VKFTA breathes new life into the fisheries industry.

In the first six months of this year, tuna exports to South Korea reached over $14 million, a 144% increase compared to the same period last year. South Korea has become one of the top 10 single markets importing the most tuna from Vietnam.

According to customs statistics, in the first six months of this year, 15 businesses were involved in exporting tuna to the South Korean market. Leading the pack were Nha Trang Bay, Yueh Chyang Canned Food, and Trinity Vietnam, accounting for 86% of the total export value.

South Korea primarily imports processed and canned tuna from Vietnam, accounting for up to 99% of total export value. Of this, South Korea mainly imports tuna loin (the tenderloin along the back of the 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, showing strong growth since last year.

VASEP assesses that the "sweet fruits" of tuna exports to the South Korean market are largely due to the Vietnam-Korea Free Trade Agreement (VKFTA). Since its signing and entry into force at the end of 2015, the VKFTA has become an important tool helping the two countries implement their economic development strategies, especially in trade and investment. This FTA has had a positive impact on many of Vietnam's key export sectors, from electronics, textiles, and footwear to seafood.

Vietnam's seafood exports to South Korea increased by 62% from US$585 million in 2015 to US$950 million in 2022 and US$786 million in 2023. During the period from 2015 to 2023, after the VKFTA agreement came into effect, seafood exports to South Korea recorded high growth across the board, with shrimp exports increasing by 37%, squid and octopus by 51%, and other fish (excluding tuna and pangasius) by 4%.

Paving the way for Vietnamese shrimp.

VASEP observes that the trend in seafood consumption in South Korea is shifting towards reduced consumer spending. This presents an opportunity for Vietnamese businesses to boost exports of seafood products at competitive prices.

Similar to Japan, the South Korean market, with its geographical proximity and stable consumer demand, will be a destination for many Vietnamese seafood businesses in the coming period, especially given the inflationary pressures causing a sharp decline in consumption in Western markets. Furthermore, with tensions in the Red Sea leading to soaring shipping costs to the US and Europe, nearby markets like South Korea are attracting significant interest from businesses.

Among seafood products exported from Vietnam, besides tuna, shrimp is also a popular item among South Korean consumers. VASEP stated that 2024 marks the 10th year of implementing the VKFTA, and according to the roadmap, almost all seafood product lines will have their tariffs reduced to 0%.

However, according to the quota commitments in Annex 2A-1 on tariff quota management of Korea in the VKFTA agreement, there are still 7 product lines of seafood imported from Vietnam to Korea that only enjoy preferential tariffs under the quota mechanism (currently, the duty-free quota is 15,000 tons/year).

Specifically, for this group, South Korea only exempts Vietnam from import duties under the VKFTA for 15,000 tons/year (quota applicable from 2020 onwards). Any volume of imported products exceeding this quota will not benefit from preferential tariffs under the VKFTA and will be subject to a base tax rate of 20%.

Meanwhile, compared to Vietnam's most up-to-date import tariff schedule (2024), all seafood products imported from South Korea into Vietnam are now subject to a 0% tariff. Thus, Vietnam is completely open to South Korean seafood, but in return, it is still subject to export quotas for shrimp to South Korea.

To further address this issue, VASEP recently submitted a document to the Government and relevant ministries and agencies requesting that South Korea urgently remove the tariff quota mechanism on Vietnamese frozen shrimp under the VKFTA to protect the market share and long-term interests of Vietnamese shrimp in this market.

From a practical perspective, according to this association, the likelihood of this proposal being supported by South Korea is very high, given the country's current challenges of high inflation and soaring food prices. Initiating consultations with South Korea to remove the current quota on shrimp from Vietnam to South Korea would give South Korean consumers greater access to Vietnamese shrimp at better prices and ensure fair competition for Vietnamese shrimp compared to other countries.