VIETNAM - AGRICULTURE BUSINESS 4.0 – HOW THE EVFTA AND THE CPTTPP SUPPORT AGRICULTURE BUSINESS

1. VIETNAM - AGRICULTURE BUSINESS 4.0 – HOW THE EVFTA AND THE CPTTPP
SUPPORT AGRICULTURE BUSINESS
Participation in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and
the EU-Vietnam Free Trade Agreement (EVFTA) has opened up many opportunities for Vietnam in the
agriculture sector as it creates favorable conditions for local enterprises to access international markets.
While the global economy is still recovering after the COVID-19 pandemic, the agriculture sector in
Vietnam has been benefiting a lot from these two FTAs.
The tariff reduction in the CPTPP and the EVFTA has increased demand and boosted exports from Vietnam
to the international market. With the CPTPP, most of Vietnam's key agricultural exports will enjoy a tax
rate of 0% immediately after the CPTPP takes effect or after 3-5 years, for example, some types of seafood
(fish, shrimp), fresh and processed vegetables, rice,... when exported to large markets such as Canada, Japan
and Mexico. With the EVFTA, tax rates on a series of agricultural products exported to the EU will
gradually decrease to 0% after a short period from the effective date of the EVFTA. Tax rate on many
Vietnamese products will fall to 0-4% such as pepper (currently 0-11%); rice and grain products. For
fisheries, about 50% of tariff lines will be eliminated, and the remaining 50% will be eliminated within a
3-7 year roadmap. This is a potential opportunity for Vietnamese businesses to grow exports in potential
markets as well as contribute to diversifying exports of agricultural, forestry and fishery products, which
are the strength of Vietnam. In 2022, the sector’s export turnover reached 53 billion USD with a trade
surplus of 8.5 billion USD, up 30% from 2021. The export of agricultural, forestry and fishery products
also achieved new records. In particular, the domestic fishery industry exports to the CPTPP markets
expanded by 30% to 27% of the country’s total fishery export value. In 2022, rice exports in Vietnam hit a
record 7 million tons, up 13.8 percent in volume and 5.1 percent in turnover in 2021. In 2023, Vietnam
expects further opportunities for export growth of agricultural products by diversifying markets and target
production to satisfy export market requirements on food safety, and effectively complete post-harvest
activities.
Vietnam’s participation in the CPTPP and in the EVFTA also increases connectivity between businesses
through participating in regional and global supply chains. Through these two FTAs, Vietnamese
agricultural products have the opportunity to access 37 large markets including Japan, Canada, and
Australia. The participation will help raise the level of development of the economy in general and
Vietnam's agriculture in particular, at the same time increasing competitiveness compared to other
competitors who do not have FTAs with the EU or other CPTPP member states, for example, India and
Thailand. With regard to production, businesses can participate in production stages with higher value
added by investing in domestic production and chain development while reducing export of raw materials
and preliminary processing. This creates motivation for domestic enterprises and income opportunities for
workers in rural areas. Vietnam’s commitments on import- export related rules and procedures create
conditions to attract more domestic and foreign investment to improve the business environment in general
and in agriculture sector in particular. Overall, this is a great opportunity to upgrade Vietnam's agriculture
in the next 5 - 10 years.
As the growth in Vietnam’s agricultural sector continues to flourish with new opportunities for trade, so
are the need for further clarity in Vietnam’s regulations or stricter requirements from each partner’s market.
There are challenges coming from regulations on animal and plant quarantine and safety (SPS), regulations
on product labeling (TBT) or related regulations on social responsibility, labor standards and high
requirements on intellectual property protection and environmental protection, especially for markets with
strict standards such as the EU and Canada. For instance, Vietnamese businesses might fail to meet the
regulations on traceability, rules of origin and maximum residue levels (MRLs) for pesticides in foods,

2. which are prerequisites for access to the EU market. Although there are many shortcomings regarding
management, quality control and production process, Vietnam’s agriculture sector is shifting to adapt to
growing diversity, especially which of highly demanding markets. This drives the requirements for
improved product quality and enhances food safety with an emphasis on environmental responsibility and
management. Under competition pressure, Vietnamese agriculture will need to absorb new science and
technology through transnational investment activities accompanied by science and technology and
improving labor skills, thereby changing the traditional agriculture and improving production efficiency
and product quality. With stricter requirements of the export markets, the agriculture sector needs to be
more innovative and adaptable, which requires building a sustainable agricultural industry and focusing on
automation and digital transformation in the sector.
As part of aiming for sustainable development, Vietnam has made specific actions such as committing at
the 26th United Nations Climate Change Conference (COP 26) and endorsing the UN Sustainable
Development Goals (SDGs), which can help build sustainable agriculture, join the global value and food
chains and improve living conditions. In 2023, Vietnam will focus on the rural economy with activities of
cooperatives, OCOP (One Commune One Product) development, and agriculture-based tourism. Vietnam
also set some priorities to focus on the development of circular agriculture:
 Efficient water use and wastewater management;
 Minimisation of waterway and wetlands salination (notably Mekong delta);
 Monitoring of Climate Change and its effect on weather patterns;
 Development of smart agriculture systems through digital transformation;
 Tracking and traceability of clean and hygienic food;
 Development of opportunities to join the global agriculture supply chain, and;
 The need for FDI companies to be more environmentally and socially responsible and concentrate
on sustainable agricultural operations.
Agriculture is one of the priority sectors of Vietnam’s plan for digital transformation. One of Vietnam’s
development orientations for 2021-2030 is to develop agriculture based on digital transformation and
linkage of domestic and international markets. The application of technology and digital in production and
business in the agriculture sector will create a turning point in agricultural production, moving from a
traditional agrarian economy to an agricultural economy. Therefore, Vietnam needs to re-invent the
agriculture sector with new ideas and concepts, new farming models, innovation, digitization, more efficient
logistics, and a greater focus on circular agriculture and environmental responsibility.
Vietnam is in the direction of restructuring the agricultural sector, reorganizing production, and piloting a
number of models for advanced production, promoting the application of science and technology,
supporting businesses and farmers in agricultural production and business activities to improve productivity
and quality of agricultural products, thereby being able to compete at home and reach the world market.
The arrival of 4.0 smart agriculture in Vietnam signals the end of an exclusive dependence on water,
fertilizers, and pesticides. Instead, farmers will acess data, GPS technology and moisture sensors to break
down traditional challenges into crop selection, market access, and innovation. New applications in
agriculture such as advanced breeding techniques, robotization and precision farming using satellite data
and drones will play a big role in the farms as it helps to produce more with fewer resources.
Although the technological level of agriculture in Vietnam is low, there are still good prospects for the
application of technology 4.0 in this sector. This is evident by the increasing, although modest, number of
enterprises providing digital and technical solutions for farming. Currently, many large Vietnamese
corporations are interested in investing in the agricultural sector with advanced production and management

3. technologies, such as Nextfarm and AgriConnect. In addition, agriculture enterprises remain active in
applying innovative solutions for leading farmers toward digitalization. From the demand side, there is a
new wave of private investment in agriculture for medium and large-scale farms.
CONCLUSION
The ongoing transformation of the agriculture sector to a sustainable and innovative way is important for
Vietnam to maximize the benefits of CPTPP and EVFTA. We do hope that Vietnamese agricultural,
forestry and aquaculture products from local and foreign-invested companies will be more competitive in
the international market and be able to satisfy stringent phyto-sanitary and other quality standards, including
traceability and packaging.
To achieve this, we have some recommendations as follow: (i) there is a need for further movement to
larger-scale farming operations away from smallholdings and also to improve quality management, minimal
pollution, energy savings and effective disease control; (ii) it is also necessary to accelerate digital
transformation process by bringing with it Smart Agriculture which allows for better water, feed, fertilizer,
traceability and waste management; and (iii) logistics and supply chain management needs to be improved,
which will allow Vietnam to join global supply chains and have efficient movement of goods within the
country between provinces and distribution hubs and centers.
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Please do not hesitate to contact Dr. Oliver Massmann at omassmann@duanemorris.com if you have any
questions. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.