Vietnam continues to be Canada’s largest import partner
According to statistics from Vietnam Customs, the Vietnamese Trade Office in Canada stated that Vietnam’s exports to Canada in 2023 reached over $5.6 billion, a decrease of 11.3% compared to the same period in 2022. According to the recently published data on January 9, 2024, Vietnam has exported $9.03 billion to the territory by the end of November 2023.
According to the Vietnamese Trade Office in Canada, this significant difference is due to Canada considering the transit flow of imports from the United States to Canada. If calculated based on local statistics, Canada is currently an important export market and the 7th largest market for Vietnam (after the United States, China, South Korea, Japan, the Netherlands, and Hong Kong – China).
Textiles and garments are among Vietnam’s exports to Canada. Photo: TTXVN
In the context of Canada’s economic recession, Vietnam’s exports to Canada in the first 11 months of 2023 decreased slightly by 2.4%, which is consistent with Canada’s overall reduction in imports (down 2.4%). Canada also reduced imports from most major exporting countries in ASEAN, such as: Indonesia (-7.7%), Malaysia (-18.8%), Thailand (-10.9%).
Currently, among ASEAN countries, Vietnam continues to be Canada’s most important import partner, accounting for 45% of Canada’s total imports from the region. Among the top 10 leading trading partners of Canada, Vietnam surpasses Italy and ranks as Canada’s 7th largest import partner.
In terms of Vietnam’s export products to Canada, according to the statistics of the Canadian Statistical Agency, the top 2 product groups with the largest proportion in Vietnam’s exports to Canada still maintain positive growth rates, namely electronics and mobile phones increased by 9.8%; and steam boilers increased by 57.3%. Other products that also recorded good growth rates include: handbags (1.6%), auto parts (64.6%), ships (224.5%), copper and copper products (12.2%).
Regarding imports, according to Vietnam’s records, in 2023 Canada exported $620 million to Vietnam (a decrease of 12.7% compared to the same period in 2022). Conversely, according to the local data, in the first 11 months of the year, Canada exported $529 million, recording a downward trend of 20.4% compared to the same period in 2022.
Vietnam’s imports from Canada have mostly decreased in the industrial inputs sector and some of Canada’s agricultural products (except for oilseed), along with the general trend of reduced industrial production index, PMI, and domestic consumption.
Canada’s machinery and electronic components imported into Vietnam are still growing. In particular, after Vietnam lifted the restrictions on KMG grass in cereal imports from Canada (which took effect on November 1, 2023), Canada’s cereal exports to Vietnam increased by 1039% (reaching $73 million).
Despite the differences in data between the two countries, Vietnam’s large surplus trend with Canada will still be maintained (according to local data, by the end of November 2023, Vietnam recorded a surplus of up to $8.5 billion), and Canada is the 4th largest deficit country (with the largest deficit being China, Mexico, Germany, and Vietnam).
Canada continues to position Vietnam as an important trading partner
Regarding the Canadian market in 2024, Ms. Tran Thu Quynh – Commercial Counselor of the Vietnamese Trade Office in Canada, said that in the context of bleak economic growth prospects, the burden of repaying mortgages at major banks, and high inflation in the food sector (at least 20% higher than two years ago), Canadian households are expected to continue tightening their consumption policies (reducing spending on clothing, footwear, kitchenware/dishes, phones, electronics, cameras, etc.).
“For Vietnam’s main export products to the territory, only based on the demand perspective of the market, let alone the competition perspective, our exports to the territory will face many difficulties in the coming years,” said Ms. Tran Thu Quynh.
Currently, Vietnamese exports to Canada are quoted in USD, while the CAD maintains a low exchange rate policy to promote exports, making Vietnamese products less competitive due to their pricing in USD. Additionally, in the context of high inflation (especially food inflation) and high interest rates, Canadian consumers have tightened their spending on non-essential consumer goods to allocate budgets for mortgage repayments and essential food.
In addition to tariff advantages, the domestic logistics costs in Canada are high, making Vietnam’s export prices less competitive compared to neighboring South American countries. Factors such as high fuel costs, slow cargo handling at Canadian ports due to labor shortages, and high logistics costs are also reasons why Vietnamese goods are less competitive than those from South American exporters.
However, Ms. Tran Thu Quynh emphasized that Vietnam is still Canada’s largest trading partner in ASEAN and the 7th largest import partner overall; Canada is Vietnam’s second-largest export partner in the Americas. “Canada continues to position Vietnam as an important trading partner in the strategy of diversifying trade, supply sources, and strengthening the sustainability of the supply chain. The two countries complement each other rather than compete in terms of goods,” Ms. Quynh said.
Canada has strengths in high-tech machinery, energy technology, telecommunications technology, biomedical technology, and input products for Vietnam’s industries such as minerals, plastics, wood, petroleum, cereals, oilseeds, and fertilizers. Conversely, Vietnam can provide consumer products, furniture, textiles, and other goods to the Canadian market thanks to the preferential tariff advantages in CPTPP.
According to Ms. Tran Thu Quynh, it is expected that economic-trade, industrial, and energy cooperation between the two countries will have specific projects in 2024 and subsequent years. With advantages in technology, finance, customer relations, and logistics networks in the Americas, Canada can be a gateway for Vietnamese businesses to expand their scale and enter the global market. Conversely, with the advantages of free trade agreements, market advantages, disciplined and high-quality labor, as well as cross-Asia transportation infrastructure, Vietnam can become a gateway for Canadian enterprises to enter ASEAN.
Currently, the structure of Vietnam’s industrial exports to Canada mainly consists of the garment and textile, toy, and furniture industries (accounting for 40% of the trade value), and these sectors are projected to have a difficult time maintaining high growth rates in 2024 and the years to come.
In addition, the Vietnamese Trade Office in Canada predicts that in the coming years, some product groups that still have good export potential are: leather shoes, leather products, and hats. Raw materials for production such as rubber, iron and steel, plastic materials, and chemicals (5%)… have experienced a sharp decline and their growth potential depends on the speed of order recovery and industrial production growth in Canada.
In 2024, Ms. Tran Thu Quynh said that the Vietnamese Trade Office in Canada will continue its activities to promote supply chain connectivity/logistics connectivity between Vietnam and Canada, help businesses from both sides understand more about the agreement and how to make use of CPTPP in their investment and business strategies.
At the same time, the Trade Office will prioritize support for super small and small Vietnamese companies in the food processing sector to participate in international trade through e-commerce solutions and participation in exhibitions in Canada; strengthen cooperation with the overseas business network and develop trade through the overseas Vietnamese business system (Vietnamese restaurants, Vietnamese consumer products, cooking instructions for Vietnamese cuisine, etc.).
Ms. Tran Thu Quynh also added that one of the focal points in 2024 will be to support domestic businesses to participate in service trade, especially in infrastructure construction, wind and solar power infrastructure, and civil construction. “For provinces and localities, the Trade Office will focus on coordinating the organization of programs to promote industrial and energy investment trade in these areas, especially supporting cooperative development of border trade management models, border economic areas, and comprehensive border logistics centers. For associations and departments under the Ministry, the Trade Office will ensure information dissemination, coordination, proactive mobilization, and attract projects to support capacity,” Ms. Quynh said.
