QUOTAS AND TAXES ARE HINDERING VIETNAM’S SHRIMP EXPORTS TO SOUTH KOREA

Pico Agriviet

Quotas and taxes are hindering Vietnam’s shrimp exports to South Korea. Accounting for 14% of Vietnam’s total shrimp exports, South Korea is one of the important export markets of Vietnamese shrimp products. However, Vietnam’s shrimp exports to this market are implemented under the quota mechanism, if exports exceed the quota, the import tax rate can be up to 20%.

In the first 2 months of 2023, Vietnam’s shrimp exports to South Korea reached more than 46 million USD, down 25% compared to the same period in 2022. Shrimp exports to South Korea in the first months of this year followed a general downward trend as the world economy fell into recession, inflation increased, purchasing power decreased.

In 2022, South Korea is a market with stable shrimp consumption demand. Moreover, the advantage of close distance, and a quite moderate inflation rate have helped to boost Vietnam’s shrimp exports to South Korea to reach $468 million, up 26% compared to 2021.

In 5 years (2018-2022), Vietnam’s shrimp exports to South Korea grew steadily from 386 million USD in 2018 to 468 million USD in 2022, up 21%. In particular, whiteleg shrimp products exported to Korea have grown sharply and continuously from 2019 up to now.

The FTA between Vietnam and South Korea, which was effective since 2015, has facilitated trade and import tariffs for Vietnamese shrimp products. However, according to detailed information from VASEP member enterprises, Vietnamese shrimp products imported into Korea are being subject to quota regulations.

The South Korea Government request auctions to buy shrimp import quotas from Vietnam at the price of 14-16% of the import value.

Outside the quota, the import tax rate is 20%. Thus, importing Vietnamese shrimp into Korea will be charged tax rates of 14-20%. This is a big disadvantage, causing lower competitiveness of Vietnamese shrimp in this market.

Meanwhile, Peru and Korea also have FTA, according to that, the tax of 20% is reduced under the 5-year roadmap from August 2011. Now the tax rate for Peru shrimp has reached 0%, so its shrimp products exported to the Korean market do not have quotas and taxes.

Every year, South Korea imports over 100,000 tons of shrimp with a value of $800 million – $1 billion (ITC data). In which, Vietnamese shrimp always occupies the highest market share of over 50%. The volume of shrimp exported to South Korea by Vietnam has been more than 50,000 tons, which is 3-4 times higher than the quota amount (15,000 tons with 0% import tax).

From 2018-2022, shrimp exports from Peru to South Korea increased 10 times. Particularly in 2022, shrimp imports to South Korea from Peru recorded a strong growth of 176% compared to 2021.

In order to improve the competitiveness of Vietnamese shrimp in the Korean market, VASEP has sent an Official Letter to the Minister of Industry and Trade, proposing the Government, the Ministry of Industry and Trade, and the Ministry of Foreign Affairs to review and proposed to the Korean side to consider abolishing shrimp import quotas from Vietnam and to adjust the tax rate to 0% for Vietnamese shrimp in VKFTA.

Source: https://fishfocus.co.uk/quotas-and-taxes-are-hindering-vietnams-shrimp-exports-to-south-korea/

# VIETNAM FRUIT EXPORTER

# VIETNAM FRUIT SUPPLIER

# FRUIT COMPANY VIETNAM