The Biden administration recently announced advances in U.S.-Vietnam trade relations, including plans for Vietnam to reduce its Most Favored Nation (MFN) tariff rate on imported frozen pork cuts.
Vietnam’s current MFN rate, which applies to U.S. pork cuts, is 15%, U.S. Meat Export Federation (USMEF) reported in its weekly audio report. Reports suggest that the rate will soon be lowered to 10% – the same reduction that was temporarily implemented in the second half of 2020 in an effort to bolster pork supplies and stabilize prices as Vietnam dealt with the impact of African swine fever (ASF). This temporary rate reduction expired on Jan. 1 of this year.
A Step in the Right Direction
U.S. Meat Export Federation (USMEF) Economist Erin Borror said the proposed rate reduction is a step in the right direction that will narrow the tariff disadvantage U.S. pork faces in this price-sensitive market.
“The White House announcement came after our Vice President’s visit to Vietnam,” Borror said in the USMEF weekly audio report. “It’s excellent that pork made the list of important trade issues. We know our industry has been hammering that home for some time now, essentially, since we left the TPP. Tariffs are always important, but especially in price-competitive markets like Vietnam.”
Canadian pork enjoys favorable tariff treatment under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), while European pork enters at a reduced rate under the EU-Vietnam FTA. Russia also has a trade agreement with Vietnam that includes duty-free access for Russian pork, the report explained.
Borror added that the tariff relief appears to be well-timed, as the COVID-19 pandemic has created pork production obstacles that may be slowing Vietnam’s ASF recovery efforts.
“There’s a concern that the ASF situation can be worsening as hogs are kind of stuck on farm. People and feed and inputs have had a hard time moving around there. The question is: How much is this going to hinder Vietnam’s pork production recovering going into next year? So, even though we’re seeing challenges in the market today, there could be big opportunities in the market tomorrow. And for the U.S. to really get in there and compete, any type of tariff relief is necessary,” Borror said.
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