Against the current

Vietnamese seafood exporters must address the difficulties they regularly face from technical barriers and high anti-dumping tariffs in the US.

Growth in both volume and value at the Vinh Hoan Corporation, one of the largest exporters of pangasius (a type of catfish) to the US, fell in August and early September following the introduction of a new US requirement for foreign exporters to demonstrate their food safety control system is the equal of US regulations.

The US Food Safety and Inspection Service (FSIS) announced in early July that it will apply new regulations on imports of Siluriformes fish (mainly tra and basa, tre and lang) from August 2, instead of September 1, as announced earlier. Under the regulations, authorized agencies in the exporting country must submit documents to the FSIS that prove the country’s food safety control system is equivalent to that in the US. Vietnam’s tra fish exports to the country have already fallen significantly According to the Vietnam Association of Seafood Exporters and Producers (VASEP), in August and September the fall was 40 per cent year-on-year. Vinh Hoan saw a decline of about 50 per cent in exports during August.

By the end of September, 198 of the 320 shipments sent by Vinh Hoan to the US had been released by the FSIS, Ms. Nguyen Thi Thai Ly, Investor Relations Manager at Vinh Hoan Corporation, told VET. “To overcome the issues, our US importers have applied for i-house approval, as the US Department of Agriculture (USDA) can approve their own cold storage as i-houses,” she said. “In late September and October, exports to the US resumed at their normal pace.” Its export value share in the US market during the third quarter, however, was down on the first two quarters.

The US is a main contributor to the company’s export value, according to Ms. Ly. Others like the Bien Dong Seafood Co. and the Hung Vuong Corp. have also suffered, Ms. To Tuong Lan, Deputy Secretary General of VASEP, told VET. “The US is Vietnam’s key market and so this latest move affects many exporters,” she said. “It also threatens the jobs of millions of people in the industry.”

The market has held major potential for Vietnamese pangasius exporters for years thanks to high and stable prices. But after the US decided to inspect all Vietnamese tra fish shipments, it then imposed an anti-dumping tax of $2.39 per kg of Vietnamese frozen fish fillets during the 13th administrative review (POR13) in August; three-fold higher than the single tax rate imposed in POR12.

High anti-dumping tariffs and stricter technical barriers as well as excessive requirements for food safety have made it hard for many exporters to maintain shipments to the US. There are 14 tra fish exporters in Vietnam now exporting to the US, but due to the barriers in place only three regularly export to the country, according to VASEP.

Measures adopted

In response to the new trade barriers, the Ministry of Agriculture and Rural Development (MARD) recently introduced a safety control program designed for Siluriformes fish and related products exported to the US. Starting from September 1, the program will apply strict supervision over all stages of fish farming, processing, and exporting. Qualified products must satisfy 85 criteria of the US regarding veterinary medicine, 106 on pesticides, 17 on metals, eight on biochemistry, and four on dyeing chemicals.

When a batch receives a warning from the authorized agency in the US, the National Agro-Forestry-Fisheries Quality Assurance Department (NAFIQAD) will request the processor trace its origin and will investigate why the batch failed to meet food safety requirements. The department will also halt the facility’s Siluriformes fish exports to the US while addressing violations. The program aims to demonstrate equivalence and minimize the potential for batches exported to the market to be refused, thus reducing costs for companies.

Importing countries usually impose trade barriers to protect their own goods. “The way in which countries can enact technical barriers to trade are diverse and complex, especially in major markets such as the US, the EU, and Japan,” said Mr. Tran Thanh Hai, Deputy Director of the Import-Export Department at the Ministry of Industry and Trade (MoIT). Figures from the Department of Trade Defense at MoIT show that in the 2016-2017 period, Vietnamese companies were sued 23 times by importing countries. The department predicted that companies in importing countries will use more trade remedies in the time to come, and advises that Vietnamese companies scrutinize such allegations.

Meanwhile, Vietnamese exporters also have their own strategies to minimize the risks from exporting to the US. “We look forward to diversifying our market mix and product mix,” said Ms. Ly from Vinh Hoan. The company will not depend on any single market, forging into new markets and offering customers a broader range of products, especially value-added and high value by-products such as collagen and gelatin, besides traditional pangasius fillets. “This diversification strategy, we believe, will mitigate market risk and also bring about higher margins,” she said. The company is also offering grilled pangasius combined with various types of Japanese sauces in Japan.

Hung Vuong also has a diversification strategy. “We need to adapt to requirements on quality as well as trade barriers when exporting to the US,” according to Chairman Duong Ngoc Minh. “We are now more flexible when there are changes in the US, such as approaching the EU and Japan with premium products.”

Vietnamese tra fish products have been prepared in Japan under a recipe used for an eel dish - a traditional dish in the country during summer - and sold at AEON supermarkets since June and it plans to expand sales of the product in the future. According to Mr. Keisuke Hino, who manages AEON’s aquatic products in the northern regions of Kanto and Niigata, the products match customers’ tastes and are prepared in line with AEON’s strict processes.

Exporting tra fish products to Japan and the EU aims at ensuring stable exports but they are both tough markets. Enterprises must accept the difficulties when exporting to such markets, as well as the US, according to Bien Dong’s Director Ngo Quang Truong. “Through improving quality and exercising good farming, processing, and marketing practices, this is an opportunity for them to increase exports to these markets,” he said.

Agreeing, Ms. Lan said that compliance with standards on quality are decisive in the long-term development of all markets.

At Vinh Hoan, the company believes that pangasius needs a systematic branding strategy as “we can’t sell it at a high price as long as it is still an unbranded commodity,” said Chairwoman Truong Thi Le Khanh. “The government should put in place a favorable mechanism to help businesses build their brands and promote trade, and influence other governments’ policies in a way that encourages transparent standards, so that businesses can overcome trade barriers.” 

VASEP previously forecast that tra fish exports this year would increase 6 per cent compared to 2016. But many Vietnamese exporters have failed to reach their own revenue targets. 

by Nghi Do / VET