The Potential Impact of the Vietnam - EFTA FTA on Vietnam Imports of Seafood

Abstract

This paper assesses the potential impacts of the Vietnam - EFTA Free Trade Agreement (Vietnam – EFTA FTA) on Vietnam's seafood imports from the EFTA by adopting the SMART model based on two scenarios. The simulation results reveal that the Vietnam – EFTA FTA would result in a significant increase in Vietnam's seafood imports from the EFTA, implying that the EFTA would be still one of the most important seafood sources for Vietnam in the upcoming time. When Vietnam also extends its coverage of tariff elimination to ASEAN+5 including China Japan, South Korea, India, Australia – New Zealand having signed an FTA with ASEAN to which Vietnam is a country member and to the European Union (EU), which is Vietnam’s partner in the Vietnam – EU FTA (EVFTA), the reduction in Vietnam’s seafood imports from the EFTA would occur but it would be inconsiderable. Besides, in both scenarios, trade creation effects would be higher than trade diversion effects meaning that the Vietnam – EFTA FTA would raise the welfare of Vietnam. Based on these results, the paper ends by drawing out some implications for the Vietnamese government and domestic seafood enterprises to be better preparing for the upcoming Vietnam – EFTA FTA.