Pepper exports face difficulties for being examined in yellow channel

Pepper exports continue to face many difficulties because pepper consignments are under physical inspection for customs dossier and pepper is considered an item eligible for conditional export.

Consignments in 'yellow channel' are mainly black pepper. Photo: TL.

According to Vietnam Pepper Association (VPA), some pepper exporters said that recently the rate of declarations in “yellow channel” (conducting physical inspection for customs dossier) for exported pepper has increased to 60% from 8% and focused primarily on black pepper. Particularly, there were businesses that had to declare "yellow channel" for more than 95% of their consignments 

This has caused a lot of difficulties for businesses as costs increase, especially, in the context of the Covid-19 outbreak, travelling to process customs declarations will pose a risk of a possible exposure to the Covid-19

For this the rate of declarations in “yellow channel” for exported pepper suddenly increased, that pepper is considered an item eligible for conditional export.

Specifically, in July 21, 2021, in the official letter responding to VPA's request for consideration of the obstacles in clearance for exported pepper, the Risk Management Agency under the General Department of Vietnam Customs said that pepper is in the list of items eligible for conditional export, Customs agencies have to conduct physical inspection for custom dossier under the specialized management

Also according to the Risk Management Agency, if pepper is exported as medicinal materials but not used for medicine under article 2, Circular No.03/2021/TT-BYT of the Ministry of Health, Customs agencies will implement clearance on the system to facilitate enterprises.

The reason for the difficulties in pepper exports is that the Ministry of Health considered pepper pharmaceutical product. In Appendix 1 of Circular No.48/2018/TT-BYT on the list of medical device with defined code along to Vietnamese export-import products, pepper: code HS 0904.11.20 is included in this list.

In March 4, 2021, the Ministry of Health issued Circular No. 03/2021/TT-BYT on the removal of a number of items in Appendix 1 promulgated together with Circular No.48/2018/TT-BYT including pepper.

However, in article 2 under the Circular No.03 stipulated: “In case export-import products specified in the Appendix promulgated together with this circular are used as medicines and medicinal materials the implementation shall comply with the provisions of legal document on pharmacy”. Therefore, from the point of view of the Customs Department pepper is an item eligible for conditional export.

Meanwhile, the Ministry of Agricultural and Rural Development (MARD) considers pepper a normal agricultural product. Especially, in Circular No.37/2018/TT-NNNPTNT dated December 25, 2018 detailing the list of national key agricultural products, pepper is among 13 commodities included in the list.

In fact, over the past years, Vietnam has always been the biggest pepper exporter in the world. Export volume reaches hundred thousand tons annually. Particularly, according to the General Department of Vietnam Customs, in 2020 Vietnam exported 285,000 tons of pepper to over 110 countries around the world, reaching a value of US$660 million.

In the first six months of 2021, Vietnam’s pepper exports reached 154,00 tons, worth US$ 497 million. Compared to the same period last year, export volume dropped by 7.5% while export value increased by 39.8%.

According to VPA’s statistics, black pepper (Code HS0904 11.20) accounted for 80% of Vietnam’s total pepper export volume. The rest including ground black pepper, white pepper, ground white pepper and pickled pepper were exported in the form of pepper seeds.

In fact, black pepper is now considered a normal agricultural product, mainly used as a spice added to cuisines in importing countries.

VPA said that although black pepper is also used as medicinal ingredient, importing countries set very strict standards for pharmaceutical products. Thus, even Vietnam has exported pepper for decades up to now none of Vietnamese pepper exporters have met the pharmaceutical standards from those countries. Currently, black pepper is used as a medicinal ingredient in traditional Vietnamese medicine and accounts for a very small percentage.

On the other hand, most of Vietnamese exporters do not have a function of medicine business but only register for exporting and importing agricultural products. It means that pepper which they export is a normal agricultural product.

Therefore, in the official letter dated July 22, 2021 sent to the Ministry of Health, the MARD, the Ministry of Industry and Trade and the General Department of Vietnam Customs, VPA asked the Ministry of Health for removing black pepper from the list of commodities eligible for conditional export to facilitate pepper exporters.

In case the enterprises’ request is not considered, VPA will ask the Ministry of Health for providing detail guidelines on documents and procedures for certificating that pepper is not exported for medical use so that enterprises can submit these papers to the customs agency.