US asks Vietnam to cut import tariffs on agricultural products

The US has requested Vietnam to cut its import tariffs on a number of agricultural products in 2020 and afterwards, according to Vietnam’s Ministry of Finance (MoF).

Illustrative photo.

The items subject to tariff reduction include chicken and processed chicken meat, almond, grape, wheat, pork, potato, among others, aiming to balance bilateral trade relations.

A reduction of import tariffs on these products would be included in the government’s revised Decree No.125 on amendments to certain articles of Decree No.122 on export duty schedule, preferential import duty schedule, and lists of commodities and their flat tax rates, compound tax rates and outside tariff quota rates.

Specifically, tariff on chicken and processed chicken meat is proposed to be cut from the current 20% to 14.5% in 2020, and 0% in 2028.

The US also requested Vietnam to reduce tariffs on fresh apples and grapes to 0% in 2020 while the tariffs on wheat, processed potato, among others, would be reduced to 6% in 2020 and 0% in 2021.

Similarly, import tariff on pork is suggested to be lowered from 25% to 18.9% in 2020 and 0% in 2027.

The MoF said it would take the US’s proposal into consideration, but the reduction may be smaller than the latter’s proposal. For example, import duty on chicken and processed chicken meat would be down to 18%, higher than the US’s proposed 14.5%, said the MoF, adding the 18% tax rate is equivalent to the commitment for tariff reduction in the first year of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP).

The MoF added such a reduction would lead to an annual decrease of US$3 million in state budget revenue, but local customers would be the main beneficiaries as they can buy chicken at lower prices. Meanwhile, not only the US, but other countries, such as Brazil and Poland could increase exports of chicken products to Vietnam.

Import tariffs on fresh apples and grapes from the US are expected to decrease to 8%, on wheat to 3%, on potato to 12%, and on pork to 22%, which are all equivalent to Vietnam’s commitment to tariff cut in the CPTPP.

Data: GSO. Chart: Ngoc Thuy.

In the January – November period, the US remained Vietnam's biggest export market, spending US$55.6 billion on Vietnamese goods, up 27.9% year-on-year, followed by the European Union with US$38 billion, down 2.3%, and China with US$37.4 billion, down 0.6%.