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The Vietnam-UK Free Trade Agreement (UKVFTA) was signed on December 29.
UKVFTA was signed in London (UK) at 9pm Vietnam time. Due to Covid-19, the leader of the Vietnamese government and the Minister of Industry and Commerce, Tran Tuan Anh, were not directly present to sign the custom. Instead, the governments of the two countries have authorized the ambassadors.
The UKVFTA Agreement is a continuation step of the Vietnam-UK trade relationship when the EU-Vietnam Free Trade Agreement (EVFTA) no longer applies to the UK after December 31, 2020 due to Brexit. With basic commitments based on EVFTA but more adapted to the two countries, UKVFTA will officially enter into force from 11pm on December 31, 2020.
According to the commitment, after 6 years of entry into force of the UKVFTA, the United Kingdom will abolish the import tax on 99.2% of tariff lines, which is equivalent to 99.7% of the export turnover of Vietnam. The EU has committed to granting Vietnam a tariff quota (TRQ) with a 0% import tax for some products.
For its part, the UK said it will rely on EU statistics on actual bilateral trade between Vietnam and the UK for the period 2014-2016 to decide on a similar policy. The UK also agreed to review the increase in the amount of TRQs on Vietnam rice products after 3 years from the UKVFTA effective date.
The export industries that benefit greatly from this agreement are the sea, rice, textiles, wood, vegetables, footwear …
By contrast, Vietnam will abolish tariffs as soon as the agreement enters into force with 48.5% of tariff lines, representing 64.5% of UK imports. After 6 years, the number of tariff lines to be eliminated increases to 91.8%, equivalent to 97.1% of the export turnover and after 9 years it is approximately 98.3% of the tariff lines (which represent 99.8% of turnover).
In addition, the Agreement also includes commitments on rules of origin, customs and trade facilitation, hygiene and food safety measures and technical barriers to trade and services (including regulations, regulations and common commitments for the opening of markets), investment, trade defense, competition, state companies, public procurement, intellectual property, trade and sustainable development, cooperation and capacity building, legal – institutional.
The Ministry of Industry and Commerce said that through UKVFTA, Vietnam will have more competitive advantages compared to strong competitors from China, India, Thailand, Malaysia, Indonesia … who do not promise to sign. conclude an FTA with the United Kingdom for many years.
On the other hand, Vietnam has more opportunities for cooperation, investment, technology transfer and attraction of British tourists after the end of Covid-19. The Agreement also created a positive message in the mutual relationship between Vietnam and the United Kingdom, especially as the two sides have just issued a Joint Statement on the vision of bilateral cooperation on the occasion of the 10th anniversary of the strategic partnership between the two countries.
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. This is the basis for the two countries to carry out the necessary legal procedures to reach the formal signing of the agreement.
The United Kingdom is Vietnam’s third largest trading partner in Europe, after Germany and the Netherlands. According to the General Customs Department, in 2019, the total import and export turnover of the two countries reached $ 6.6 billion, of which exports reached $ 5.8 billion. In the period 2011-2019, the growth rate of bilateral import and export turnover between Vietnam and the United Kingdom increased by an average of 12.1% per year, 10% more than the average annual rate for Vietnam. The growth of total import and export billing to this market is also high (more than 10%).
The Ministry of Industry and Trade assessed that the space for market growth in the UK is still very large. Currently, Vietnam’s exported goods account for less than 1% of the UK’s annual import of nearly $ 700 billion.
Phuong Anh
