The VKFTA was officially signed in Hanoi on May 5, 2015. On December 6, 2015, the two Ministries of Foreign Affairs exchanged diplomatic notes to determine the effective date of the agreement, which officially took effect on December 20, 2015, ten days sooner than expected.
According to the agreement, the RoK pledged to grant a tariff quota of 10,000 tonnes of shrimp to Vietnam in the first year and 15,000 tonnes after five years at zero percent import duty.
With a limit of 15,000 tonnes of shrimp, seven shrimp products from Vietnam will receive a 0% export duty rate.
Vietnamese shrimp has a big advantage over the ten ASEAN countries (particularly in regards to Thailand, Indonesia, and Malaysia), as the RoK only grants a quota of 5,000 tonnes for the whole bloc.
To take full advantage of tax incentives under the VKFTA, VASEP recommended Vietnam’s shrimp exporters visit sites on tariffs and tariff lines with the corresponding codes of both the RoK and Vietnam’s Ministry of Finance to acquire official information relating to the incentives.
In addition, they also need to meet Sanitary and Phytosanitary Measures (SPS), surpassing technical barriers to trade and quality standard fences, especially meeting rules of origin requirements.
Shrimp consumers in the RoK have similarities with Japanese consumers and experience in exporting the product to the Japanese market is also a big advantage to Vietnamese shrimp exporters.
The overall growth of the RoK market with economic recovery is also the driving force for Vietnam's seafood export companies. The RoK has become a relatively stable market of Vietnam's fisheries sector, including shrimp, amidst the country’s fishing activities showing signs of slowing down.
According to International Trade Centre (ITC), the RoK’s shrimp imports reached nearly US$413 million in the first ten months of 2015, down 10.3% from the same period in 2014.
Vietnam is still the leading supplier of shrimp to the country, accounting for nearly 49% of total shrimp imports on the market, followed by China with 14% and Thailand with 12%.
Among ten major shrimp supplies for the market, shrimp imports from Thailand, Ecuador, Argentina and Saudi Arabia recorded positive growth (from 14% to 74%), while imports from other sources saw a decline which the strongest decline coming from the Philippines with -54%.
The RoK is currently the 5th largest market for Vietnamese shrimp, after the US, Japan, the EU and China.