Trade pact boosts exports to UK
Trade pact boosts exports to UK
Industrial products contribute significantly to Vietnam’s export value to the UK.
Despite COVID-19-induced difficulties, Vietnam’s exports under the UK-Vietnam Free Trade Agreement (UKVFTA), which took effect on January 1, 2021, increased 16.4 percent over 2020 to reach more than US$5.7 billion. In 2022, despite global political changes, trade between Vietnam and the UK reached nearly US$3.3 billion in the first six months, US$2.9 billion of which were exports to the UK, a year-on-year increase of 1.2 percent, and US$372.5 million worth of imports, down 9.9 percent.
According to the Ministry of Industry and Trade (MoIT), Vietnam ranks 23rd among exporters to the UK. In 2021, industrial products (not including iron, steel and other metals) accounted for 44.2 percent (US$2.54 billion) of Vietnam’s export value to this market. Major exports included phones and components (accounting for 24 percent of the total value; machinery, equipment and spare parts (10.8 percent); steel and iron (8.7 percent); computers, electronic products and components (5.6 percent).
The MoIT attributed the results to the zeroing out of import taxes under the UKVFTA, providing many Vietnamese products with competitive advantages compared with similar products from China, Thailand, Malaysia, Indonesia and other countries.
Vietnam has seen impressive growth of industrial exports to the UK |
Tariff preferences under the UKVFTA will also provide Vietnamese industrial manufacturers with more opportunities to join supply chains in the UK market. The trending shift to clean, renewable energy and digital transformation will also create new opportunities for investment and trade.
During the last two years, the UK faced instability and scarcity of supply sources due to the impact of COVID-19, Brexit and economic sanctions against Russia, opening up opportunities for Vietnamese exports of industrial, agro and aquatic products, food, wood products, textiles and garments, among others.
However, starting on January 1, 2023, the UK Conformity Assessed (UKCA) marking will be a compulsory requirement for most industrial products imported by the UK, requiring urgent guidance of domestic companies so they can take advantage of the trade deal.
Ta Hoang Linh, Director of the MoIT’s European-American Market Department, said the UKCA marking has specific requirements for each kind of product in terms of design, packaging and appearance. These can be assessed by the exporting companies themselves or by a third-party.
The UKCA marking replaces the European Union’s CE markings that certify safety, health and environmental requirements. Although the UKCA marking became valid on January 1, 2021, the UK accepts CE marking during a transitional period to give exporters time to prepare for the new requirements.
The European-American Market Department said some Vietnamese manufacturers of gloves, facemasks, protective suits, iron, aluminum, construction glass and wood plank flooring already have UKCA markings. Domestic companies can seek consultancy on UKCA marking from the British Standards Institution.
| The UKVFTA is expected to boost bilateral trade between Vietnam and the UK. Domestic companies should improve their production capacity and product quality to meet strict UK market requirements. |
