Trang 1 FOREIGN TRADE UNIVERSITY FACULTY OF ENGLISH FOR INTERNATIONAL BUSINESS ---***--- RESEARCH PAPER U.S TECHNICAL BARRIERS TO TRADE AND VIETNAMESE SEAFOOD EXPORTS Topic: Internation
FOREIGN TRADE UNIVERSITY FACULTY OF ENGLISH FOR INTERNATIONAL BUSINESS -*** - RESEARCH PAPER U.S TECHNICAL BARRIERS TO TRADE AND VIETNAMESE SEAFOOD EXPORTS Topic: International Trade Class: TAN432/He2023.1 Instructor: M.A Phan Kim Thoa Group: No Group Name Phùng Hà My Quách Linh Chi Nguyễn Diễm Quỳnh Phạm Thị Thủy Tiên Nguyễn Thị Lan Hương Lê Thanh Nga Hanoi, July 28th, 2023 Student ID 2014110176 2014110038 2014110206 2011120010 2014110113 2014410103 WORK ASSIGNMENT No Name Phùng Hà My (Leader) Student ID 2014110176 Quách Linh Chi 2014110038 Nguyễn Diễm Quỳnh 2014110206 Phạm Thị Thủy Tiên 2011120010 Nguyễn Thị Lan Hương 2014110113 Lê Thanh Nga 2014410103 Assigned Contribution Conclusion 10/10 References Synthetic Recommendations for 10/10 Enhancing Vietnamese Aquacultural Export to the U.S Theoretical 10/10 Framework Implications of U.S 10/10 TBTs on Vietnamese Seafood Exported to the U.S Implications of U.S 10/10 TBTs on Vietnamese Seafood Exported to the U.S Abstract 10/10 Introduction Synthetic U.S technical barriers to trade and Vietnamese seafood exports My H Phung, Chi L Quach, Quynh D Nguyen, Tien T.T Pham, Huong T.L Nguyen, Nga T Le School of Economics and International Business, Foreign Trade University TAN432: English for Specific Purpose M.A Phan Kim Thoa July 28, 2023 Abstract Trade barriers of a technical nature (TBTs) are a common occurrence in various industries, but they are particularly prevalent when it comes to the international trade of primary and processed agricultural as well as aquaculture goods In recent times, a notable number of Vietnamese seafood products have encountered rejection at U.S ports due to their failure to meet the environmental and food safety regulations imposed by the United States Consequently, this has led to significant losses for Vietnamese producers and exporters This essay explores the TBTs that have been imposed on Vietnam's seafood products, acting as a means of restricting imports Additionally, it assesses the impact of these technical barriers on Vietnamese seafood exports to the U.S market Finding a resolution to this issue would prove beneficial for the Vietnamese business community, facilitating their trade expansion with the U.S and enabling them to establish a solid presence in this crucial market Keywords: International trade, technical barriers, seafood exports, U.S., Vietnam Introduction The United States holds a significant position as a key market for Vietnam's import and export commodities due to its densely populated nature, diverse preferences, and substantial annual demand for seafood In recent years, it has consistently maintained its status as Vietnam's primary import destination, constituting approximately 20% of the total export value for this category Despite this, various obstacles continue to impede the expansion of Vietnamese exports into this market Trade barriers are a universal concern, particularly in developed countries like the U.S., where stringent technical trade standards are established, often influenced by the country's political and economic conditions While international negotiations and multilateral trade agreements have successfully removed some traditional barriers to international trade, the U.S faces the challenge of increased imports from developing nations, including Vietnam, offering goods with lower prices, labor standards, and technology compared to American products In response, the U.S has implemented restrictive requirements that pose difficulties for exporters, particularly those from developing countries, in meeting compliance Technical trade barriers are prevalent across various industries, with particular significance in the international trade of primary and processed agricultural products The regulatory landscape for agricultural goods is predicted to become more complex, despite ongoing reform initiatives in many countries aimed at reducing the number and rigidity of regulations faced by the private sector In this report, we used qualitative methods to analyze the topic “U.S Technical Barriers to Trade and Vietnamese Seafood Exports” This paper will show that Vietnam is far from enjoying bilateral trade with the U.S in a genuinely free environment The paper will also contain some discussion on how U.S TBTs have been applied to Vietnam’s aquacultural products as means of import restriction Besides discussing U.S technical trade barriers, the paper will explain some terms that may be useful in the study of trade barriers in agricultural markets and examine why technical barriers are becoming an increasing focus of public policy debate It will then evaluate the effects of technical trade barriers on the Vietnamese business community to expand the volume of its trade with the U.S The research paper is organized as follows: SECTION 1: THEORETICAL FRAMEWORK SECTION 2: ANALYSIS AND FINDINGS SECTION 3: SOLUTIONS AND RECOMMENDATIONS During the process of making this research paper, due to the limited amount of time as well as some certain limits in understanding and data collecting, despite all the efforts, the report may hardly avoid mistakes We are always willing to receive your comments so that our group can improve and complete this paper Document continues below Discover more from: Kinh tế TACN3 TAN432 Trường Đại học… 41 documents Go to course 199 Bản TACN3 KTKT - sách TACN3 Kinh tế 100% (1) Gaining competitive 16 advantage from CS… TACN3 Kinh tế None Unit Exercises to sts - Practice and… TACN3 Kinh tế None Unit Part Exercises to sts Done TACN3 Kinh tế None Unit Exercises to sts Done TACN3 Kinh tế Unit Part Theoretical framework None Exercises to sts to trade (TBTs) Overview of non-tariff barriers (NTBs) and technical barriers Definition of Non-tariff barriers (NTBs) TACN3 Kinh tế None According to a recent OECD survey, many developed countries have introduced nontariff barriers to replace increasingly low tariffs under WTO NTBs now make up a very large category The full range of NTBs may be listed as follows (OECD Business Survey, 2003): • Technical measures • Internal taxes or charges • Customs rules and procedures • Competition-related restrictions on market access • Quantitative import restrictions • Procedures and administration (general) • Public procurement practices • Subsidies and related government supports • Investment restrictions or requirements • Transport regulations or costs • Restrictions of services (general) • Restrictions on the mobility of business people or labor • Defensive trade instruments (antidumping, countervailing duty, safeguards) • Local marketing regulations To date, there are various “weapons” for the purpose of trade protection For instance, U.S non-tariff barriers shut the door against many categories of products including toys, lighters, and traditional Chinese medicine (TCM) The State of California, in particular, insists that over 110 TCMs originating in China contain excessive heavy metals by the standards of drinking water in California and requests all these medicines be labeled “poisonous” (Financial Times, 2003) Due to limited space, this research seeks to examine only what are technical barriers to trade and how the U.S uses these barriers against imported seafood, particularly aquacultural products from Vietnam Technical Barriers to Trade (TBTs) Among non-tariff barriers, technical barriers to trade are least clearly identified Technical barriers refer to product standards that may differ from country to country (Kristina Kloiber, 2001) These standards can also have the effect of restricting trade Such standards can include specifications of characteristics of any type of product and may be established by private or public bodies Although compliance with these specifications may not be mandatory, the market may still penalize those who not comply Technical standards may require that products meet certain requirements before they are placed on the market These specifications may act as barriers to trade especially when they differ from country to country Conforming to these specifications can be so difficult and costly that it becomes economically impossible to comply with them and still remain competitive in the foreign market Technical barriers to trade can be grouped into three main categories (John Skorburg, 1998): Sanitary and phytosanitary: these regulations are implemented by countries to protect human, animal, and plant life or health Consumer measures: they regulate food safety and quality including labeling, packaging, pesticide residues, nutritional content, and contamination These regulations can allow a country to use barriers that may keep even safe commodities out for no real reason Trade measures: these are implemented to prevent commercial fraud including shipping and financial documents, standards of identity, and standards of measurement The emergence of invisible TBTs has created an overall negative trading environment While some TBTs are based on sound science, others are not and have increasingly been used to unduly inhibit trade On the other hand, the U.S has considerably increased its import inspection at the port of entry over the last few years leading to an expansion of targeted surveillance sampling of imported products U.S Institutions and Regulations for imported seafood U.S Institutions for overseeing imported seafood products The Food and Drug Administration (FDA) is part of the Department of Health and Human Services (DHHS) and the Public Health Service (PHS) All food products must be designed and produced in compliance with relevant FDA standards FDA is the scientific regulatory agency responsible for the safety of all foods (except meat, poultry, frozen and dried eggs and the labeling of alcoholic beverages and tobacco, cosmetics, drugs, biologics, medical devices, and radiological products) The task of the FDA is to ensure that food products are safe, clean, and wholesome and their labeling is honest and informative FDA also initiates food safety programs In 2020, FDA proposed regulations that would establish the Hazard Analysis Critical Control Points (HACCP) system for the seafood industry FDA issued its final rule on HACCP for seafood in December 2021 HACCP has been endorsed by the National Academy of Sciences, the Codex Alimentations Commission (an international food standard-setting organization), and the National Advisory Committee on Microbiological Criteria for Foods U.S Customs Service is an agency of the U.S Department of Treasury responsible for the assessment and collection of import duties and taxes and the control of carriers, persons, and articles entering or departing the U.S National Marine Fisheries Service (NMFS) is an agency belonging to the National Oceanic and Atmospheric Administration, U.S Department of Commerce Marine product imports are subject to the requirements of this agency and the FDA NMFS oversees fisheries management in the U.S and, through the Agricultural Marketing Act, provides a voluntary inspection service to the industry The NMFS Fishery Products Inspection Program offers a variety of professional inspection services that assure compliance with all applicable food regulations In addition, product quality evaluation, grading, and certification services on a product lot basis are also provided U.S regulations on imported seafood: Imports to the U.S are not only subject to the relatively transparent system of import duties but also to quality and grade standards to ensure the safety of the American food supply Trademark laws Several provisions in the U.S laws administered by various government agencies offer protection against the misuse of trademarks, trade names, copyrights, and patents The Trademark Act prohibits the importation of articles bearing marks that are confusingly similar to or the counterfeit of trademarks registered in the U.S Patent and Trademark Office The Tariff Act requires the U.S Customs Service to prohibit the importation of foreign-made goods bearing marks that have been registered in the Patent and Trademark Office by a U.S citizen or corporation if a copy of the certificate of registration has been filed with the U.S Treasury Department U.S regulations require that a trademark or copyright owner record its mark or copyrighted work by application, which may be in the form of a letter, to the Customs Commissioner, Washington, D.C., with a payment of applicable fees Other regulations FDA operates an oversight compliance program for Low-Acid Canned Food (LACF), which is based on the HACCP concept, and is focused on thermally processed, commercially sterile foods including seafood such as canned tuna and salmon U.S Federal Register system There are two acts that define the basic functions of the Federal Register system and provide the framework for the promulgation of U.S government regulations They are the Federal Register Act and the Administrative Procedure Act The former establishes a uniform system for handling agency regulations while the latter adds several important requirements to the Federal Register System Labeling requirements In principle, all food products must be inspected and labeled to meet the relevant laws and regulations According to the Federal Food, Drug, and Cosmetic Act (FD&C Act), a food label must contain specified information, displayed conspicuously and in 11 Figure Value of Vietnamese seafood exports to the U.S from 2015 to 2022 Source: Trademap Seafood export in 2015 faced some difficulties: electricity prices increased, social insurance increased, and lending interest rates increased; while TPP and FTA commitments make the export door open, but at the same time technical barriers increased However, the biggest difficulty to mention about seafood export in 2015 is the technical and trade barriers raised by importing countries Accordingly, the anti-dumping tax on pangasius in the US market increased, causing difficulties for fish farmers and Vietnamese pangasius exporters In 2015, the US Department of Commerce (DOC) twice introduced anti-dumping duties on frozen pangasius filets imported from Vietnam From 2016 to 2022, the value of Vietnamese seafood exported to the US has shown signs of improvement 2016 is considered a year with many difficulties for pangasius farmers in the Mekong Delta as well as pangasius exporters Raw material prices fluctuated in a large and erratic range, causing businesses and farmers to continue to suffer heavy losses However, thanks to strong investment and technological innovation, the shrimp market remains volatile and increases with a large export source If in 2017, Vietnam's pangasius exports to the US market have many pessimistic forecasts about promoting more to this market when the anti-dumping tax is high, the catfish 12 inspection program will be transferred to the US Department of Agriculture With many difficulties in implementation, 2018 and especially the last two quarters of the year had many unexpected changes In the first two quarters of 2018, pangasius exports to the US market were still not really stable when in February and June 2018, the export value decreased from 4.3 to 5.5% over the same period last year The factors that are dominating seafood exports in 2019 such as the anti-dumping tax on shrimp and pangasius in the US, IUU yellow card for seafood exploited by the EU are unpredictable and will tend to be better or worse in the future next year Therefore, it is difficult to forecast the export trend to main markets According to the Vietnam Association of Seafood Exporters and Producers (VASEP), in 2020 the Covid-19 epidemic broke out strongly in the southern provinces In the third quarter, strict epidemic prevention and control regulations made most seafood processing factories only maintain 30-50% of production Seafood exports to the US market hit a record of US$2 billion, up 27% compared to 2020, accounting for 23% of Vietnam's total seafood exports According to the Association of Seafood Exporters and Producers, in the 11 months of 2022, Vietnam's seafood export turnover to the US reached the milestone of US$2 billion, an increase of nearly 10% compared to 2021 This is thanks to the support support the effectiveness of the policy and the strong transformation of enterprises "We have added new products, products that we almost didn't accept in the past This is a product line that customers love very much We expect in 2023, this product will help revenue growth to support other products," said Mr Minh Nguyen, General Director of Nghi Son Food Group Vietnamese seafood exports to the U.S in the first quarter of 2023 Exports to the US tended to decline from the last quarter of 2022 and continued to decline deeply in the first months of 2023 Up to now, the US only accounts for 14.5% of Vietnam's total seafood exports, but still holds the No import market position Although inflation has slowed down, gasoline prices have fallen, but production costs and prices of practical products in the US remain high Consumers still have to tighten their spending during this period, they prefer to consume products with lower prices Therefore, the average price of US seafood imports in the first month of the year fell by more than 9% compared to the same period last year Vietnam is also among the countries that have reduced exports to the US because the average export price has decreased by the same amount 13 By the end of February 2023, Vietnam's seafood exports to the US reached US$132 million, down 43% over the same period last year In which, shrimp accounted for 37%, tuna accounted for 23%, pangasius accounted for 17% and other marine fish products accounted for 15% In the context of inflation, the US seafood import and consumption will increase in the frozen segment and decrease more in the value-added processed goods segment, the export price will continue to decrease compared to 2022 It will be difficult to have a strong breakthrough in the coming months Figure Vietnam’s seafood export to the U.S Source: General Department of Customs Some challenges facing Vietnamese seafood entering the United States market It is crucial that when Vietnamese exporters ship their products to the U.S and other major markets, these products meet current seafood safety regulatory requirements In general, technical barriers to trade can be identified as measures that require foreign seafood exporters to comply with technical regulations and standards; comply with trademark or labeling regulations; control dishonest trade acts; follow the rules of product’s origin; and ensure safety and environmental protection (Nguyen Tu Cuong, 2004) Tariff barriers for aquatic products imported into the market 14 Table Tariffs for some aquatic products imported into the market USA Under normal Not in the scope of trade relations regulations normal trade (NTR) relations (NonNTR) 0% 0% 0% 2.2-4.4 cent/kg 0% 0-5.5 cent/kg 4-7% 25-30% Frozen shrimp 0% 0% Frozen crab meat 7.5% 15% 0% 0% Snail 5% 20% Fish products 0.9-6 cents/kg 6.6-22 cents/kg Cooked Crab 10% 20% Crab meat 0% 22.5% Processed lobster 10% 20% Tax code Items 0301 Live fish Parts remaining after 0302 cutting 0%fresh or frozen filets 0304 0305 0305.13 0305(1224) 0307 0307.60 16011604 160510.05 160510.20 160530.05 Fish filets, boneless fish, fresh or frozen Dried, salted, smoked fish All kinds of clams and shells Source: US Customs Non-tariff barriers for each seafood product imported into the US market • Regulations of the United States on food hygiene and safety By law, all domestically produced and imported foods are subject to Federal laws such as the Food and Drug Act, the Packaging and Labeling Act, and parts of the Food and Drug Administration Health Services Act There are also separate regulations by the US 15 Department of Agriculture or the US National Marine Fisheries Service In addition to the federal legal system, each state or administrative region has its own legal system State and administrative law may not contravene the Constitution of the Union • US Regulations on Quarantine • Regulations on additives • Regulations on food coloring • US regulations on trademarks • US regulations on product quality standards • Product traceability • Regulations of the United States on the protection of the environment and resources US Regulations Concerning Fair Trade • Anti-dumping: Provide sanctions against a country, or a business, that sells its product for less than its cost Antidumping laws also allow US industries to file complaints about dumping in third countries • Anti-Unequal Competition: Regulations on “urgent measures” that an importing country is allowed to take against an exporting country when it has taken action to support its producers in terms of capital, equipment, or subsidies to a manufacturer so that the product can be exported at a price below its actual cost • Anti-infringement of intellectual property, industrial designs, trademarks and trademarks of goods: Including regulations and procedures for receiving and registering exclusive registration of inventions, innovations, industrial and exclusive designs about trademarks, trademarks of goods of the country or of the manufacturer with sanctions for violations The recent “catfish” trade name disputes The United States has also banned the import of catfish (tra or basa) raised in the Mekong River Delta as part of its TBT policy against seafood imported from Vietnam Beginning in the late 1990s, Vietnamese frozen fish fillets were sold in the United States By 2001, Vietnamese products accounted for 20% of the U.S domestic frozen fish fillet market So, it is understandable that American catfish farmers were concerned about the competition from invading imports In order to prevent the growing number of imports, the Catfish Farmers of America (CFA) started the dispute by pointing to “subsidies, mislabeling, and low wages” to account for Vietnam’s success in American markets 16 More specifically, they claimed Vietnamese producers purposely used misleading labels to manipulate consumers into purchasing Vietnamese catfish Vietnamese catfish was widely promoted to restaurant chains and food wholesalers under the names of "Delta Fresh" "Cajun Delight”, “Harvest Fresh,” and “Farm Select.” Advocates for the American catfish industry claimed the names were intentionally similar to American brands like "Delta Pride," "Harvest Select," and "Farm Fresh." The CFA sought the advice of experts in order to resolve the disagreement and establish what exactly constitutes an American catfish It was determined after speaking with ichthyologist Ed Wiley that a catfish was a catfish regardless of whether it was an Asian or North American catfish However, CFA proponents contended that only catfish from the Iclaluridae family that were farmed in the United States could be marked and marketed there To convince Congress of the legitimacy of this claim, The CFA contended that American consumers had the right to know whether the catfish they buy or order is either catfish or something else The Vietnamese representation (VASEP) maintained that their basa and tra catfish are distinct from the types seen in America and did not copy or infringe on American trademarks Despite the fact that fisheries specialists claimed the Vietnamese variations looked and tasted the same as the American goods, Congress sided with CFA and forbade the Vietnamese exporters from using the term "catfish." The labeling of catfish from Vietnam as catfish was then outlawed by Congress (Tran V Nam, 2003) It is believed that the fact that imports were reducing the sales of American catfish was a bigger factor in this decision Under the names Basa Bocourti and Basa Catfish, Vietnamese catfish were permitted to be sold in the United States under the provisions of the Bill Following their compliance with the Bill, the Vietnamese exporters were required to mark their catfish as "tra" or "basa” Despite the fact that the ban ended on September 30, 2002, Vietnamese people nevertheless felt its negative effects However, despite CFA's efforts to limit imports of Vietnamese catfish, those shipments have only increased Two Congressional Representatives pushed the Bush Administration to require catfish, especially those from Vietnam, to bear required country-of-origin labels in 2001 They asserted that in order to get 20% of the market, Vietnam changed the name of its fish from basa to basa catfish on comparable packaging and, in an inventive move, began marketing it as "Delta Fresh." In this instance, rather than the Mississippi Delta, where 94 percent of American crops are raised in six southern states, the products were sent frozen from the Mekong Delta Vietnamese exporters responded that all of their fish items were marked "Product of Vietnam" and that they had "no reason to imitate American brands and logos." The 17 United States government passed a rule requiring the labeling of meat and fish products with their place of origin in order to assist American farmers and producers once more The decisions against Vietnamese catfish will undoubtedly have a major impact on the future seafood trade between the United States and Vietnam The matter might have gone before a dispute resolution panel, though, if Vietnam had been a WTO member Catfish from Vietnam should be sold as "catfish" when it reaches the U.S market, as may be seen by examining the Peru-EU "sardine" controversy Reference to the Peru-EU “sardine” dispute The case “Catfish” Trade name Dispute between Vietnam and U.S” was concerned with an international standard for the classification of sardines which the European Union declined to recognize in the EU technical regulation (Raymond Schonfeld and John Dobinson, 2004) The question was whether one type of fish, known to experts as Sardinops sagax, should be categorized as a sardine In a 1989 law, the EU restricted the use of the term "sardine" to one species, Sardina pilchardus, which is located nearby to Europe, and refused to recognize imported Peruvian fish as "sardine." Therefore, Sardinops sagax, which was discovered in several waters, most notably off the coast of Peru, could not be sold in the EU as sardines The international standards body Codex Alimentarius issued a new international standard that Sardinops sagax could be referred to as a sardine in the middle of the 1990s The Government of Peru requested that the EU change its regulation to adopt this standard, but the EU refused to comply Peru believed that the refusal to classify their fish as sardines had negatively impacted Peruvian export prospects and that this restriction on commerce was unjustified So it applied the process specified in the WTO agreements to pursue this case The EU law, according to the Peruvian Government, violated the TBT Agreement, thus in May 2001, the government of Peru formally requested consultation under the WTO's guidelines for resolving disputes It then asked for the creation of a panel to look into the EU regulation Finally, Peru won the case at the WTO’s Dispute Settlement Panel and its Appellate Body Recommendations for Enhancing Vietnamese Aquacultural Export to the U.S Recommendations for Vietnamese processors and Exporters Since seafood products must meet all requirements to get through the U.S border checking points, Vietnamese exporters should be aware of U.S regulations and standards on quality, size, packaging, labeling, etc Facing US technical barriers to Vietnam's seafood trade and exports is an important challenge To help Vietnamese seafood processors overcome these barriers and maintain or expand export markets, here are some recommendations: 18 Enhance product quality and safety: Ensure seafood meets U.S safety and quality standards This includes compliance with quality regulations, limiting the use of banned substances, and ensuring food safety and hygiene Compliance with regulations on environmental protection: The United States has strict regulations on environmental protection related to fishing and seafood processing Processors need to comply with these regulations to ensure the sustainability of aquatic resources and protect the marine environment Improve quality control capacity: Invest in quality and safety management standards, including quality control and monitoring systems throughout the process This helps to improve credibility and meet the strict requirements of the United States Learn and adapt to new regulations: Export and trade regulations and policies can change over time Therefore, processors need to regularly monitor and master the latest regulations to meet US requirements Seeking alternative markets: Contingency by finding and expanding export markets other than the United States This helps to minimize the negative impact of fluctuations in the US market and ensures diversification of trade sources Partnering with Governments and Related Organizations: Learn how the Vietnamese government and commercial organizations can assist businesses in dealing with US technical barriers Cooperation and support from these agencies can help solve some of the difficulties in the export process By putting these strategies into practice, exporters and processors should be able to reduce the likelihood of a material shortage and successfully deal with the obstacles put in the way of Vietnamese fish exports Recommendation for Vietnamese policymakers and administrative agencies In the face of US technical barriers to Vietnam's seafood trade and exports, Vietnamese policymakers and administrative agencies need to adopt measures to support the seafood industry products to overcome difficulties and enhance export efficiency To achieve this target, all local policymakers and administrative agencies have a lot of solutions Promoting international cooperation and dialogue: Strengthening cooperation with the United States through policy and trade dialogues This will help the parties understand the issues that are causing barriers and find common solutions The Vietnamese government must bargain with FDA for voluntary food-safety standards agreements comparable to those in the U.S in order to assist local exporters in instructing the safety of seafood entering the country