NEWS RELEASE

Hanoi, August 10, 2021 - Vietnam Association of Seafood Exporters and Producers (VASEP) and the World Bank announced “A Trade-Based Analysis of the Economic Impact of Non-Compliance with Illegal, Unreported and Unregulated Fishing: The Case of Vietnam”

Fishery and aquaculture commodities represent Vietnam’s fifth largest export in value, accounting for approximately 4 percent of the country’s exports (2018). In recent years, Vietnam’s seafood export has reached close to 8.5 - 9 billion US Dollars (USD) a year, of which aquaculture had a share of 60-65%, and capture fisheries accounted for 35-40% percent.

As the third leading player in the global market, Vietnam has prioritized the development of sustainable fisheries. Vietnam’s capture fisheries sector, characterized as small scale, however is challenged by a yellow card issued by the European Commission (EC) since 10/2017 for insufficient effort to address illegal, unreported and unregulated (IUU) fishing.

Due to IUU yellow card, the quantity of seafood exports to the European Union (EU) have decreased significantly since 2017. Comparing seafood export in 2017 to 2019 (to assess the impact of the yellow card after two years of its issuance), the decrease in seafood exports to the EU market declined at 12 percent or USD 183.5 million. Two years after the issuance of the yellow card, total marine product exports decreased by over 10 percent, equivalent to a loss of USD 43 million. Of these, cephalopod plunged the most with a 37 percent drop, bivalve mollusk decreased by 11 percent, tuna decreased by nearly 2 percent and crabs decreased by 11 percent. Similarly, exports of aquaculture to the EU also decreased by 13 percent from 2017 to 2019.

The downward trend continued further in 2020, especially due to the combined impact of COVID-19 pandemic, IUU yellow card and Brexit. As a result, Vietnam’s seafood exports witnessed a decrease of 5.7 percent, equivalent to a turnover of only USD 959 million compared to 2019.

Since then, the EU has dropped from being the second largest seafood import market for Vietnam to the fourth largest, ranking after the US, Japan and China. However, the EU is a dominant world market and can create a ripple effect in other markets, including important partners for Vietnam’s seafood market.

There is the possibility that Vietnam risks losing access to the EU market if Vietnam is issued a red card from the EC due to the failure in addressing the requirements for combating IUU fishing in order to remove the yellow card.

In order to have a comprehensive assessment of the possible risk, Vietnam Association of Seafood Exporters and Producers (VASEP) cooperating with experts from Nha Trang University and Copenhagen Business School (Denmark) prepared the report “A Trade-Based Analysis of the Economic Impact of Non-Compliance with Illegal, Unreported and Unregulated Fishing: The Case of Vietnam”. The report was conducted under the supervision of the World Bank and funded by two World Bank managed global partnerships - Global Program on Fisheries (PROFISH) and the Program for the Blue Economy (PROBLUE).

The 60-page report consists of five parts, including the overview of Vietnam seafood production; market regulations on IUU Fishing; overall assessment of trade fluctuations between 2017-2019 to assess economic impact of the IUU yellow card on Vietnam’s seafood exports; and the estimated short-term and medium-term economic impacts if Vietnam were to receive a red card.

The analysis reveals that capture fisheries is directly affected from the IUU regulations and carding process, while aquaculture is subject to indirect impacts. In case Vietnam were issued a red card from the EU, the immediate and short-term impact on Vietnam’s seafood sector would be a trade ban from the EC if the country fails to address the requirements for combating IUU fishing. In total, the Vietnam seafood sector would immediately lose the EU markets, an export value of nearly USD 480 million. It is estimated that the Vietnam capture fisheries which includes tuna, swordfish, mollusk, cephalopod and other marine species, would lose around USD 387 million per year.

The indirect impacts for aquaculture stem from an increasingly negative reputation, the increasing burden of custom control, and missing the opportunities to take advantage of the Vietnam - European Union Free Trade Agreement (EVFTA)’s preferential tax levels. The aquaculture sector could lose around USD 93 million from these indirect impacts. The medium-term impact if the ban lasted for 2-3 years would mean the disruption of the Vietnamese seafood sector, as a result of which there could be a decline of at least 30 percent in earnings for capture fisheries.

The report also reviews the new challenges faced by the seafood sector as a result of the Coronavirus Disease (COVID-19) pandemic and finds that addressing the IUU yellow card and taking advantage of other opportunities can minize the impact. If Vietnam can remove the IUU yellow card soon, take advantage of tariff preferences and institutional changes from EVFTA, and the opportunity to recover and grow back in the EU market, it would be feasible for Vietnam to achieve export of around USD 1.2-1.4 billion in the coming years. This shows the need for reasonable and effective solutions to quickly overcome the yellow card. Doing so could bring the fishery industry closer to achieving the annual growth target of seven to nine percent in exports and reaching USD 16-18 billion for export by 2030 as well as contribute greatly to the development of sustainable fisheries.

The full report can be found on World Bank official website in both Vietnamese and English languages.