The EU-Vietnam Free Trade Agreement (EVFTA) has opened up unprecedented opportunities for Vietnamese rice. Thanks to the preferential tariffs, the exports of fragrant rice and high-quality rice to the European market (EU) is highly appreciated and gives positive results.

The statistics figures showed that rice exports to the EU in the first 4 months of 2022 reached over 30,000 tonnes, with a turnover of 23 million USD. Particularly in the first quarter of 2022, Vietnam exported more than 22,500 tonnes of rice to this market, earning nearly 18 million USD, up by nearly 4 times in volume and 4.3 times in value over the same period of 2021.

Among the EU members, Italy has risen to the top in importing rice from Vietnam, with the import turnover increasing by 26 times over the same period last year. Some other key markets are Germany, France, the Netherlands, and Sweden.

According to the Import and Export Department (under the Ministry of Industry and Trade), this result shows that businesses have effectively taken advantage of a number of advantages from the EVFTA to increase the value of rice exports to the EU, especially in the context of the pandemic. Due to complicated developments, sea freight rates to the EU increased sharply and this market's rice imports decreased in 2021.

The commitment from the EVFTA clearly states that the EU gives Vietnam a quota of 80,000 tonnes of rice per year, including: 30,000 tonnes of milled rice, 20,000 tonnes of unmilled rice and 30,000 tonnes of fragrant rice.

In particular, the EU will completely liberalize broken rice, this commitment helps Vietnam to export an estimated 100,000 tonnes of rice to the EU annually.

For rice products, the EU will bring the tax rate to 0% after 3-5 years. This has opened up an opportunity for Vietnamese rice to compete with other countries when exporting to the EU.

Therefore, with the passport from the EVFTA, Vietnam's rice exports to this market have had excellent results.

According to trade experts, because Vietnam's rice market share in the EU is still quite modest, accounting for only 3.1% of the total amount of foreign rice imported into the EU, Vietnam still has plenty of room to increase exports into this market.

With competitive prices, increasingly improved rice quality and advantages from the EVFTA, Vietnam's rice exports to the EU are expected to continue to boom in the near future.

It is forecasted that in 2022, Vietnam's rice exports to the EU are expected to increase quite a bit. In particular, the quality of Vietnamese rice has been improved, mainly aromatic rice varieties, hitting the tastes of European consumers.

Therefore, taking advantage of the EVFTA to export fragrant rice with 0% tax is in the hands of enterprises with large raw material areas, cultivated according to high standards such as Loc Troi, Tan Long, Trung An.

Analyzing the reasons for hindering rice exports to the EU over the past time, experts say that the EU tax rate imposed on rice imported from Vietnam is quite high; at the same time, Vietnam has not been granted a tariff quota by the EU, so it is difficult to compete with rice from other countries such as Thailand, the US, Australia, India, and Pakistan, which are allocated tariff quotas and countries such as Laos, Cambodia and Myanmar, which are exempt from tax and are not subject to quotas.

However, according to the commitment from the EVFTA, the EU gives Vietnam a quota of 80,000 tonnes of rice per year (including 30,000 tonnes of milled rice, 20,000 tonnes of unmilled rice and 30,000 tonnes of fragrant rice).

In particular, the EU will completely liberalize broken rice (this commitment helps Vietnam to export an estimated 100,000 tons to the EU annually). For rice products, the EU will bring the tax rate to 0% after 3-5 years. This has opened up an opportunity for Vietnamese rice to compete with other countries when exporting to the EU.

With stable demand, especially at a high level for specialty rice from Asia, in the coming time the EU will continue to be a potential rice export market for Vietnamese enterprises.

However, the epidemic is still complicated in Europe, and sea freight rates remain high, which may make it difficult to exploit the advantages of the EVFTA to boost rice exports to the EU market in the year 2022.

Source: ASEM Connect

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