South Korea has become one of the 10 single markets importing the most tuna from Vietnam. (Source: VnEconomy)

“Sweet fruit” from VKFTA

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), tuna exports to the Korean market have grown at a three-digit rate for the past three months. Notably, tuna exports to this market peaked in June, with an export value of nearly 6 million USD, nearly 6 times higher than the same period in 2023.

In the first 6 months of this year, tuna exports to South Korea reached over 14 million USD, up 144% over the same period. South Korea has become one of the 10 single markets importing the most tuna from Vietnam.

According to Customs statistics, in the first 6 months of this year, there were 15 enterprises exporting tuna to the Korean market. Leading among them were Nha Trang Bay, Yueh Chyang Canned Food and Trinity Vietnam, accounting for 86% of total export turnover.

South Korea mainly imports processed and canned tuna from Vietnam, accounting for 99% of total export turnover. Of which, South Korea mainly imports loin meat (the loin meat along the back of tuna). frozen steamed skipjack tuna

Notably, while South Korea reduced tuna imports from other countries, it increased imports from Vietnam. With a population of over 51 million, South Korea is a potential market for Vietnamese tuna exporters with a high growth trend since last year.

VASEP assessed that the “sweet fruit” that tuna exports from the Korean market have been greatly affected by the Vietnam – Korea Free Trade Agreement (VKFTA). Since being signed and taking effect in late 2015, the VKFTA has become an important tool to help the two countries implement their economic development strategies, especially trade and investment. This FTA has had a positive impact on many of Vietnam’s key export industries, from electronics, textiles, footwear to seafood.

Vietnam's seafood exports to South Korea increased by 62% from 585 million USD in 2015 to 950 million USD in 2022 and 786 million USD in 2023. In the period from 2015 to 2023, after the VKFTA Agreement took effect, seafood exports to South Korea all recorded high growth, of which shrimp increased by 37%, squid and octopus increased by 51%, other fish (except tuna and pangasius) increased by 4%.

Paving the way for Vietnamese shrimp

VASEP believes that seafood consumption trends in Korea are changing in line with the trend of reduced consumer spending. This is an opportunity for Vietnamese businesses to boost exports of seafood products at reasonable prices.

Like Japan, the Korean market has the advantage of being close geographically and having stable consumption demand, and will be the destination of many Vietnamese seafood enterprises in the coming time, in the context of inflation causing a sharp decrease in consumption in Western markets. In addition, the Red Sea tension has caused shipping rates to the US and Europe to skyrocket, so nearby markets such as Korea are attracting the attention of many enterprises.

Among seafood products exported from Vietnam, in addition to tuna, shrimp is also a popular item among Korean consumers. VASEP said that 2024 is the 10th year of VKFTA implementation, according to the roadmap, almost all seafood products will have a tax rate of 0%.

However, according to the quota commitment in Appendix 2A-1 on tariff quota management of Korea in the VKFTA document, there are still 7 groups of seafood products imported from Vietnam to Korea that are only enjoying tariff incentives under the quota mechanism (up to now, the duty-free quota is 15,000 tons/year).

Specifically, for this group, Korea only exempts Vietnam from import tax under VKFTA for 15,000 tons/year (quota applied from 2020 onwards). Imported product volume exceeding the quota will not enjoy tariff incentives under VKFTA but will be subject to a base tax rate of 20%.

Meanwhile, compared with the latest import tax schedule of Vietnam (2024), all seafood products imported from Korea to Vietnam are at 0%. Thus, Vietnam is completely open to Korean seafood but in return, it is still subject to shrimp export quotas to Korea.

To continue to resolve this issue, VASEP recently sent a document requesting the Government, ministries and branches to consider asking Korea to remove the tariff quota mechanism for Vietnamese frozen shrimp under VKFTA, which is very urgent to protect the market share and long-term interests of Vietnamese shrimp in this market.

From a practical perspective, according to the Association, the possibility of this proposal being supported by the Korean side is very high in the context that the country is facing the challenge of high inflation and skyrocketing food prices. Initiating a proposal for consultation with Korea to remove the current quota on shrimp from Vietnam to Korea will help Korean consumers have more access to Vietnamese shrimp at better prices and ensure fairness for Vietnamese shrimp in competition with other countries.