Vietnam's agriculture sector has seen strong export growth since 2016 but remains vulnerable due to quality issues and environmental concerns. The government aims to enhance competitiveness through improved regulations, traceability systems, and international trade agreements such as the CPTPP and EU-VNFTA, which promise to eliminate tariffs and promote investment. Addressing these challenges with sustainable practices and technological advancements is crucial for the sector's future growth and safety.

1. Vietnam – Agriculture Sector - Current Issues and Solutions for Investment
and Outlook on Major Trade Deals TPP 11 and EUVNFTA
Author: Dr. Oliver Massmann
A. OVERVIEW AGRICULTURE SECTOR VIETNAM
Since 2016, the exports of many products in the agriculture sector in Vietnam has strongly
increased. On the other hand, the agriculture sector is still vulnerable as shown in the past due to
its limited development.
The development of the agriculture sector in Vietnam needs to come on track to solve the
important issue on shifting from price to quality to ensure sustainable growth as backbone sector
of Vietnam’s economy.
However, to ensure high quality products, Vietnam needs to make changes.
Firstly, the use of prohibited chemicals during breeding, preservation, digestion needs to be
enforced and controlled by state authorities. The stricter control of raw materials before digestion
and the manufacturing standards are further issues that need to be addressed to make the
agriculture competitive with international players. Furthermore, the transformation of the
domestic Vietnamese agriculture into a self-sufficient sector is another important step that needs
to be realized.
In addition, to ensure sustainability, growth and for protection against crisis, farmers need to earn
stable income, the farmers’ carbon footprints need to get reduced and the production must be
adjusted to the requirements of the consumers and demand in the market.
However, for solving these problems, long term solutions need to be enrolled, those can be (i)
increased food safety, (ii) diversification of products, (iii) improvement of regulatory
environment, (iv) observing costs and improved finance, (v) the dependence on China in fruits,
vegetables and pork meat must be addressed due to caused problems in the past.
On the other hand, Vietnam’s export of dragon fruit to Australia and export of poultry to Japan
shows capability of Vietnamese exports meeting high safety requirements.
If the current issues can be addressed in the future, Vietnam’s exports in agriculture sector will
show sustainable growth in the future.
B. ISSUES
1. Traceability and safeguarding of products
Vietnamese and international consumers are concerned about quality and safety of the food they
are purchasing.
Currently, there are no well-developed traceability systems of the government for agricultural
products in force. This is leading to significant consequences for the competitiveness in
production. Further, the potential of product improvement is reduced, exports and market access
is limited.

2. In Addition, the safety for consumers is deceased leading to low satisfaction of consumers.
As result of the existing issues, there are almost no financial incentives for improvement of
processes.
However, now, it is possible for the Ministry of Agriculture and Rural Development (MARD) to
monitor animal movements with the help of the Department of Animal Health for protection
against diseases of animals.
Furthermore, the Ministry of Industry and Trade and the Department of Livestock Production
improved systems for better protection and regulation of unofficial imports of products from
other countries. This monitoring system shall also improve competitiveness and market
accessibility in foreign countries.
On the other hand, these issues can only be fully addressed if obtained in regulations. TE Food
System is operating a traceability system helping the authorities in HCMC and surrounding
provinces on monitoring movements of pigs. This system is embedded in Decision 6079/QD.
This year, the system was extended to eggs (Decision 3583/QD), chicken and poultry (Decision
3584/QD). Further extension to fruits, vegetables and beef are planned.
Nevertheless, these systems not only grant possibility on making regulations, it also can lead to
reduced corruption due to better possibility to control.
For addressing the issue best, the systems should be improved on including the whole agriculture
sector for ensuring sustainable growth, a fair and well-developed competition between national
famers and international farmers as well as good market access.
2. Management of Plant Protection Products and its approach to regulation based on science
On 6th
August 2015 the Circular No. 21/2015 was released. It is addressing Management of Plant
Protection Products.
However, it contains provisions that could turn out as dangerous to the economy, environment
and to the farmers as displayed in the following:
The circular contains provision about no registration and the banning of pesticides falling under
GHS Category 3 and 4 in area of vegetable, tea and fruit. Further, the banning and no registration
of crop protection products for use with vegetables, tea and fruit with having PHI bigger than
seven days of use.
There is no scientific approach behind these provisions. As result, they could ban the availability
on technologies for farmers in Vietnam operating in vegetable, tea and fruit.
Furthermore, these provisions lead to a significant competitive disadvantage to the agriculture
sector. In addition, they contain specific risks to the environment, consumers and domestic
economy due to the potential prohibition of the most-developed technologies bringing biggest
amount of safety against diseases and climate issues to the consumer and possibility of
productivity to farmers.
These provisions should not be adopted due to lack of science-based approach. Vietnam should
handle this issue as other countries in southeast-Asia did.
3. Import and Export of Plants and Seeds

3. The import of plants and seeds can be done online in Vietnam. The purchased seeds have to be
registered before the import can be successful. In cases where the online application file does not
fit with the registration requirements, the import is delayed until registration is successful.
Enterprises need to be provided with sufficient information or guidelines to accelerate the import
processes and for excluding delays in imports. On the other hand, export cannot be done online,
thus, exports of plants and seeds need an insufficient amount of time.
The online export should be made possible for more efficiency in Vietnam.
4. Legal environment on banned substances and reduction of Antimicrobial Resistance
The last issue addresses the enforcement of regulations on bans and limitations regarding
substances and the reduction of Antimicrobial Resistance. The use of antibiotics in animal
nutrition can have various good effects such as prevention of diseases or treatment against them.
On the other hand, it has bad impact on the consumer by means of the human body is building
resistance against antibiotics leading to significant health risks for consumers.
As result, Vietnamese lawmakers have made big efforts to enforce existing regulations regarding
to violations on the use of banned antibiotics and other substances.
Several circulars have been provided containing a list of prohibited chemicals and antibiotics on
import, use in livestock and trading. However, the Circular No. 28/2014/TT-BNNPTNT is only
addressing a few types of banned antibiotics and substances. After releasing the circular, many
farmers concluded about reducing the use of antibiotics in animal nutrition and tried to replace
them with alternative substances. Therefore, the government should endeavor research activities
on alternative treatments and substances.
Another important measurement for enforcing the regulations were urine test kits for scanning on
prohibited substances and uncovering violations against the regulations. Violations can lead to
hard penalties up to the obligation on killing all animals on the farm. As result, it was possible to
reduce the overuse of prohibited substances.
Moreover, the mass usage of antibiotics is leading to Antimicrobial Resistance (AMR).
According to the WTO, AMR is a huge global problem and estimated to be main cause of death
by 2050 in Vietnam. Further, the economic costs will be USD 100 trillion!
However, in 2015, the four competent Vietnamese Ministries, Development Partners and a
National Steering Committee signed an Aide Memoire as action plan against misuse and control
of antibiotics in the livestock production and aquaculture. Vietnam should adopt measurements
and strategies from other countries to address these issues in a successful way and to ensure strict
enforcement of existing regulations. Further, biosecurity, monitoring, genetics, nutrition and
control are other aspects that have to be addressed to grant safe products to the consumer without
major health risks and to reduce AMR.
C. OUTLOOK ON MAJOR TRADE AGREEMENTS TPP 11 AND EUVNFTA
In January 2017, US President Donald Trump decided to withdraw from the US’ participation in
the TPP. In November 2017, the remaining TPP members met at the APEC meetings and

4. concluded about pushing forward the now called CPTPP (TPP 11) without the USA. The
agreement shall be signed by all member states by the first quarter of 2018. After that, it has to
be ratified in each member state before taking effect.
The effects of the TPP 11 promising great benefits for the agriculture sector in Vietnam and will
support Vietnam’s national agriculture transforming into a self-sufficient and competitive sector.
The TPP 11 is targeting to eliminate tariff lines and custom duties among member states on
certain goods and commodities to 100%. As a result, international products will arrive at the
Vietnamese market, so that, the Vietnamese livestock should use the given time for restructuring
but also for becoming competitive and creating efficient environment for international
investments.
With the National and Most-Favored Nation Treatment principle, the TPP is ensuring a fair
competition which will attract new foreign investments as well as support for the agriculture
sector in its restructuring process.
Moreover, national farmers must adopt high-developed technologies in nutrients and animal
healthcare to be competitive. This will lead to more safety and trust of the consumer in the
agriculture market in Vietnam.
One another notable major trade agreement is the EUVNFTA between the European Union and
Vietnam. The EUVNFTA offers great opportunity to access new markets for both, the EU and
Vietnam. It will help to bring more capital into Vietnam. In addition, the EUVNFTA will boost
the most economic sectors in Vietnam. Moreover, the agreement will eliminate 99% of tariffs on
agricultural products leading to huge dynamic in the sector and Vietnam will get the chance on
adopting technology from the European Union.
Furthermore, the Investor State Dispute Settlement (ISDS) will ensure highest standards of legal
certainty and enforceability and protection for investors. We alert investors to make use of these
standards! We can advise how to best do that! It is going to be applied under the TPP 11 and the
EUVNFTA. Under that provision, for investment related disputes, the investors have the right to
bring claims to the host country by means of international arbitration. The arbitration
proceedings shall be made public as a matter of transparency in conflict cases. In relation to the
TPP, the scope of the ISDS was reduced by removing references to “investment agreements” and
“investment authorization” as result of the discussion about the TPP’s future on the APEC
meetings on 10th
and 11th
November 2017.
Further securities come with the Government Procurement Agreement (GPA), which is going to
be part of the TPP 11 and the EUVNFTA.
The GPA in both agreements mainly deals with the requirement to treat bidders or domestic
bidders with investment capital and Vietnamese bidders equally when a government buys goods
or requests for a service worth over the specified threshold. Vietnam undertakes to timely
publish information on tender, allow sufficient time for bidders to prepare for and submit bids,
maintain confidentiality of tenders. The GPA in both agreements also requires its Parties assess
bids based on fair and objective principles, evaluate and award bids only based on criteria set out
in notices and tender documentation, create an effective regime for complaints and settling
disputes, etc.
This instrument will ensure a fair competition and projects of quality and efficient developing
processes.

5. ***
If you have any question on the above, please do not hesitate to contact Dr. Oliver Massmann
under omassmann@duanemorris.com . Dr. Oliver Massmann is the General Director of Duane
Morris Vietnam LLC.
Thank you very much!