With Vietnam participating in 16 FTAs, the country has gained considerable competitive advantages in term of tariffs, providing significant opportunities for cinnamon products to expand globally. — VNA/VNS
HANOI: The cinnamon industry of Vietnam is seeking to develop an ecosystem to take advantages of free trade agreements (FTAs), including the trade deal between Vietnam and the United Kingdom (UKVFTA) to expand exports sustainably.
With Vietnam participating in 16 FTAs , including new trade pacts such as the UKVFTA, European Union–Vietnam FTA, the Comprehensive and Progressive Agreement for Trans–Pacific Partnership, and the Regional Comprehensive Economic Partnership, the country has gained considerable competitive advantages in term of tariffs, providing significant opportunities for cinnamon products to expand globally.
According to the Vietnam Pepper and Spice Association (VPSA), Vietnam is the world’s largest cinnamon producer with a total plantation area of 180,000ha and since 2021, has been the world’s largest exporter of cinnamon products.
Statistics showed that Vietnam exported nearly 90,000 tonnes of cinnamon worth US$260mil last year, accounting for 34.4% of the global cinnamon market.
The global demand for cinnamon is increasing because it is used not only in the food but also in the pharmaceutical, cosmetics and health supplement industries.
Major export markets of Vietnam’s cinnamon products include India, China, Bangladesh, the United States and the EU.
Notably, while cinnamon exports to major markets saw drops in the first months of this year, cinnamon exports to the EU and Britain witnessed impressive growth. Cinnamon exports to the EU rose by 12.7% and to Britain by 94.4% in January and February this year, while exports to India fell by 30.3% and the United States by 0.8%.
For the British market, the strong tariff liberalisation under the UKVFTA has given an advantage in market access to a number of Vietnamese agricultural products such as seafood, fruits and vegetables, coffee, rice and cinnamon.
The trade deal immediately removed 85.6% of tariff lines on Vietnamese products when it came into force on Jan 1, 2021, and will reach 99.2% from Jan 1, 2027. The remaining 0.8% will enjoy zero tariffs within quotas.
The cinnamon industry of Vietnam has successfully taken advantage of the UKVFTA to increase exports to Britain.
According to the United Nations Comptrade database on international trade, Britain’s imports of cinnamon and cinnamon-tree flowers from Vietnam increased from US$1.65mil in 2020 – before the trade deal came into force – to US$2.97mil in 2021, US$3.36mil in 2022 and US$2.38mil in 2023.
Vietnamese cinnamon has been exported to nearly a hundred markets so far, accounting for market share of 95% in India, 36.5% in the United States and 35% in the EU.
However, processed products make up for just around 18.6%, or more than 18,650 tonnes, which were mainly exported to the United States (70%) and the EU (12%).
Import markets, especially the EU and Britain, have stringent standards for cinnamon products, including requirements for carbon emissions, origin traceability, sustainable production, product quality, and maximum residue levels. These markets also have increasing demands for organic products or products with high added value.
According to VPSA president, Hoang Thi Lien, it is necessary for Vietnam’s cinnamon industry to make drastic changes to meet the export-market requirements. — Viet Nam News/ANN
