Members determined to smooth CPTPP path for UK
Members determined to smooth CPTPP path for UK
Vietnam continues to back up Britain’s entry into a major trade pact, although the exact benefits for members are yet to be fully understood.
At the ninth strategic dialogue between Vietnam and the UK in London over a week ago, Vietnam said it completely supported the UK’s negotiations on the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Vietnam will continue working with the UK on the latter’s CPTPP membership, with the determination of opportunities and hurdles that need to be removed in favour of businesses and investors of both economies.
“Vietnam reaffirms its strong support for the UK to join the CPTPP which, in addition to the positive impacts of the UK-Vietnam Free Trade Agreement (UKVFTA), will help both nations to further increase their trade and investment ties which are on the rise. The UK’s participation in the deal will also bring about wonderful trade and investment opportunities to each CPTPP member,” said Vietnamese Minister of Industry and Trade Nguyen Hong Dien.
The UK will be the first European member of CPTPP and the first new country to join the agreement. The parties will now take the final legal and administrative steps before formal signature at the end of 2023.
UK Prime Minister Rishi Sunak said that joining the bloc would put the UK “in a prime position in the global economy to seize opportunities for new jobs, growth and innovation” and that it would put the UK “at the centre of a dynamic and growing group of Pacific economies.”
According to a statement by the British government on the impacts of the CPTPP on the UK economy, over 99 per cent of British goods exports to member countries will be eligible for zero tariffs, improving goods market access for British firms. Eventually, joining the CPTPP could lead to a £1.7 billion ($2.1 billion) boost to UK exports to other CPTPP countries.
However, according to the House of Commons Library (HCL), the information resource of the lower house of the British Parliament, the economic benefits appear to be small.
The UK government’s scoping assessment indicates that the long-run increase in GDP would be 0.08 per cent thanks to the CPTPP. Trade expert Sam Lowe pointed out that this is largely because the UK already has bilateral trade agreements with most CPTPP members. The benefits would be larger if other countries, such as South Korea, joined the CPTPP in future, Lowe said.
Currently, the CPTPP covers 11 member nations, and the agreement has come into force in all, except Brunei. The UK already has trade agreements in effect with nine CPTPP members.
Other economies have also applied to join or expressed an interest in doing so. These include China, Taiwan, Ecuador, Costa Rica, Uruguay, Ukraine, South Korea, and Thailand.
Currently, the Vietnam-UK trade and investment ties are largely driven by the UKVFTA that took effect in May 2021. In that, 85.6 per cent of tariff lines for goods imported by the UK from Vietnam were eliminated in 2021, and 99.2 per cent will be removed by January 2027, according to the UK’s Department for International Trade. According to the General Department of Vietnam Customs, the bilateral trade between Vietnam and the UK touched $6.84 billion last year, up 3 per cent on-year. This included Vietnamese exports worth over $6 billion, up 5.2 per cent, and imports valued at $771 million, down 9.2 per cent.
The two-way trade hit nearly $1.6 billion in the first three months of this year, almost the same as in the corresponding period last year, including Vietnamese exports of $1.4 billion and imports of $175 million. The key exports items from Vietnam to the UK with a high-growth rate included assorted mobile phones and spare parts; machinery, equipment, and spare parts; garments and textiles; assorted footwear; computers, electronics, and spare parts; aquatic products; and wood and wooden products.
“The UKVFTA is on route to become a highway for businesses to reach to the other side’s markets faster and stronger thanks to its extensive tariff reduction roadmap,” Nguyen Canh Cuong, trade counsellor at the Vietnamese Embassy in the United Kingdom, told VIR.
Vietnam’s Ministry of Planning and Investment reported that accumulatively as of May 20, the UK’s total registered investment capital in Vietnam was $4.26 billion for 522 valid projects, including $3.73 million for the January-May 20 period. Vietnam is now encouraging British companies to boost investment in Vietnam in areas such as renewable energy, digital technology, finance and banking, innovation, and high-quality infrastructure.
