The Comprehensive and Progressive Agreement for Trans-Pacific Partnership reduces Vietnamese tariffs on Canadian agri-food products:
When sales increase by 6,000 percent, it could be a blip or the beginning of a trend.
In the first seven months of 2020, Canada exported $37 million in pork to Vietnam. That’s up from $619,470 in the same time period of 2019, a sales increase of 5,980 percent.
The export figures are small compared to a major market like Japan, which bought $861 million worth of Canadian pork from January to July, based on Agriculture Canada stats.
But $37 million in exports is still $37 million.
Vietnam is buying more Canadian pork, much more, because African swine fever devastated the country’s pig herd in 2019. The United States Department of Agriculture has estimated that Vietnam culled 5.9 million pigs — 23 percent of the country’s herd.
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This year the spread of ASF slowed in Vietnam, but it’s impossible to replace nearly six million pigs in short order.
Vietnam, which was self-sufficient in pork production before ASF, has increased imports from countries besides Canada. The U.S. Meat Export Federation reported US$24.2 million in pork sales to Vietnam during the first seven months of 2020.
The additional sales are a bonus for Canada’s pork industry but the opportunity could be temporary, until Vietnam rebuilds its swine herd.
“The country has been hit hard by ASF and that’s all the real feedback available,” said a spokesperson for the Canadian Pork Council.
In the longer term, Vietnam could become an attractive market for Canadian pork and other agri-food commodities for a number of reasons:
- It has a population of 97 million and may climb to 120 million.
- Vietnam’s gross domestic product in 1990 was US$6 billion. In 2019, it was more than $250 billion.
- A World Bank report from 2015 suggests Vietnam could become a middle income country by 2035. Not Japan wealthy, but a desirable market.
“It’s a huge market, that’s why we spent all this time negotiating a multi-lateral free trade agreement,” said Pauline Stern, program manager with the Asia Pacific Foundation of Canada, referring to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
The CPTPP, which Canada ratified in 2018, is a trade deal between 11 countries, including Australia, New Zealand and Japan. The big opportunity for Canada’s agri-food sector is reduced tariffs on food sold into Japan.
Vietnam and the CPTPP
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership reduces Vietnamese tariffs on Canadian agri-food products:
- Beef — Tariffs of up to 31 percent on fresh, chilled and frozen beef are expected to be eliminated within two years. Tariffs of up to 34 percent on all other beef products are scheduled to be eliminated within seven years.
- Pork — Tariffs of up to 31 percent on fresh, chilled, frozen and prepared pork products are slated to be eliminated within nine years.
- Canola — Tariffs of up to 20 percent on canola oil are to be eliminated within seven years.
- Alcohol — Ice wine and whisky tariffs of up to 56 percent are expected to be eliminated within 10 years.
Source: Government of Canada
“Realistically, in the short term, it (the CPTPP) is a bilateral agreement with Japan,” Stern said from her home office in Vancouver. “In the five- to 10-year period… Vietnam and Malaysia are the two up and comer countries that have high market potential.”
Vietnam has ratified the deal and began reducing tariff rates on pork and other products from Canada. But the rubber hits the road in 2021, when Vietnam is expected to change its labour laws, foreign investment rules and other regulations to comply with the CPTPP.
The big question is whether Vietnam will make it easy, or hard, for foreign firms to do business in the country. Will they use non-tariff trade barriers to protect domestic industries?
“Are they still going to have biases against (foreign) companies?” Stern said. “Even something simple like: are they going to publish their rules and regulations in English, easily accessible to Canadian exporters?”
In the immediate future, Vietnam could be a limited market for Canadian exporters of agricultural products. But it’s important for Canadian companies to get a foothold in the region because Vietnam is an entry point to neighbouring countries.
“Canada’s attraction in Vietnam is not just about Vietnam. It’s about Vietnam and the rest of Southeast Asia,” Stern said.
Besides pork, it’s been a good year for Canadian beef sales to Vietnam.
From January to July, Canada exported $11.9 million in beef to Vietnam. That’s up from $2.9 million in the same period last year.
