Tuna exports to EK not affected by Brexit

The UK has officially left the European Union (Brexit), and has entered a “transition period” until the end of December 2020, so exports to the UK havenot been affected by Brexit.  

Processing tuna for export Photo: T.H

According to the Vietnam Association of Seafood Exporters and Producers, as per the EU notification, from 23h (UK time) on January 31, 2020, the UK officially left the European Union after 47 years of membership and entered a “transition period” until the end of December 2020. During this period, the UK remainsa member of the EU market and the EU Customs Union (EUCU).

During the transition period, everything remainsthe same, but the UK can no longer take part in EU decision-making. This shows that from now until December 31, seafood and tuna exports between Vietnam and the UK still take place normally and will not change.

If the EVFTA is approved and smoothly applied as expected, trade activities between Vietnam and the UK will enjoyenjoy preferential treatment from the EVFTA within 7-8 months. Therefore, the impact of Brexit on Vietnam - UK trade relations in 2020 is insignificant.

In 2019, the UK was Vietnam's seventhlargest tuna import market. Among tuna products, fresh and frozen tuna was the major export product of Vietnam to this market, accounting for 88 percent. Vietnam's exports of these products to the UK increased by 3percent compared to 2018, while processed and canned tuna exports decreased by 24 percent.

After threeconsecutive years of growth, the UK’s tuna imports from Vietnam decreased in 2019. Export value of Vietnam’s tuna exports to the UK only reached US$7 million, down 1 percent. The UK has also reduced imports of tuna from other countries. According to the International Trade Center (ITC), the UK’s tuna imports in 2019 fellboth in volume (down 2 percent) and in value (down 8 percent).This decline partly stemmed from the impact of Brexit on the beliefs and consumer behavior of British consumers.

According to the experts, Brexit will cause depreciation of the British Pound and EUR. British consumers need to spend more money to buy products, especially imported tuna because trade is conducted in USD or EUR. Moreover, the UK does not haveany tuna processing and importing facilities, with the majority of canned tuna shipments imported from outside the EU. This will make the price of tuna products exported to the UK higher and competition will be more difficult.

Moreover, the tax rate of 24 percent for tuna products imported from exporting countries when the UK left the EU. Currently, only Ecuador has signed a new trade agreement with the UK, allowing 95 percent of Ecuador's products, including tuna imported into the country to be exempt from taxes. This will incur when the UK leaves the EU. Meanwhile, tuna products of other countries will be subject to higher tax rates. Therefore, countries exporting tuna to the UK such as Papua New Guinea and Peru,large suppliers of tuna, have negotiated a trade agreement with the UK prepared for signing. This is expected to create a trend of tuna import growth into the UK from countries with preferential tariffs, reducing tuna imports from countries with high tariffs such as Vietnam.

Thus, after Brexit, tuna exports to the UK areexpected to be more difficult. In the context of the UK’s technical barriers, food safety, traceability with imports into this country increasing, if Vietnamese businesses want to boost exports to the UK, they need to adjust production strategy to meet market requirements.