Vietnamese government officials announced Monday that it has revised its Most Favored Nation tariff rates and as of Dec. 30, 2021, it will reduce the import tax on corn from all origins to 2% from 5% and zero out the tax on wheat, which was previously 3%. The import tax on frozen pork will also be reduced from 15% to 10% beginning July 1, 2022.
The action follows the White House’s announcement in late August that promised improved market access for U.S. agricultural producers with Vietnam.
According to the USDA, U.S. exports of corn, wheat and pork to Vietnam were valued at $228 million in 2020. Vietnamese purchases of U.S. dried distillers grains with solubles increased in 2020-2021, totaling 1.7 million metric tons, and placed the country as the second largest market.
“This is great news for U.S. products as it levels the playing field with our competitors from the Black Sea and ASEAN (Association of Southeast Asian Nations) members,” says U.S. Grains Council President and CEO Ryan LeGrand. “The Council’s work in Vietnam, in coordination with the U.S. Department of Agriculture’s Foreign Agricultural Service, has helped make this happen. We thank the Vietnamese government for taking these important steps to make trade freer and fairer there.”
The Council’s work in the effort culminated in September when it coordinated a meeting in New York City between T&T Group, a Vietnamese feed grain importer, and Council members, DeLong Company and Valero, where two memorandums of understanding were signed. At that meeting, LeGrand also spoke with Vietnamese President Nguyen Xuan Phuc about lowering corn and ethanol import tariffs.
The following day in Washington, D.C., the Council accelerated the relationship by hosting Vietnam’s Ministry of Agriculture and Rural Development (Deputy Minister Le Quoc Doanh, other MARD officials and a representative from Khai Anh Company, another large Vietnamese feed grain importer). The Council signed two MOUs with the groups – one with MARD and one with Khai Anh Company – to build Vietnam’s feed, livestock and aquaculture industries and secure U.S. corn and distiller’s dried grains with solubles purchases, respectively.
U.S. Wheat Associates and the National Association of Wheat Growers appreciated the efforts by the Biden administration, FAS and Vietnam’s Ministry of Finance toward eliminating the wheat tariff, which follows a reduction from 5% to 3% in July 2020.
Vietnam imported more than 500,000 metric tons of U.S. hard red spring, soft white, hard red winter, and soft red winter wheat valued at $129 million in the marketing year 2020-21, second in volume only to Australia. Vietnam imports an average of about 4 million metric tons of wheat per year.
“U.S. wheat exports to Vietnam’s growing market are much slower so far this year because of short supplies and rising prices, so eliminating this tariff is very important for growers like me,” says Darren Padget, USW chairman and a soft white wheat grower from Grass Valley, Ore.
“With about half of the wheat we produce available for export each year, we depend on increasing access to markets like Vietnam,” adds Dave Milligan, NAWG president and a wheat grower from Cass City, Mich. “Here at home, NAWG will continue advocating for trade policies that work toward positive opportunities for wheat growers and their customers.”
In late December 2020, National Pork Producers Council Assistant Vice President of International Affairs Maria Zieba testified that tariffs on Vietnamese imports would have left U.S. hog farmers vulnerable to retaliation on U.S. pork imports. Vietnam is a major pork-consuming nation dealing with African swine fever outbreaks in its domestic herd, with significant demand for imported pork. The U.S. does not have a free trade agreement with Vietnam and was at a competitive disadvantage to Canada, the EU, Mexico and other supplier nations. A number of non-tariff barriers act as an additional barrier on U.S. pork exports to Vietnam.
NPPC President Jen Sorenson says, “Vietnam consumes a lot of pork, but it has been dealing with African swine fever. That has decimated its domestic pork production and increased its reliance on imported pork. The tariff cut will let us send more product to Vietnam to fill its need.”
While the rate reduction will help, because the United States does not have a free trade agreement with Vietnam, the U.S. pork industry remains at a competitive disadvantage to pork-supplying countries that do, including the European Union, Russia and nations in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. CPTPP countries, for example, have a duty of only 7.5% on frozen pork exports going to Vietnam, NPPC says.
Because of Vietnam’s high tariff on and non-tariff barriers to U.S. pork and the lack of a free trade agreement or preferential trade deal between the United States and Vietnam, the U.S. pork industry shipped only about 25,000 metric tons of pork worth $54 million to Vietnam in 2020. For comparison, although Vietnam consumes more pork than Mexico – the U.S. pork industry’s No. 2 export market by volume and a member of the U.S.-Mexico-Canada Agreement – the United States exported more than 735,000 metric tons valued at $1.2 billion to Mexico last year.
NPPC has been urging the administration, which helped facilitate Vietnam’s tariff reduction, to join the 11-nation CPTPP. "We hope this leads to broader trade discussions to reenter the Comprehensive and Progressive Trans-Pacific Partnership as the tariff reductions do not place U.S. pork on a level playing field with competitors and are not set to take effect until July 1, 2022," says Zieba.