As a Vietnamese cabbie famously quipped, “We fought the Chinese for 1,000 years, we fought the French for 100. You [the US] were here just for 10.” But while it might seem unlikely that no animosity exists between the two former combatants, the speed at which the Vietnamese-United States (US) economic relationship has evolved over the past few decades strongly suggests so.
Only having reestablished full economic relations in 2001, the US and Vietnam were two of just eight countries to engage in initial talks of the now defunct Trans-Pacific Partnership (TPP) less than a decade later. Now, the US is Vietnam’s largest export market and second largest trading partner in general—behind only China—accounting for $45.5 billion in imports and exports in 2016. Of that total, agricultural exports from the US accounted for $2.5 billion, a number which has increased 414 percent in the past decade and which makes Vietnam the US’ eleventh largest agricultural export market.
Vietnam’s desire is clear. As the rapidly-growing country and its economy orient toward higher value-added industries, such as manufacturing and services, reliably sourcing cheap and abundant quantities of agricultural commodities is a national priority. Vietnam’s dogged pursuit of the recently-signed, US-less Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) makes it clear that any viable trade partners—be they former combatants or not—will suffice along the country’s road toward economic development.
It didn't take long for newly-elected US President Donald Trump to begin delivering on his signature campaign promise—freeing the US from what he considered to be extortionate trade agreements. In fact, it only took one full day in office. It didn't take much longer, however, for the other eleven members of the TPP to huddle and rally for the trade agreement’s survival, and the CPTPP was officially announced within the same year.
Vietnam was one of the first eight countries to begin formal negotiations of the TPP and again one of the most eager to resurrect it in the form of the CPTPP. A closer look at Vietnam’s economic growth makes it clear why. Since embracing free-market ideology in 1986, the Vietnamese economy has flourished by nearly every measure.
Vietnamese exports and imports of total goods and services have increased 8,140 percent and 6,279 percent, respectively, between 1990 and 2016. Meanwhile, gross domestic product (GDP) per capita rose from just 939 to 6,296 international dollars. Notably, Vietnam flipped from a net importer to a net exporter, a shift that the country’s government is clearly keen to build on.
Trade has become the lifeblood of Vietnam's economy. After the US and Vietnam concluded a 2001 bilateral trade agreement, Vietnam moved quickly to become the 150th member of the World Trade Organization (WTO) in 2007. Now, Vietnam is a member of the Association of Southeast Asian Nations (ASEAN), which as a bloc has signed trade pacts with Korea, China, Australia, New Zealand, India, Chile, and Japan. With export-led growth in mind, Vietnamese officials have signed and continue to pursue more free trade agreements to satiate the country's appetite for broader market access.
Vietnam's economy, like those of most developing countries, has traditionally been centered around agriculture. So far, compared to other Vietnamese industries, agriculture has seen little benefit from the government's pursuit of export-led growth. Between 1996 and 2016, Vietnam's gross domestic product (GDP) rose from $24.7 billion to $205.3 billion and exports of goods increased 2,335 percent to $176.6 billion. Yet food as a share of those exports shrunk from 30.2 percent to 14.8 percent, between 1997 and 2014, as imports have risen from 5.0 percent to 8.6 percent. Similarly, agriculture as a percent of GDP dropped from 27.7 to 18.1 percent during that same period.
Ahead of the CPTPP, which will likely come into force between late 2018 and early 2019, a closer look at how Vietnam's agricultural commodity trade might further shift under the new trade deal is worthwhile.
Vietnam imported $2.5 billion worth of agricultural goods from the US in 2017, a number which has increased by 414 percent in the past decade. According to Gro's ontology, the 10 largest US agricultural export groups to Vietnam in 2017 were, by volume: oil crops (744,711 million tonnes); textiles, industrial crops, and fibers (628,568 million tonnes); paper and paperboard (416,214 million tonnes); agricultural byproducts (312,206 million tonnes); fertilizers (217,998 million tonnes); processed pulses (186,035 million tonnes); cereals (146,906 million tonnes); fruits and nuts (113,194 million tonnes); feed and fodder (98,966 million tonnes); and poultry and eggs (80,665 million tonnes).
Notably, most of those categories are composed of just one or a couple items. Raw agricultural commodities such as cotton lint, wheat, corn, temperate-growing fruits and nuts, and soybeans and their products clearly dominate US agricultural exports to Vietnam.
The CPTPP will bring Vietnam into an economic trading bloc that accounts for 500 million people and nearly 15 percent of global trade. The notable exception, of course, is the US, which would have pumped up the bloc’s numbers to 800 million people comprising 40 percent of global trade. The CPTPP will nevertheless contain Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, and Singapore, in addition to Vietnam.
Given that the US still has a bilateral trade agreement with Vietnam, US market share in Vietnam is unlikely to completely evaporate under the CPTPP. However, major grains exporters such as Australia and Canada—and to a lesser extent Chile, Mexico, Peru, and New Zealand—are both party to the deal and will now benefit from even closer ties to the Vietnamese market. Of the primary US agricultural exports to Vietnam mentioned above, many of the CPTPP members are already major exporters and are likely to increase acreage to meet new demand.
Seasonality concerns will also be addressed by the trade bloc, which spans both sides of the equator and all four hemispheres of the globe. When Australian corn is in the planting stage, for example, harvests in Canada will be reaching completion.
Nutrient-rich soils and abundant rainfall provide Vietnam with prime growing conditions across a range of climates.
Meanwhile, populations in tropical countries continue to boom, demanding and consuming more domestic produce. Unlike row crops, fruits and vegetables are often far more labor-intensive and generally have not witnessed an explosion in yields due to genetic-modification or other innovations. Fruit and vegetable farmers have already been doing well in Vietnam, joining the country's coffee, rubber, and sugar farmers by exporting record amounts in recent years. Farmers planting crops in optimal growing conditions, or in other words, those leveraging their respective geographic comparative advantages will clearly benefit the most from global trade under the CPTPP.
The farmers who will generally be hurt most by increased liberalization under the CPTPP will be those operating in limited, suboptimal conditions, such as grains producers. Vietnam produces a significant amount of soybeans and corn, but it lacks the geography and large scale operations needed to feed a population of almost 100 million people, especially at competitive prices. Rice plays a significant role in the history and culture of the country, and the government has made moves to protect it (similar to those in Japan). Whether the Vietnamese government can or even wants to do the same for domestic corn and soybean farmers, however, is yet to be seen. Moreover, although the US is not in the CPTPP, a potential trade war with China may flood Vietnam with marked-down US soybeans that have few other places to go. Regardless, Vietnam’s major staple producers should consider themselves endangered and closely ponder switching to higher value-added crops.
The real winner, however, will be the average Vietnamese citizen. A growing economy, rising wages, and improving phytosanitary regulations mean trade deals will ultimately be able to deliver a healthier and more diverse selection of food to Vietnamese consumers at lower prices.
The US and Vietnam were smart to leave any potential animosity behind when they entered into a bilateral trade agreement in 2001. US agricultural exports to Vietnam soared, and the US quickly became Vietnam’s second-largest trading partner. Both Vietnam and the US were eager to further the trend by launching the TPP, but US leadership has recently had other ideas. Although the world’s largest economy would have made the TPP even more influential and advantageous, Vietnam is prepared and driven to continue without the US. Many other major agricultural exporters are surely happy to step into the latter country’s role.
Vietnam has taken an indubitably prudent approach to both globalization and modernization of the country’s complex food and agriculture supply chain. Vietnam’s government has steadily adopted policies aimed at liberalizing their economy and increasing food safety. While they have strategically opened Vietnam’s doors to the bounty global agriculture has to offer, Vietnamese officials have also been keen to protect the country’s most valued farmers as well as to support the sectors in which their farmers can be globally competitive.
Regardless, agriculture will contribute less and less relative value to the Vietnamese economy as the country pursues trade deals and more value-added industries domestically. However, Vietnam will become far more connected to and reliant on the global economy. This means if a major economic recession or climatic catastrophe were to take place, the country may quickly find itself in the midst of a food security crisis. Gro Intelligence can help monitor whether Vietnam has ultimately found the right balance between supply and demand and which major exporters might step in to help it do so.
Receive our research in your inbox
Thank you for subscribing to our newsletter!
What Information Do We Collect?
The information we gather enables us to personalize, improve and continue to operate the Services. We collect the following types of information from our users.
IP Address Information and Other Information Collected Automatically:
· We automatically receive and record information from your web browser when you interact with the Services, including your IP address and cookie information. This information is used for fighting spam/malware and also to facilitate collection of data concerning your interaction with the Services (e.g., what links you have clicked on).
· Generally, the Services automatically collect usage information, such as the number and frequency of visitors to the Site. We may use this data in aggregate form, that is, as a statistical measure, but not in a manner that would identify you personally. This type of aggregate data enables us and third parties authorized by us to figure out how often individuals use parts of the Services so that we can analyze and improve them.
Information Collected Using Cookies:
· Most browsers have an option for turning off the cookie feature, which will prevent your browser from accepting new cookies, as well as (depending on the sophistication of your browser software) allowing you to decide on acceptance of each new cookie in a variety of ways.
We collect statistical information about how users collectively use the Services (“Aggregate Information”). Some of this information may be derived from Personal Information. This statistical information is not Personal Information and cannot be tied back to you or your web browser.
How, and With Whom, Is My Information Shared?
IP Address Information:
Information You Elect to Share:
We share Aggregate Information with our partners, service providers and other persons with whom we conduct business. We share this type of statistical data so that our partners can understand how and how often people use our Services and their services or websites, which facilitates improving both their services and how our Services interface with them. In addition, these third parties may share with us non-private, aggregated or otherwise non Personal Information about you that they have independently developed or acquired.
Information Shared with Our Agents:
We employ and contract with people and other entities that perform certain tasks on our behalf and who are under our control (our “Agents”). We may need to share Personal Information with our Agents in order to provide products or services to you. Unless we tell you differently, our Agents do not have any right to use Personal Information or other information we share with them beyond what is necessary to assist us. You hereby consent to our sharing of Personal Information with our Agents.
Information Disclosed Pursuant to Business Transfers:
In some cases, we may choose to buy or sell assets. In these types of transactions, user information is typically one of the transferred business assets. Moreover, if we, or substantially all of our assets, were acquired, or if we go out of business or enter bankruptcy, user information would be one of the assets that is transferred or acquired by a third party. You acknowledge that such transfers may occur, and that any acquirer of us or our assets may continue to use your Personal Information as set forth in this policy.
Information Disclosed for Our Protection and the Protection of Others:
Information We Share With Your Consent:
Except as set forth above, you will be notified when your Personal Information may be shared with third parties, and will be able to prevent the sharing of this information.
Is Information About Me Secure?
We store all of our information, including your IP address information, using industry-standard techniques. We do not guarantee or warrant that such techniques will prevent unauthorized access to information about you that we store, Personal Information or otherwise.
What Information of Mine Can I Access?
You can access and delete cookies through your web browser settings.
California Privacy Rights: Under California Civil Code sections 1798.83-1798.84, California residents are entitled to ask us for a notice identifying the categories of personal customer information which we share with our affiliates and/or third parties for marketing purposes, and providing contact information for such affiliates and/or third parties. If you are a California resident and would like a copy of this notice, please submit a written request to the following address: 12 E 49th Street, 11th Floor, New York, NY 10017
What If I Have Questions or Concerns?
If you have any questions or concerns regarding privacy using the Services, please send us a detailed message to email@example.com. We will make every effort to resolve your concerns.
Effective Date: March 11, 2014
b. You shall not (directly or indirectly):i. take any action that imposes or may impose (as determined by us in our sole discretion) an unreasonable or disproportionately large load on our (or our third party providers’) infrastructure;ii. interfere or attempt to interfere with the proper working of the Services or any activities conducted on the Services;iii. bypass, circumvent or attempt to bypass or circumvent any measures we may use to prevent or restrict access to the Services (or other accounts, computer systems or networks connected to the Services);iv. use manual or automated software, devices, or other processes to “crawl” or “spider” any page of the Site;
v. harvest or scrape any Content from the Services;
vi. otherwise take any action in violation of our guidelines and policies;vii. decipher, decompile, disassemble, reverse engineer or otherwise attempt to derive any source code or underlying ideas or algorithms of any part of the Services (including without limitation any application), except to the limited extent applicable laws specifically prohibit such restriction;viii. modify, translate, or otherwise create derivative works of any part of the Services; orix. copy, rent, lease, distribute, or otherwise transfer any of the rights that you receive hereunder.c. We also reserve the right to access, read, preserve, and disclose any information as we reasonably believe is necessary to:i. satisfy any applicable law, regulation, legal process or governmental request;ii. enforce these Terms of Service, including investigation of potential violations hereof;
iii. detect, prevent, or otherwise address fraud, security or technical issues;
iv. respond to user support requests; or
v. protect the rights, property or safety of us, our users and the public.4. Third Party Services. The Services may permit you to link to other websites, services or resources on the Internet, and other websites, services or resources may contain links to the Services. When you access third party resources on the Internet, you do so at your own risk. These other resources are not under our control, and you acknowledge that we are not responsible or liable for the content, functions, accuracy, legality, appropriateness or any other aspect of such websites or resources. The inclusion of any such link does not imply our endorsement or any association between us and their operators. You further acknowledge and agree that we shall not be responsible or liable, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any such content, goods or services available on or through any such website or resource.5. Termination. We may terminate your access to all or any part of the Services at any time, with or without cause, with or without notice, effective immediately. All provisions of these Terms of Service which by their nature should survive termination shall survive termination, including, without limitation, ownership provisions, warranty disclaimers, indemnity and limitations of liability.6. Warranty Disclaimer.a. You release us from all liability for you having acquired or not acquired Content through the Services. We make no representations concerning any Content contained in or accessed through the Services, and we will not be responsible or liable for the accuracy, copyright compliance, or legality of material or Content contained in or accessed through the Services.b. THE SERVICES AND CONTENT ARE PROVIDED “AS IS”, “AS AVAILABLE” AND WITHOUT WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND ANY WARRANTIES IMPLIED BY ANY COURSE OF PERFORMANCE OR USAGE OF TRADE, ALL OF WHICH ARE EXPRESSLY DISCLAIMED. WE, AND OUR DIRECTORS, EMPLOYEES, AGENTS, SUPPLIERS, PARTNERS AND CONTENT PROVIDERS DO NOT WARRANT THAT: (I) THE SERVICES WILL BE SECURE OR AVAILABLE AT ANY PARTICULAR TIME OR LOCATION; (II) ANY DEFECTS OR ERRORS WILL BE CORRECTED; (III) ANY CONTENT AVAILABLE AT OR THROUGH THE SERVICES IS FREE OF VIRUSES OR OTHER HARMFUL COMPONENTS; OR (IV) THE RESULTS OF USING THE SERVICES WILL MEET YOUR REQUIREMENTS.7. Limitation of Liability. IN NO EVENT SHALL WE, NOR OUR DIRECTORS, EMPLOYEES, AGENTS, PARTNERS, SUPPLIERS OR CONTENT PROVIDERS, BE LIABLE UNDER CONTRACT, TORT, STRICT LIABILITY, NEGLIGENCE OR ANY OTHER LEGAL OR EQUITABLE THEORY WITH RESPECT TO THE SERVICES FOR ANY (I) LOST PROFITS, DATA LOSS, COST OF PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, OR SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE, COMPENSATORY OR CONSEQUENTIAL DAMAGES OF ANY KIND WHATSOEVER, SUBSTITUTE GOODS OR SERVICES (HOWEVER ARISING), (II) BUGS, VIRUSES, TROJAN HORSES, OR THE LIKE (REGARDLESS OF THE SOURCE OF ORIGINATION), OR (III) DIRECT DAMAGES IN EXCESS OF $50.00.8. Governing Law and Jurisdiction. These Terms of Service shall be governed by and construed in accordance with the laws of the State of New York, including its conflicts of law rules, and the United States of America. You agree that any dispute arising from or relating to the subject matter of these Terms of Service shall be governed by the exclusive jurisdiction and venue of the state and Federal courts of New York County, New York.9. Miscellaneous.a. Modification. We reserve the right, in our sole discretion, to modify or replace any of these Terms of Service, or change, suspend, or discontinue the Services at any time. Your continued use of the Services following notification of any changes to these Terms of Service constitutes acceptance of those changes.b. Entire Agreement and Severability. These Terms of Service are the entire agreement between you and us with respect to the Services, including use of the Site, and supersede all prior or contemporaneous communications and proposals (whether oral, written or electronic) between you and us with respect to the Services. If any provision of these Terms of Service is found to be unenforceable or invalid, that provision will be limited or eliminated to the minimum extent necessary so that these Terms of Service will otherwise remain in full force and effect and enforceable. The failure of either party to exercise in any respect any right provided for herein shall not be deemed a waiver of any further rights hereunderc. Force Majeure. We shall not be liable for any failure to perform our obligations hereunder where such failure results from any cause beyond our reasonable control, including, without limitation, mechanical, electronic or communications failure or degradation.d. Assignment. These Terms of Service are personal to you, and are not assignable, transferable or sublicensable by you except with our prior written consent. We may assign, transfer or delegate any of our rights and obligations hereunder without consent.e. Agency. No agency, partnership, joint venture, or employment relationship is created as a result of these Terms of Service and neither party has any authority of any kind to bind the other in any respect.f. Notices. Unless otherwise specified in these Term of Service, all notices under these Terms of Service will be in writing and will be deemed to have been duly given when received, if personally delivered or sent by certified or registered mail, return receipt requested; when receipt is electronically confirmed, if transmitted by facsimile or e-mail; or the day after it is sent, if sent for next day delivery by recognized overnight delivery service. Electronic notices should be sent to firstname.lastname@example.org. No Waiver. Our failure to enforce any part of these Terms of Service shall not constitute a waiver of our right to later enforce that or any other part of these Terms of Service. Waiver of compliance in any particular instance does not mean that we will waive compliance in the future. In order for any waiver of compliance with these Terms of Service to be binding, we must provide you with written notice of such waiver through one of our authorized representatives.h. Headings. The section and paragraph headings in these Terms of Service are for convenience only and shall not affect their interpretation.Contact. You may contact us at the following address: 12 E 49th Street, 11th Floor, New York, NY 10017.