On Jun 7, the Ministry of Industry and Trade organized a conference on the structure of Vietnam’s export of food and beverages to the U.S. Many businesses urgently said that they have fallen into the list of enterprises that do not meet the requirements for exporting to the US market while having a long history of exporting to the market for more than ten years. In addition, they did not receive any warning information from the authorities. In fact, new regulations were announced Oct 1 – Decc 31, 2016, and applied from Jan 1, 2017., in just a few months from the end of 2016 to the beginning of 2017, the number of Vietnamese companies with valid FDA registration to export to the US market dropped from 1,845 companies down to only 806.
Vietnamese businesses “blocked because of lack of information”
According to David Lennarz, Vice President of Registrar Corp, the US Food and Drug Administration (FDA) introduced new regulations from early 2017, [based on the “Food Safety Modernization Act of 2011].
The latest regulations require that food facilities must re-register. A foreign manufacturing facility must appoint a representative in the United States. This regulation also requires that enterprises must re-new their registration every two years. By registering, facilities agree to have FDA inspections. In case of non-renewal, the FDA registration will expire. As a result, exports from rhe facility can not enter the US market.
In 2016, the FDA sent warning notices of the changed registration requirements to notify all representatives or authorized third parties of foreign enterprises exporting to the US market. The FDA web site also announced the requirements to re-register between Oct 1 and Dec 31,, 2016. (see notice below from FDA web site on “Food Facility Registration Background”). Therefore, in cases where enterprises can no longer export goods into the US, it is because the Vietnam export enterprises have no representatives or third parties authorized in the United States, OR their representatives did not respond to the FDA’s warning notice emails.
As a result, as soon as the new regulations entered into effect, in just a few months from the end of 2016 to the beginning of 2017, the number of Vietnamese companies with valid FDA registration to export to the US market dropped from 1,845 companies down to only 806.
In addition, Vietnamese exports to the US market have been “denied entry” and returned continuously in recent times due to the changes in food safety inspections in the United States,[under the Food Safety Modernization Act]. Before, the quality of products was only checked at the port, now the company must prove quality through certification at each stage: raw materials – production – finished products – preserved – transported to the export market. This certification must be issued by an FDA accredited independent third-party.
Urgent standardization of the production and export process
In the first 5 months of 2017, the US remains the main export market of Vietnam. According to the General Department of Vietnam Customs, by the end of April 2017, Vietnam’s export turnover to the US market reached US $ 12.4 billion, accounting for over 20% of total export turnover of Vietnam, Up 8.7% over the same period in 2016. The export structure of Vietnamese goods to the United States in the first months of 2017 is still the same as the main export commodities in past years such as — seafood, textiles, footwear, furniture, wood and wood products, computers, electronic products and components and agricultural products …
However, this trend is changing in a decreasing direction. Representatives of the Trade Promotion Agency under the Ministry of Industry and Trade (MOIT) acknowledge that Vietnamese businesses face a lot of trade barriers due to the new [food safety] management policies of the US government. On the other hand, Vietnamese enterprises have difficulties and do not fully comprehend, or thoroughly understand the new regulations on food safety or the new import processes and procedure into the U,S. market.