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VASEP deputy chairman Nguyen Huu Dung claims this scheme would be beneficial to exporters.
Why is VASEP considered a tra fish floor export price?
The US Department of Commerce recently delivered the final results of the eight administrative review for anti-dumping duties on Vietnam’s tra fish exported to US market. Accordingly, the anti-dumping rates levied on export tra fish to US market rose markedly.
Since the decision is unreasonable, Vietnamese firms are handling legal procedures, trying to bring a case to US Court of International Trade.
This case, however, provides an opportunity to hike tra fish export prices in the US. If export firms were in consensus in its application, it would help firms incurring high anti-dumping rates alleviate losses, while benefiting many others.
For example, current tra fish export fetches $4 per kg. The anti-dumping duty most firms exporting tra fish to US market incur is around 77US cents per kg. Thus, if export firms agreed to set a tra fish floor export price at $4.77 per kg, the firms hit by recent anti-dumping lawsuit would not largely be affected, while it could benefit other firms.
VASEP mulled the same move in the past but it had proven ineffective due to the hustle-bustle in the market place to secure export contracts. Would you sure this will not be repeated?
Competition is inevitable in doing business. At present, seafood firms particularly tra fish exporters, are competing in pricing. VASEP wants businesses vying for quality but not in pricing and setting floor export price is one of the measures.
In the past, VASEP several times introduced floor export price schemes which were supported by firms. However, it then failed due to lack of state support during enforcement as well as regulated sanction measures.
The floor export price scheme for tra export would only be valid with the support from the Ministry of Agriculture and Rural Development (MARD). For example, the MARD sends a document to the customs sector, requiring it not to approve export shipments of tra fish having export price lower than the floor price.
Will this impinge on existing Vietnamese laws as well as international business practices?
This is also a MARD concern. I am sure that this is compliant with Vietnamese law and does not affect Vietnam’s commitments with the world community because in this case, the floor price is not set by the state and the state only stands to help firms realise their consensus.
Under the current law, if the state supported firms to pull down prices, it might be involved in anti-subsidy lawsuit whereas in this case, the state helps firms drive up prices, so its support does not violate the law.
The floor export price scheme could work when there was effective cooperation between the business community and relevant state agencies, including the MARD and Ministry of Finance.
Tra export saw constant declines in the first quarter, particularly it slid 13 per cent alone in March. What are VASEP’s measures to hike the tra fish export value?
Tra fish incurring high anti-dumping duties in the US forced firms to diversify export markets and heighten export price. That is also seafood export development orientation: hiking export value.
In respect to tra fish, its added value in 2012 was 0.68 per cent merely, showing there is huge room to boost tra fish added value. Tra fish export value could soar if we shifted 20-30 per cent of current raw export volume into export of added value products.