Vietnam's shrimp exports to South Korea face difficulties because the quota fee is nearly equal to the tax

Published Mar 18, 2023

Tridge summary

Vietnam is a major exporter of shrimp to South Korea, with annual exports valued between 400-500 million USD, which makes it the fifth largest market for Vietnamese shrimp. The country imports over 100,000 tons of shrimp each year, valued between $800 million to $1 billion. However, a quota mechanism under the Vietnam-Korea Free Trade Agreement (VKFTA) has resulted in a 14-16% increase in costs for obtaining shrimp import quota, effectively increasing the tax rate for Vietnamese shrimp to 14-20%. This higher tax rate is making Vietnamese shrimp less competitive in the Korean market, leading importers to consider shifting their purchases to countries like Peru, which offers zero import tax. The Vietnam Association of Seafood Exporters and Producers (VASEP) has called on the Minister of Industry and Trade to consider reducing the tax rate for Vietnamese shrimp to 0% under VKFTA to maintain competitiveness and prevent a decline in shrimp exports to South Korea.

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Original content

According to VASEP, Korea is one of the important export markets of Vietnamese shrimp, with a turnover of 400-500 million USD per year, behind the US, EU, Japan and China markets. Every year, Korea imports over 100,000 tons of shrimp with a value of $800 million to $1 billion. In particular, Vietnam's shrimp imports increased every year and accounted for the highest market share (over 50%) thanks to the FTA Agreement between Vietnam and Korea (VKFTA), although the quota mechanism is still being implemented (15,000 tons). with a tax rate of 0%). According to information from VASEP member enterprises, currently in Korea, the cost to obtain a shrimp import quota under VKFTA through the bidding mechanism has increased to about 14-16% compared to the value. import. This level is also approximately equivalent to the import tax rate of 20% for the volume of shrimp imported outside the quota. Importers said that, despite the application of VKFTA, Vietnamese shrimp when imported into Korea ...

Source: Vietstock