UK trade deal benefits Vietnamese goods
UK trade deal benefits Vietnamese goods
The UK-Vietnam Free Trade Agreement (UKVFTA) represents the beginning of a new phase in the trade relationship between the two countries. The deal replicates the commitments of the EU-Vietnam Free Trade Agreement (EVFTA) with necessary adjustments to ensure compliance with the bilateral trade framework between the UK and Vietnam.
The UKVFTA provides Vietnam with great opportunities to increase exports to the UK |
More competitive advantages
In fact, 65 percent of all tariffs have already been eliminated from UK-Vietnam trade. In the first six years of the deal, which went into effect in 2021, the UK will eliminate 99.2 percent of tariff lines on Vietnam’s imports. The UK will also review an option to increase the amount of tariff-rate quota (TRQ) with Vietnam’s rice products after three years from the effective date. Vietnam pledges to eliminate 48.5 percent of tariffs, matching other EU countries under the EVFTA. The figure will increase to 91.8 percent after six years and 98.3 percent after nine years.
The trade deal includes commitments on rules of origin, customs and trade facilitation, food hygiene and safety, and on technical measures for trade and services, investment, trade defense, competition, state-owned enterprises, government procurement, and intellectual property.
According to the Ministry of Industry and Trade, the agreement gives Vietnam more competitive advantages compared to countries like China, India, Thailand, Malaysia and Indonesia, which are unlikely to conclude trade agreements with the UK for years to come. Vietnam will also have more opportunities for cooperation, investment, technology transfer, and attracting British tourism during the post-pandemic period.
Cashew nuts are Vietnam's key exports to the UK |
Opportunities to boost exports
Thanks to the commitments related to market opening, coupled with additional quotas on products in which Vietnam has competitive advantages, such as agricultural and fishery products, the country will have more opportunities to promote exports to the UK.
The trade deal is expected to reduce import tariffs on Vietnamese goods by around VND3.5 trillion per year. Given difficulties posed by the COVID-19 pandemic and political instability in some parts of the world, the trade deal is expected to help stabilize the market so that businesses can recover and grow quickly.
According to the Ministry of Industry and Trade, there is significant room for trade growth between the two countries as Vietnam’s exports account for just below one percent of the UK’s imports.
However, the trade deal will exert certain competition pressure on the domestic economy, especially in sectors and industries in which the UK is strong, such as financial services, pharmaceuticals and chemical industries. The UK also has very high standards and quality requirements on imported products, requiring Vietnam to improve product quality and ensure product uniformity.
