CONTENT iii LIST OF ABBREVIATIONS .vi LIST OF TABLES vii INTRODUCTION 1 THE URGENCY OF THEME LITERATURE REVIEW 3 RESEARCH PURPOSES RESEARCH SCOPE AND OBJECTIVES RESEARCH METHODOLOGIES THESIS STRUCTURE CHAPTER I: THEORETICAL FOUNDATION OF AGRICULTURAL PRODUCT EXPORTING 10 1.1 THEORETICAL FOUNDATION OF AGRICULTURAL PRODUCTS 10 1.1.1 Definition of agricultural products 10 1.1.2 Characteristics of agricultural products 11 1.1.3 Classification of agricultural products 13 1.2 THEORETICAL FOUNDATION OF AGRICULTURAL PRODUCT EXPORTING 14 1.2.1 Definition of agricultural product exporting 14 1.2.2 Forms of good exporting 14 1.2.3 The role of agricultural product exporting 15 1.3 FACTORS AFFECTING VIETNAM'S AGRICULTURAL PRODUCT EXPORTING 16 1.3.1 Subjective factors 16 1.3.2 Objective factors 17 1.4 RESEARCH MODEL ON FACTORS AFFECTING VIETNAM'S AGRICULTURAL PRODUCT EXPORTING 22 iv 1.4.1 Introduction to gravity model 22 1.4.2 Scientific basis 22 1.4.3 Variations 24 1.4.4 Gravity model 25 1.4.5 Gravity model estimation method 26 CONCLUSION OF CHAPTER I 27 CHAPTER II: THE SITUATION OF VIETNAM’S AGRICULTURAL PRODUCT EXPORTING TO EU MARKET 28 2.1 VIETNAM - EU TRADE RELATIONSHIP 28 2.1.1 Overview of Vietnam - EU trade relationship 28 2.1.2 EVFTA Areement 28 2.2 THE SITUATION OF VIETNAM'S AGRICULTURAL PRODUCT EXPORTING TO EU MARKET 30 2.2.1 Characteristics of the EU agricultural market 30 2.2.2 The situation of Vietnam's agricultural product exporting to the EU market 36 2.2.3 The results of gravity model analysis on factors affecting the export of Vietnam’s agricultural products to the EU market 47 2.3 GENERAL ASSESSMENT OF THE SITUATION OF VIETNAM'S AGRICULTURAL PRODUCT EXPORTING TO THE EU MARKET 52 2.3.1 Achievements 52 2.3.2 Limitations 52 2.3.3 Causes of limitations 53 CONCLUSION OF CHAPTER II 56 CHAPTER III: ORIENTATIONS AND SOLUTIONS TO PROMOTE THE VIETNAM’S AGRICULTURAL PRODUCT EXPORTING TO THE EU MARKET FROM NOW TO 2025 58 3.1 ORIENTATION OF VIETNAM’S AGRICULTURAL PRODUCT EXPORTING TO 2025 58 3.2 SOLUTIONS TO PROMOTE VIETNAM’S AGRICULTURAL PRODUCT EXPORTING TO THE EU MARKET 59 3.2.1 For businesses 59 v 3.2.2 For Government 62 3.3 RECOMMENDATIONS 68 3.3.1 To businesses 68 3.3.2 To Government 70 CONCLUSION OF CHAPTER III 71 CONCLUSION 73 REFERENCES RESOURCES 74 APPENDIX 75 vi LIST OF ABBREVIATIONS Abbreviations Full Meaning ASEAN Association of South East Asia Nations CPTPP The Comprehensive and Progressive Agreement of Trans-Pacific Partnership EC European Commission EU European Union EVFTA EU-Vietnam Free Trade Agreement EVIPA EU-Vietnam Investment Promotion Agreement FAO Food and Agriculture Organization of United Nations FEM Fixed Effects Model FTA Free Trade Agreement GDP Gross Domestic Product GSO General Statistics Office GSP Generalized Systems of Preferences HACCP Hazard Analysis and Critical Control Points HS Harmonized System Codes ISO International Organization for Standardization LM Breusch-pagan Larange Multiphier Test OLS Ordinary Least Squares REM Random Effects Model SITC Standard International Trade Classification SPS Sanitary and Phytosanitary Measures TBT Technical Barriers to Trade TDCA Trade, Development and Cooperation Agreement WTO World Trade Organization vii LIST OF TABLES Table number Table 1.1 Table 1.2 Table 1.3 Table 2.1 Table 2.2 Table 2.3 Table 2.4 Table 2.5 Table 2.6 Table 2.7 Table 2.8 Table 2.9 Table 2.10 Table 2.11 Table 2.12 Table 2.13 Table name Page Classification of goods with 1-digit code according to SITC System Rev.3 Classification of agricultural products with 1-digit code according to SITC Rev.3 System Description of the parameters of the extended gravity model Vietnam's coffee export turnover to the EU in the period 2010 2020 The proportion of coffee export turnover to the EU in the total coffee export turnover of Vietnam in the period 2010 -2020 Vietnam's coffee market share and some critical competitors in the EU market in the period 2010 -2020 Export turnover of Vietnamese pepper products to the EU in the period 2010 - 2020 The proportion of pepper export turnover to the EU in the total pepper export turnover of Vietnam in the period 2010 - 2020 Market share of Vietnamese pepper products and some main competitors in the EU market in the period 2010 -2020 Export turnover of Vietnamese fruit and vegetable products to the EU in the period 2010 - 2020 The proportion of fruit and vegetable export turnover to the EU in the total fruit and vegetable export turnover of Vietnam in the period 2010 - 2020 Market share of Vietnamese fruit and vegetable products in the EU market in the period 2010 - 2020 Descriptive statistics of data from gravity model on factors affecting the export of Vietnamese agricultural products to the EU market Result of testing gravity model on factors affecting the export of Vietnamese agricultural products to the EU market The results of the regression model of the gravity model on the factors affecting the export of Vietnamese agricultural products to the EU market The results of gravity model estimation on factors affecting the export of Vietnamese agricultural products to the EU market 13 14 24 38 39 40 41 42 43 44 45 46 47 48 48 49 INTRODUCTION THE URGENCY OF THEME Promoting the export of Vietnamese agricultural products to the world market in general and the European Union, in particular, is considered a significant strategic orientation of the Party and Government in restructuring the agricultural sector towards sustainable development In particular, the last 12th Party Congress also emphasized that in the period 2016-2020, the world and regional situation will still have many very complicated developments, directly affecting Vietnam's export activities to the world market In addition, in the context of deepening integration with regional and international organizations, Vietnam will also have to fully implement its commitments and regulations according to international standards, such as regulations on goods and technical barriers services (TBT), animal and plant quarantine systems (SPS), intellectual property issues, geographical indications, and origin of goods in new-generation free trade agreements (FTAs) such as the Vietnam Free Trade Agreement (FTA) The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Free Trade Agreement between Vietnam and the EU (EVFTA) are posing opportunities and challenges for the export of general goods and agricultural products in particular of Vietnam In recent years, the export market of Vietnam in general and critical agricultural products in particular (coffee, rubber, rice, tea, pepper and some vegetables) to the EU market has reached a growth rate that is high and stable compared to major competitors in the region such as China, India, Malaysia, Thailand Specifically, in terms of coffee, the EU is the traditional market The largest and most traditional market of Vietnam with an export proportion accounting for 53,58% in the period 2010-2020, reaching a value of over billion USD/year, the export turnover of vegetables and fruits also has impressive growth in turnover vegetable exports to the 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) In addition to the achievements, the export of agricultural products of Vietnam still has limitations and challenges such as low added value due to mainly exporting an unprocessed raw form human resources have not met the requirements, lack of information and confusion in finding customers, establishing export distribution channels of enterprises producing and exporting essential agricultural products Investment policies for agricultural development are still limited, the degree of linkage in the agricultural value chain is still low Along with that, strict requirements and regulations on importing agricultural products into the EU market such as: ban imported products containing high and toxic antibiotic content and apply trade remedies in emergency cases, grant and inspect imported goods that meet the standards about food safety From now to 2025, the views and policies of the Government of Vietnam are increasingly integrating more deeply into the global trade when participating in a series of new generation FTAs such as CPTPP and EVFTA These new generations FTAs will significantly affect Vietnam's exportability to the international market in general On the one hand, they will create significant opportunities for Vietnam's export products to increase their turnover and market share when tariff barriers are eliminated, but on the other hand, when participating in new generation FTAs, exportation of Vietnam also faces many challenges such as quality standards, food safety and hygiene, origin, intellectual property, anti-dumping If the Government, ministries and sectors not have appropriate strategies, and especially Vietnamese exporters not have a thorough preparation for this problem, this will inhibit or even reduce Vietnam's ability to export products in general and key outcomes in particular to the EU market To take advantage of opportunities as well as to limit challenges from FTAs, there is no other way that Vietnamese businesses and the Government, relevant ministries and sectors need to have orientations, plans and synchronously deploying solutions to improve and enhance the ability to export key products to the international market in general and the EU market in particular in the coming period Against such background, I researched the topic: "Exporting agricultural products of Vietnam to the European Union market: situation and solutions" to clarify the actual situation of exporting agricultural products of Vietnam to the EU market and propose solutions to promote agricultural exports to this challenging market