No FTA with Vietnam Results in Market Loss

[ABS News Service/14.08.2024]

US agricultural products are at a “substantial disadvantage” in Vietnam because it lacks a free trade agreement with Hanoi that many of its competitors enjoy, according to a new report from the Agriculture Department.

The United States is largest agricultural trading partner with Vietnam that does not have an FTA with Vietnam, the Foreign Agricultural Service report notes.

As a result, the most favored nation tariff rates that apply to US agricultural products are substantially higher than those stipulated in Vietnam’s many FTAs.

With Vietnam continuing to negotiate trade agreements with other countries, US agricultural products will continue to lose market share, especially in higher-value products, according to the report. The European Union-Vietnam FTA, which currently is in the implementation stage, will have a particularly strong impact.

“The US continues to lose market share in Vietnam’s market for high-value food and agriculture products, due in significant measure to a profound disadvantage in tariff rates,” the report states.

“The US is the sole major agricultural exporter to Vietnam that is not party to any of the many FTAs that Vietnam has negotiated. Aggregate export statistics tend obscure the losses in market share for two reasons. First, Vietnam’s total agricultural imports continue to rise along with consumer demand, so US exports can remain stable even as market share falls. Second, losses in market share are concentrated in high-value products where the impact of tariffs is highest.”