Vietnam’s Trade with Korea: Longer-Term Prospects for the Vietnamese Agricultural Sector
The Republic of Korea (RoK) is a relatively new, but increasingly important, trade partner for Vietnam. The RoK was Vietnam’s sixth largest trade partner in 2003, and has been a growing source of foreign direct investment (FDI) in Vietnam. Trade and investment relations between Vietnam and the RoK will likely play an increasingly larger role in Vietnam’s agricultural sector, which accounts for 22 percent of the Vietnam’s GDP and employs 60 percent of its workforce (World Bank, 2005). By 2004, Vietnam’s agricultural exports to the RoK had grown to more than four times 1998 levels, accounting for 40 percent of Vietnam’s total exports to the RoK that year.
Although growing, Vietnam’s trade and investment activities with the RoK have historically had a lesser impact on Vietnam’s agricultural sector. The RoK is not a major export market for Vietnam for most agricultural products, and Vietnam’s agricultural exports to the RoK remain limited to a small group of products. Changes in the region, including the RoK’s ambitious plans for a free trade agreement with ASEAN (Association of Southeast Asian Nations), will likely produce further trade and investment opportunities for Vietnamese agriculture. Taking advantage of these opportunities will require systemic improvements to Vietnam’s agricultural sector to respond to growing international competition and meet higher Korean food safety standards for imports.