TECHNICAL BARRIERS AND SOLUTIONS TO IMPROVE VIETNAM'S RICE EXPORT

POSITION IN THE EU MARKET

Nguyen Thanh Hang

31201025323

ABSTRACT

This paper was conducted with the aim of making recommendations to “increase the amount of
exported rice, especially when the EU and Vietnam signed a free trade agreement.” This paper
describes TBT applied to Vietnamese agricultural products as a means of restricting imports. In the
empirical part we will analyze the EU technical requirements in the import of rice products, the
situation of Vietnamese rice producers and management when Vietnamese rice is exported to the
EU. This paper also assesses the impact of TBT on Vietnamese rice products exported to the EU
market. Next, recommendations are proposed on the policies and measures of the government and
Vietnam exporters to overcome the market-oriented. Finding ways to resolve this problem will help
the Vietnamese business community to increase trade volume with the European Union and build a
foothold in this important market.

Ho Chi Minh city, 20/11/2021

Key word: Rice Export; Techical Trade Barriers; Vietnammese Rice; Algricultural; Rice Products; Free Trade
Agreement
CONTENTS
PURPOSE OF THIS ESSAY................................................................................................................1

DETAILS..............................................................................................................................................2

1.  Overall theoretical framework of technical barriers after FTA integration:.......................2

1.1 What is TBTs (technical barriers to trade):............................................................................2

1.2. the importance of TBTs and the rice export industry:............................................................2

2. VietNam rice exxport in the EU market and Solution to boost trade volume in the near
future:...............................................................................................................................................3

2.1. VietNam rice export to EU before and after EVFTA agreements (from 2016 to 2020):.......3

2.2. The quality and quantity requirement in the EU market:.......................................................6

2.3 Opportunities and difficulty of VietNam rice export to the EU market in the near future:....7

2.4. Recommendations to increase rice product quantities and increase trade volume with EU. 8

CONCLUSION...................................................................................................................................10

REFERENCE......................................................................................................................................10
PURPOSE OF THIS ESSAY

The export of rice has always increased in both output and quality, but Vietnamese rice is
still entangled at the threshold of the European Union (EU). The EU's regulation on rice exports
from other countries causes many obstacles for Vietnam to penetrate this difficult market. From
August 1, 2020, the effect of the Vietnam - EU Free Trade Agreement (EVFTA) brings great
opptunities for VietNam bussiness to enter the EU market. However, the validity of the Agreement
is an advantage, but knowing whether to take advantage or not depends on whether Vietnamese
enterprises themselves know how to make appropriate adjustments to meet the strict requirements of
the Agreement. What is the impact of the Agreement on rice exports and Vietnam's economy?

This esay is written with the purpose to “analyze the facilitating and hindering factors of
Vietnamese rice Exporting to the EU”. Based on that, we can find ways to “increase the quantity of
Vietnamese rice export to the EU, especially” when the “free trade agreement between the EU and
Vietnam” enters into force in 2020. This can bring benefits to “Vietnamese farmers and companies
who are exporting rice to the EU.”

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DETAILS
1.  Overall theoretical framework of technical barriers after FTA integration:
1.1 What is TBTs (technical barriers to trade):
Technical Barriers to Trade (TBTs) are technical regulations and standards. They cover all
traded goods and include standards for food packaging and labelling, animal welfare, agriculture and
veterinary chemicals, fisheries and forestry. TBTs can create interruptions and stifle trade
opportunities. TBTs are governed by the World Trade Organization’s (WTO) Agreement on
Technical Barriers to Trade (the TBT Agreement) and its Committee on Technical Barriers to Trade
(the TBT Committee).

It is indicated that TBTs have a generally strong positive impact on the value and the quality
of imports of goods. While many keywords cited in TBTs notified to the WTO affect the values and
volumes of imports in a positive way, certain other TBTs function as trade barriers that can reduce
their values and volumes.

1.2. the importance of TBTs and the rice export industry:

Technical Barriers to Trade (TBT) exist in most industries, but are particularly widespread
on the international exchanges for basic and processed agricultural products. Recently, one shipment
of high-quality fragrant rice like ST25, exported to Belgium, has had to be recalled due to excess
chemical residues. The situation has pulled out the great shortcomings of Vietnamese rice exports in
the world market, especially in markets with high requirements on quality and technology like the
EU.

“Rice is both an important food source and a strategic export item of Vietnam”. Since the
EVFTA agreements officially come into force in 8/2020, it has created great opportunities for
“Vietnamese rice exporters. However, to overcome the strict requirements of the EU market,
Vietnamese” enterprises need to find solutions to improve the quality of Vietnamese products to
ensure output and long-term cooperation with EU countries. In the next section, we will explore the
overview of Vietnamese rice exports in the EU market, to consider the opportunities and challenges
for the industry in the coming time.

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2. VietNam rice exxport in the EU market and Solution to boost trade volume in the near
future:
2.1. VietNam rice export to EU before and after EVFTA agreements (from 2016 to 2020):
According to the latest figures, “the volume of rice exports in April 2021 is estimated at
700,000 tons with a value of 362 million USD” which “bringing the total volume of rice exports in
the first 4 months of 2021 to 1.9 million tons with a value of 1.01 billion USD, down 10.8% in
volume but up 1.2% in value over the same period in 2020.”

I Figure 1: “Rice export turnover and market in 2020 and the first 5 months of 2021

(According to data published on January 13, 2021, and June 12, 2021, of the General Department of
Customs)”

Vietnam's rice import market is mainly Asian and African countries. Meanwhile, the output
of Vietnamese rice imported to European markets and countries with high quality requirements for
imported rice from Vietnam is still low. Countries in the European Union (EU) from 2015-2019 to
import rice from Vietnam in very limited quantities due to strict quality requirements as well
asequirementson origin and brand.

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 Figure 2: The main Asian rice exporters to Eu from 2016- 2019 (

“Asian countries exporting rice to Europe are mainly India, Thailand, Pakistan, Cambodia,
and Myanmar. Figure 1 shows that in the year 2017, the volume of rice export from India to the EU
worth 443, 925,864 euro”, Thailand stood in second place with 185,338,183 euro, followed by
Cambodia154,134,181 euro. In 2019, Pakistan got the highest turnover of rice exports. Thailand
reached 246,373,115 euro when “exporting rice to the EU in 2019. India, Myanmar and Cambodia
obtained 223,058,937 euro, 160,995,596 euro, 155,054,889 euro correspondingly”.

From the figures below, Vietnamese rice is facing stiff competition from other markets such
as Thailand and Cambodia. While other countries are increasing the production of good quality rice,
Vietnam is only focusing on high yielding varieties. EU people use less rice than Asians and
Africans, the demand for high quality fragrant rice is necessary while Vietnam focuses on increasing
production, contributing to the price and quantity of rice exported. This period is significantly
reduced. Vietnamese rice has not confirmed its name and has not built a brand name for Vietnamese
rice in the eyes of EU member countries.

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 Figure 3: “The chart of International rice price in USD/ tonne from Sept 2015 to March
2020”

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 Figure 4: “The quantity of Vietnamese rice export to the EU”

2016 was a gloomy year for Vietnam's rice export industry because rice export stagnation led
to a decrease in rice prices, reaching only more than 30 thousand tons, down 36.8% in. volume
compared to 2016. Vietnamese rice exports to the EU saw a slow down in 2016 but “tended to
increase from 2017 to 2019”. However Vietnamese rice export “only accounts for a very small
proportion of the total amount of EU rice imports”. For example, in 2018, 23,519 tons of
Vietnamese rice entered into the EU worth 13,013,032 euro. Meanwhile, the “EU imported
2,073,484 tons of rice worth 1,272,302,650 in 2018.”

2.2. The quality and quantity requirement in the EU market:

 Controlling pesticide residues

The EU has established maximum residue levels (MRLs) for pesticides and other chemicals.
EC Regulation No 396/2005, dated 23/02/2005 establishing maximum residue levels of pesticides in
food products. All food products will be expelled from the EU market if any contain illegal
pesticides or higher residues of pesticides than prescribed deadlines set forth by the Regulations

 Controlling contaminants in products

 EC Regulation No 1881/2006, 19/12/2006 on setting maximum concentrations for

pollutants certain foods in order to be allowed to enter the European market. Regulations on toxic
concentrations are determined by commodity and season.

 Plant quarantine regulations

 The EU has regulations on the quarantine of plants and plant products from outside the EU
for the purpose of protecting crops from harmful organisms such as pests. a unified set of
regulations on control conditions and is applicable to all of the EU's trading partners. The new EU
Plant Health Act 2016 stipulates that all live plant products need a phytosanitary certificate. animals
and subject to more stringent pest regulations.

 Food Labeling

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  Foods that enter the E market need to meet the mandatory product name information
product, ingredient list, net weight, expiration date, storage conditions, country of origin,
instructions use, batch marking and nutrition statement. (EU Regulation No. 1169/2011)

“It can be said that the requirements of EU imported products are extremely strict.” “
Currently Vietnam's rice exports do not meet these standards or meet very small quantities”.
Regarding the rules of labeling and packaging, “EU standards will be a challenge for Vietnam when
Vietnamese rice exporters lack both capacity, knowledge and experience about this matter. When
the free trade agreement is effected, it becomes a golden opportunity for Vietnam's exports,”
“improved competitive advantage in price compared to long-time rivals such as Thailand and
Cambodia when exporting to the EU.”

2.3 Opportunities and difficulty of VietNam rice export to the EU market in the near future:
2.3.1. Opportunities:

Vietnam's rice exports are receiving many double opportunities, due to the complicated
“situation of the Covid-19 epidemic and spreading rapidly in the world”, “making the demand for
food in many countries increase.”

“In 2020, Vietnam has expanded and diversified its export markets through recently signed
Free Trade Agreements (FTAs) such as the EVFTA Agreement”. According to the commitment in
the EVFTA, the EU will give Vietnam a quota of 80,000 tons of rice (0% tax) and eliminate tax on
broken rice in 3-5 years. “This is an opportunity for Vietnamese rice” to compete in the EU market
in the near future. In 2021, “with the preferential tax rates in the above agreements, Vietnamese rice
will have competitive advantages and growth opportunities in the EU, UK, and EAEU countries.”

In particular, the standards of the EU market are very high, so when Vietnamese rice enters
the EU, its position will be enhanced in the international market. In the long term, strict regulations
on quality standards of agricultural products and rice imported from Vietnam are chances to
promote a more comprehensive and synchronous agricultural restructuring.

The VietNam-EU agreement will not cause a sudden spike in rice export turnover, but will
be an opportunity to diversify Vietnam's rice export market. Meeting the strict technical standards of
the EU will help increase Vietnam's rice brand in the world.

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 3.1.2. Difficulties:

“Besides opportunities, Vietnam's rice export activities have to face many difficulties and
challenges” due to “strict market requirements on standards, food safety, and environmental
protection are very high because rice is a sensitive commodity”

“Rice production lacks sustainability, smallholder production scale, fragmentation, high cost
and low added value, slow mechanization, large post-harvest losses (currently the post-harvest loss
rate of our country is 13-16%, Thailand is about 7-10%)” “ The number of enterprises participating
in the association contracts to consume agricultural products is small in quantity, small in scale, and
limited in capacity, so the association contracts are limited in both quantity and quality.”

Infrastructure and technology for the preservation and processing of agricultural products are
still lacking, leading to increased losses and reduced quality during the preservation process. The
industry of deep processing of rice products has not developed uniformly, especially products that
have not been processed to increase added value.

In order to receive the 0% tariff, businesses must register with the competent authorities to
certify the type of rice and clearly state "rice belongs to one of the categories entitled to preferential
tariff rates under the EVFTA." However, like competitive pressure, this is both a challenge and a
motivation to promote enterprises to improve the localization rate and added value in export
products.

2.4. Recommendations to increase rice product quantities and increase trade volume with EU
 Solutions from State management agencies

“The rice industry plays an important role in the development of agriculture and rural areas,
especially contributing to ensuring national food security”. However, the development of the
industry is facing many challenges. “Therefore, to promote rice exports in the coming time, it is
necessary to have solutions from state management agencies and businesses.”

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 :Since 2018, the Government has issued Decree No.107/2018/ND-CP on rice export
business”; encouraging traders to “invest in the production and export of high-quality and high-
value rice products”. These are new “institutional steps towards opening, creating favorable
conditions for traders to enter the rice export market”. However, in the current context, when
Vietnam has signed many FTAs such as the EVFTA Agreement; RCEP; UKVFTA, “the authorities
need to review and propose mechanisms and policies to respond flexibly and appropriately to
frequent fluctuations from the rice export market.”

Create high-quality rice growing areas on a large scale and producing according to the
standards set by fastidious markets such as the EU, the US, etc., for the rice industry to develop
more sustainably.

In addition, “strengthen the selection and development of rice varieties to meet the structure
of rice varieties according to the export strategy”. In particular, “priority should be given to aromatic
and specialty rice varieties and the development of concentrated production areas according to the
varieties identified in the production”, consumption and export linkages. “Strictly control the
production process so that products have uniform quality and ensure food safety and hygiene
standards”. “In this regard, it is necessary to absolutely meet the regulations on the maximum
allowable residue level of pesticides and trace the origin.”

 Solutions from businesses

“Rice exporters, as well as farmers, need to actively improve their knowledge of FTAs;
actively research and well implement documents guiding the implementation of FTAs” of the
Government and related ministries and sectors, especially EVFTA, RCEP...; proactively prepare
“capacity and source of goods, improve competitiveness through building long-term and methodical
plans”, improve “production and business capacity through application of science and technology to
increase product value”.

In order to effectively take advantage of the incentives brought by the EVFTA, businesses
need to actively learn the contents of the EVFTA, especially commitments related to tariffs and
rules of origin, and actively adjust the production process. source of raw materials to meet the
Agreement's rules of origin. Brand building for Vietnamese rice products.

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 At the same time, “Enterprises need to strictly implement and comply with regulations on
traceability; strengthen inspection and supervision of the use of plant protection drugs in their
production and processing stages in service of export; well control the issue of plant quarantine,
ensure food safety and hygiene in the entire chain of preservation and processing to have high
quality rice products, meeting the requirements of importing countries.”

CONCLUSION
In order to meet the increasingly strict requirements of the EU market, the rice production
industry has actively researched, produced and created rice varieties that have both good quality and
meet all difficult conditions of a difficult market like the EU. Exporting is also a great source of
foreign currency earnings, helping businesses invest in modern equipment for farming and
production, creating high-quality rice varieties that can compete with rice in other markets. such as
Thailand and Cambodia, etc.

The EVFTA, which took effect on August 1, 2020 is an important milestone for Vietnam's
rice export industry. After meeting the standards of the European Union, Vietnamese rice will have
the opportunity to raise its position and affirm the brand name not only in the EU but also in the
world. The job of businesses is to try to improve to meet the requirements for rice of the EU market,
increase export turnover and contribute to the general development of the country. During the
research process, due to limited knowledge and incomplete data on rice exports to the EU market,
the thesis cannot avoid shortcomings, I hope to receive your comments. teachers to improve the
topic.

REFERENCE
In order to meet the increasingly strict requirements of the EU market, the rice production
industry has actively researched, produced and created rice varieties that have both good quality and
meet all difficult conditions of a difficult market like the EU. Exporting is also a great source of
foreign currency earnings, helping businesses invest in modern equipment for farming and
production, creating high-quality rice varieties that can compete with rice in other markets. such as
Thailand and Cambodia, etc.

10
 The EVFTA, which took effect on August 1, 2020 is an important milestone for Vietnam's
rice export industry. After meeting the standards of the European Union, Vietnamese rice will have
the opportunity to raise its position and affirm the brand name not only in the EU but also in the
world. The job of businesses is to try to improve to meet the requirements for rice of the EU market,
increase export turnover and contribute to the general development of the country. During the
research process, due to limited knowledge and incomplete data on rice exports to the EU market,
the thesis cannot avoid shortcomings, I hope to receive your comments. teachers to improve the
topic.

In order to meet the increasingly strict requirements of the EU market, the rice production
industry has actively researched, produced and created rice varieties that have both good quality and
meet all difficult conditions of a difficult market like the EU. Exporting is also a great source of
foreign currency earnings, helping businesses invest in modern equipment for farming and
production, creating high-quality rice varieties that can compete with rice in other markets. such as
Thailand and Cambodia, etc.

The EVFTA, which took effect on August 1, 2020 is an important milestone for Vietnam's
rice export industry. After meeting the standards of the European Union, Vietnamese rice will have
the opportunity to raise its position and affirm the brand name not only in the EU but also in the
world. The job of businesses is to try to improve to meet the requirements for rice of the EU market,
increase export turnover and contribute to the general development of the country. During the
research process, due to limited knowledge and incomplete data on rice exports to the EU market,
the thesis cannot avoid shortcomings, I hope to receive your comments. teachers to improve the
topic.

In order to meet the increasingly strict requirements of the EU market, the rice production
industry has actively researched, produced and created rice varieties that have both good quality and
meet all difficult conditions of a difficult market like the EU. Exporting is also a great source of
foreign currency earnings, helping businesses invest in modern equipment for farming and
production, creating high-quality rice varieties that can compete with rice in other markets. such as
Thailand and Cambodia, etc.

The EVFTA, which took effect on August 1, 2020 is an important milestone for Vietnam's
rice export industry. After meeting the standards of the European Union, Vietnamese rice will have

11
the opportunity to raise its position and affirm the brand name not only in the EU but also in the
world. The job of businesses is to try to improve to meet the requirements for rice of the EU market,
increase export turnover and contribute to the general development of the country. During the
research process, due to limited knowledge and incomplete data on rice exports to the EU market,
the thesis cannot avoid shortcomings, I hope to receive your comments. teachers to improve the
topic.

12