Vietnam-US Bilateral Trade Enjoying a Boom

Since the Bilateral Trade Agreement (BTA) went into effect in 2001, a historic moment in economic relations between Vietnam and US, the two – way trade between Vietnam and the US has dramatically increased, up 15 fold to over US$ 15 billion in 2009 from just US$ 1 billion in 2001.

According to statistics, since 2003 the US has consistently been the biggest goods importer of Vietnam, accounting for some 20% of its total export turnover in 2005-2009. Key Vietnamese exports to the US include garments, textiles, timber, wooden products, footwear, crude oil, seafood, computers, and electronic goods and accessories. From 2005 to 2008, the US remained Vietnam’s 3rd biggest trading partner. Especially, the US overtook Japan to become the 2nd biggest trade partner in 2009, after China.

In 2009 alone, Vietnamese exports to the US were valued at US$12.3 billion and imports from the US were US$3.1 billion, despite the bad effects of the global financial crisis. As a result, the two-way trade turnover reached US$15.4 billion. In first quarter of 2010, Vietnam has exported US$2.8 billion worth of goods to the US, posting a year on year growth of 23.2%, the largest increase seen so far.

According to the Ministry of Industry and Trade, Vietnam has raked in US$3.9 billion from exporting goods to the United States in the first four months of 2010.The figure has made the United States Vietnam’s leading export market, with a 20% share of the country’s total export turnover.

Vietnam-US trade in the first quarter this year maintained its growth rate, with total import-export turnover up 16.5 % compared to the same period last year. In terms of footwear, Vietnam’s export turnover in the first five months went up 8.6% to US$1.8 (General Department of Vietnam Customs). Among the goods exported to the US, garments have the biggest export value, gaining US$1.3 billion, more than US$1.2 billion higher than last year. Wood and furniture is in second place, achieving nearly US$393 million, up 26 %.

In particular, Vietnam Wood and Forestry Product Association (Viforest) reported that the value of signed contracts for 2010 totalled about US$3 billion, increasing by US$320 million over early 2009. The contract value of first five months accounted for US$1.4 billion, up 35 % against the same period of last year thanks to the sharp surge in contract numbers for exports to key traditional markets, including the US.

Barriers remain

Although the export amount to the US remains high, Vietnam still faces many difficulties. In terms of agricultural products: Vietnam previously was a big exporter to the US because Vietnam has many agricultural advantages. However, now more US made agricultural products are flowing to Vietnam. According to statistics from the US Department of Agriculture (USDA), in Jan-March, Vietnam’s US made agricultural product trade deficit hit US$78 million for the first time in the last five years. Vietnam’s agricultural export position in the US market seemed to change as the domestic market has more and more regulations on exports.

At the same time, many key export items of Vietnam, including rice and shrimp, saw a flat trend in export to US. Even, the export turnover of black tiger shrimp fell 1 %, while rice plunged 78 % in the first quarter of 2010. Lately, Vietnam has sued the US in the WTO for applying “zeroing” treatment on Vietnam’s processed shrimp. At this time, the US is imposing an antidumping tariff on Vietnam’s frozen black tiger shrimp.

In addition, Vietnam’s tra fish exports are also suffering antidumping tariffs on the US market, and the product is facing another risk. According to US Farm Bill 2008, the USDA will remove Vietnam’s tra fish from the list of catfish that the US applies the comprehensive food safety and hygiene supervision (from breeding, processing to distribution).

In general, agricultural products saw a rise in US market in the recent time bringing in 2009 export turnover of US$70 million, and tea with annual US$5 billion earnings. If the US gives Vietnam Generalized System of Preference (GSP) and recognizes Vietnam to be a market based economy, Vietnam’s agricultural exports will be much higher in the future, and thousands of other Vietnamese products could enter into the US market duty free.

Besides, the US is also a huge market for Vietnamese fruits, especially dragonfruit. Currently, Rong Do Company (HCMC) exports around six containers (approximately 77 tonnes of dragon fruit) by sea and 10 containers (9 tonnes) by air per month. The above amount is still limited due to stringent quality requirements. Today, the Ministry of Agriculture and Rural Development also continues to develop a “Good Agricultural Practices” (GAP) system to strengthen and ensure quality maintenance, particularly to control insecticide usage. By doing this, hopefully, in the coming time, many other kinds of Vietnamese fruits will be accepted in the US market. – VCCI

Tags: Vietnam-US bilateral trade