Impacts of EVFTA on the exportation of Vietnamese agricultural products to the EU market

Abstract

This study aims to appraise the potential impacts of the European Union - Vietnam Free Trade Agreement (EVFTA) on Vietnam’s agricultural exports to the European Union (EU). The authors apply the SMART model to quantitatively estimate how tariff elimination under this agreement affects trade value between two parties, with the base year of 2018. By simulating the zero-rate tariff scenario for 17 two-digit HS codes of agricultural goods, the authors analyze the total change in export, trade creation, and trade diversion effects of the whole sector. The four important product groups that witnessed the highest change, including HS 04 (dairy produce, birds’ eggs; natural honey; edible products of animal origin), HS 08 (edible fruit and nuts, peel of citrus fruit or melons), HS 09 (coffee, tea, maté, and spices) and HS 20 (preparations of vegetables, fruit, nuts or other parts of plants) are further classified into products with 4-6-digit HS codes to find out the specific product lines that benefit the most. The SMART outputs reveal that EVFTA positively affects the export of agricultural products from Vietnam to the EU market, with trade diversion dominating trade creation effects. Based on these findings, recommendations are proposed to the state authorities as well as domestic enterprises to promote the export of farm produce.