Vietnam and The United Kingdom signed bilateral trade agreement. Free trade agreement between Vietnam and the United Kingdom (UKVFTA) was signed on December 29th.
UKVFTA was signed in London (The United Kingdom) at 9pm time in Vietnam. Because of Covid-19, the Vietnamese Government leader and the Minister of Industry and Trade Tran Tuan Anh were not present to directly sign as usual. Instead, the two governments have authorized the ambassadors.
UKVFTA is the higher level in trade relation between Vietnam – The United Kingdom. Although the The United Kingdom has been no longer a member of EU – Vietnam Free Trade Agreement since 31/12/2020, UK and Vietnam are still tighten the trade relation by this new FTA that will officially take effect from 23:00 on December 31, 2020.
According to the agreement, after 6 years UKVFTA takes effect, the The United Kingdom will reduce tariff rates by 99%. Vietnam will immediately remove tariffs on 48.5% of goods from the The United Kingdom. Vietnam stands to benefit from tariff savings of £114 million on Vietnamese exports. For The United Kingdom exports, this figure will be £36 million.
The UK said they will consult EU statistics on bilateral trade between Vietnam and the U.K. in the 2014-2016 period to come up with a similar policy.
Commitments under the agreement will boost Vietnam’s export of key items like fish, rice, garments, textiles, wood products, vegetables and footwear.
Besides, the FTA also regulate on rules of origin, customs and trade facilitation, food hygiene and safety measures, technical barriers to trade and services, investment, trade defense, competition, state-owned firms, government procurement, and intellectual property.
The Ministry of Industry and Trade said that through UKVFTA, Vietnam will have more competitive advantages compared to strong competitors from China, India, Thailand, Malaysia, Indonesia … that seems not promising to sign FTA with The United Kingdom in years to come.
On the other hand, Vietnam has more opportunities for cooperation, investment, technology transfer, and attracting British tourists after the end of Covid-19.
Before that, on December 11, Minister Tran Tuan Anh and his counterpart Elizabeth Truss signed a memorandum on the conclusion of the UKVFTA negotiation after more than 2 years of discussion.
The United Kingdom is the third largest trading partner of Vietnam in Europe, after Germany and the Netherlands. According to the General Department of Customs, in 2019, the total import-export turnover of the two countries reached 6.6 billion USD, of which exports reached 5.8 billion USD.
In the period 2011-2019, the growth rate of Vietnam and The United Kingdom bilateral import and export turnover increased by an average of 12.1% a year, 10% higher than the average rate of Vietnam per year. The growth of total import-export turnover to this market is also high (over 10%).
The Ministry of Industry and Trade assessed that The United Kingdom market is still very large and available. Currently, Vietnam’s exported products account for less than 1% of the UK’s annual import of nearly 700 billion USD.