Canada likely to become gateway for Vietnamese businesses going global

Vietnam remains the most important Canadian import partner

At present, Vietnam is Canada's largest trading partner in ASEAN and their seventh largest import partner after the United States, China, the Republic of Korea, Japan, the Netherlands, and Hong Kong (China). 

Statistics compiled by Vietnam Customs and the Vietnam Trade Office in Canada indicate that Vietnamese exports to Canada dropped by 11.3% to over US$5.6 billion compared to the same period last year. 

This decline in exports to the North American nation can be seen in the general downward trend occurring in the context of its economic recession.

It has also moved to reduce imports from most major exporting countries in ASEAN such as Indonesia, down 7.7%; Malaysia, down 18.8%; and Thailand, down 10.9%. 

Currently, Vietnam continues to be Canada's most important import partner among ASEAN members, accounting for 45% of its total imports from the region.

Among Canada's top 10 trading partners, the country has surpassed Italy to become Canada's seventh largest import partner.

Two leading product groups which account for the largest proportion of Vietnamese export turnover to Canada includes electronics and mobile phones, up 9.8%, and boiler reactors, up 57.3%. 

Meanwhile, Canada exported goods worth US$620 million to the Vietnamese market last year, down 12.7% on-year.

However, Canadian machinery, equipment, and electronic component imports into the country still maintain a positive growth rate. 

In particular, after Vietnam moved to lift restrictions related to field thistle in grain imported from Canada last year, Canadian grain exports to Vietnam increased by 1039% to US$73 million. 

Despite differences recorded in data between the two countries’ agencies, the country ran a large trade surplus up to US$8.5 billion with Canada.

Challenges faced by Vietnamese exports to Canada in 2024

With regard to the export prospects to the Canadian market this year, Tran Thu Quynh, Vietnamese trade counselor in Canada, pointed out that the nation’s exports to the region will face plenty of challenges over the next few years due to gloomy global economic growth, high interest rates, and inflation and tightened consumption policies.

In addition, the tariff incentives under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will not bring about practical benefits to Vietnamese exports as Canada has accelerated the signing of free trade agreements (FTAs) with South American partners and those in the Indo-Pacific region such as Malaysia, India, Indonesia, all of which share similar product structures to Vietnam.

Furthermore, Canada has recently called on businesses to look towards the South American economic bloc and towards allied countries as a means of building sustainable and reliable supply chains. This trend is starting to negatively impact the export of several advantageous Vietnamese products such as fruits, seafood, and textiles.

Along with losing tariff advantages, high domestic logistics costs occurring in Canada make the nation’s export prices less competitive compared to neighboring South American countries. 

However, Quynh stressed that the country remains still Canada's largest trading partner in ASEAN and Canada's seventh largest import partner

The Canadian side is the nation’s second largest export partner in the Americas as they continue to view the country as an important trading partner in its strategy of diversifying trade and supply sources to enhance the sustainability of the supply chain. 

Canada boasts strengths in high-tech machinery, energy technology, telecommunications technology, biomedicine, and input products for Vietnamese industries such as minerals, plastics, wood, oil and gas, grains and seeds.

On the contrary, the Vietnamese side can provide household products, furniture, textiles, and furniture to the Canadian market thanks to preferential tariff set out in the CPTPP.

Economic, trade, industrial, and energy ties between the two countries will be strengthened through  specific projects in 2024 and over the coming years, Quynh said. 

In contrast, with advantage of a network of FTAs and market advantages, a disciplined and high-quality workforce, as well as trans-Asian transportation infrastructure, Vietnam can completely become a gateway to the wider world. 

Currently, Vietnam's domestic industrial exports to Canada is mainly in the textile and garment industry, as well as toys and wooden furniture, making up  40% of turnover. This group of products is anticipated not to see high growth in 2024 or over the coming years.

The Vietnam Trade Office in Canada forecasts that over the coming years, several product categories are predicted to enjoy robust growth, including footwear, leather products, and headgear products. 

The Trade Office revealed that it will prioritize supporting Vietnamese micro and small processed food enterprises in engaging in exhibitions and fairs to be held in Canada in the time ahead.