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Trade pact boosts Vietnam coffee exports to EU 

 Wednesday, April 12,2023

AsemconnectVietnam - The EU-Vietnam Free Trade Agreement (EVFTA) has zeroed out import tariffs on many Vietnamese coffee product lines since taking effect in August 2020, creating favorable conditions for Vietnam's coffee industry to expand EU market share.

Largest importer of Vietnamese coffee
According to the International Trade Center (ITC), the EU accounted for 47-49 percent of the total value of global coffee imports in the 2017-2021 period with an average annual growth rate of 3.7 percent and annual turnover reaching US$15.7 billion. Vietnam ranks second in coffee exports to the EU after Brazil, but its market share in the EU in recent years declined from 9.7 percent in 2017 to only 6.2 percent in 2021.
The EVFTA, which revoked the EU’s 7.5-11.5 percent on Vietnamese coffee, is expected to help Vietnam regain its position and market share as it enters the third year of implementation with more extensive tariff commitments. In addition to tariff advantages, Vietnam's coffee exports to the EU are also supported by other factors such as improved coffee quality and reduced supply chain congestion.
The decline in global coffee supply from some of Vietnam’s traditional competitors, especially from Brazil, Colombia and Peru, also opens up opportunities for Vietnamese coffee exporters to regain EU market share.
Coffee accounts for 1.08 percent of Vietnam’s total export value and about 18 percent of the country’s produce export value.
Vietnam has exported coffee products to more than 80 countries and territories, including the EU, the US, Russia, Japan, and the UK, becoming the world’s second biggest coffee exporter with a market share of 14.2 percent.
According to the General Department of Vietnam Customs, Vietnam exported 1.78 million tonnes of coffee worth more than US$4.06 billion in 2022 (up 13.8 percent in volume and 32 percent in value from 2021), the highest revenue over the past decade.
The EU has become the biggest importer of Vietnamese coffee, representing about 39 percent of the country’s coffee export volume. Specifically, Vietnam's coffee exports to this market reached 689,049 tonnes worth almost US$1.5 billion in 2022, up 25.8 percent in volume and 45.4 percent in value compared to 2021. Major EU importers of Vietnamese coffee include Germany, Italy, Belgium, and Spain.
Challenges to EU access
However, the coffee industry faces challenges in accessing the EU market, including SPS (sanitary and phytosanitary) measures, TBT (technical barriers to trade) and origin traceability regulations of importing countries, as well as regulations on intellectual property rights, labor rights, and information transparency, among others.
The difficulties in boosting Vietnam's coffee exports in 2023 include not only coffee supply but also coffee quality and origin. In late 2022, the EU issued a decree banning the import of coffee produced after deforestation. This regulation has forced Vietnam to develop its coffee industry in a more sustainable way.
Moreover, the EU's stricter regulation on pesticide residues for nuts, including coffee at 0.1 mg/kg, also challenges Vietnamese coffee farmers.
“This is the driving force for improvements to keep up with major export market trends. The changes will help Vietnam maintain its leading position, not only in terms of output but also quality and scale of the industry,” said Pham Quang Anh, Director of the Vietnam Commodity News Center.
Do Ha Nam, Chair of the Board at Intimex Group, said it is crucial for businesses to intensively invest in instant coffee production in order to take advantage of the EVFTA and exploit this large market. “Participating in the EVFTA is not easy. For example, the EU has technical barriers, regulations on pesticide residues, banned substances, etc., which require Vietnamese exporters to increase quality,” Nam said.
Source: Vietnamplus.vn

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