Quality Control Challenges For Russian Exporters In ASEAN

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Closer Quality Cooperation & Coordination Between EAEU and ASEAN

Op/Ed By Chris Devonshire-Ellis

Russian importers and exporters are gaining more experience and solving the logistics issues of doing business in ASEAN, where Vietnam has a Free Trade Agreement and other ASEAN nations are set to follow.

In Vietnam, since the signing of the Eurasian Economic Union FTA (of which Russia is a part) bilateral trade has zoomed from nowhere to US$10 billion in just two years. However that hasn’t come without dealing with problems. South-East Asia has a markedly different climate than Russia, and with that come issues with quality standards – a note for Russian businesses to be aware of.

ASEAN and the EAEU have differing QC standards, and work is being done on both sides to make these compatible. An example of this is the recent issues over Vietnamese wheat imports from Russia. Vietnam had been importing Russian wheat, however suspended this when Russian weed seeds where found mixed in with the grain in quantities that met EAEU but failed ASEAN protocols. The issue has been resolved at G2G level, with Russia suspending the phytosanitary certificates issued to the wheat exporters involved.

Better QC checks, investment in monitoring and processing equipment have been put in place, with Russia resuming wheat exports to Vietnam earlier this month. Some 500,000 tonnes of Russian wheat have been supplied since then. Vietnam has also invited a Russian farming delegation to visit Ho Chi Minh City on October 28-29 for technical consultations on plant quarantine, quality and safety of grain and for developing a consolidated stance on supplying these goods to the country.

These situations are nothing especially new, but do occur when free trade agreements are put in place between different countries, or in this case, different trade blocs. ASEAN includes the South-East Asian countries of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore and Thailand in addition to Vietnam and is seen as a large potential market for Russian exporters. We can see the current economic attractions of ASEAN below:

asean-countries-2019-gdp-growth-rates-1

The EAEU comprises Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia. We can examine the exports from the EAEU to ASEAN in terms of products as follows:

10-biggest-asean-import-from-eaeu-us-dollar-thousand-1

There are lessons here for Russian exporters looking at the ASEAN markets, and that is to conduct research into the quality standards required to accept Russian produce into these markets. With Cambodia, Indonesia and Thailand all in the process of negotiating Free Trade Agreements with the EAEU, and Singapore having signed off just last month, the time is ripe for Russian exporters to be looking at how to comply with ASEAN product standards. With Vietnam in the market to buy 2 million tonnes of Wheat from Russia in 2020, the onus is on Russian suppliers – and not just in agriculture – to confirm to the correct standards or risk missing out on the ASEAN market. Firms such as Dezan Shira & Associates can assist.

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About Us

Russia Briefing is written by Dezan Shira & Associates. The firm assists Russian investors into Asia and has offices throughout ASEAN in addition to China and India. For assistance with Russian investment into the region please contact Maria Kotova at russia@dezshira.com

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