Vietnam News Agency reported on December 30 that at 21:00 on December 29, Vietnam time, the authorized representatives (ambassadors) of the Vietnamese and British governments officially signed the “Vietnam and British Freedom Agreement” in London, England. Trade Agreement (UKVFTA).
Previously, on December 11, 2020, Vietnam’s Minister of Industry and Trade Tran Tuan Anh and British Secretary of State for International Trade Liz Truss (Elizabeth Truss) signed the conclusion of negotiations on the UKVFTA agreement The memorandum of understanding laid the foundation for the two countries to carry out the necessary legal procedures for formal signing.
Currently, both parties are working hard to complete relevant domestic procedures in compliance with the laws and regulations of their respective countries to ensure the immediate implementation of the agreement from 23:00 on December 31, 2020.
In the context of the UK’s official withdrawal from the EU and the imminent end of the post-exit transition period (December 31, 2020), the signing of the UKVFTA agreement will ensure that Vietnam and The UK’s bilateral trade will not be disrupted after the transition period.
The UKVFTA agreement not only opens up trade in goods and services, but also incorporates many other important factors, such as orienting towards green growth and sustainable development.
The United Kingdom is Vietnam’s third largest trading partner in Europe. According to statistics from the General Administration of Customs of Vietnam, the total import and export volume between the two countries in 2019 reached US$6.6 billion, of which exports reached US$5.8 billion and imports reached US$857 million. In the 2011-2019 period, the average annual growth rate of Vietnam-UK bilateral import and export was 12.1%, which was 10% higher than Vietnam’s average annual level.
Vietnam’s main export products to the UK include mobile phones and their spare parts, textiles and clothing, footwear, aquatic products, wood and wood products, computers and parts, cashew nuts, coffee , pepper, etc. Vietnam imports products from the UK including machinery, equipment, pharmaceuticals, steel, chemicals, etc. The import and export of goods between the two countries are complementary rather than competitive.
The annual import volume of British goods reaches nearly 700 billion U.S. dollars, and Vietnam’s total exports to the United Kingdom only account for 1%. Therefore, there is still a lot of room for growth in the British market for Vietnamese products.
After Brexit, the benefits brought by the Vietnam-EU Free Trade Agreement (EVFTA) will not apply to the British market. Therefore, signing a bilateral free trade agreement will create convenient conditions for promoting reform, market opening and trade facilitation activities on the basis of inheriting the positive negotiation results of EVFTA.
Vietnam’s Ministry of Industry and Trade stated that some commodities with export growth potential in the British market include textiles and clothing. In 2019, the UK mainly imported textiles and clothing from Vietnam. Although China has the largest market share in the British market, the country’s textile and clothing exports to the UK have dropped by 8% in the past five years. In addition to China, countries exporting textiles and clothing to the UK include Bangladesh, Cambodia\Pakistan, etc. These countries have more advantages than Vietnam in terms of tax rates. Therefore, the free trade agreement between Vietnam and the United Kingdom will bring tariff preferences and help Vietnamese products become more competitive with other competitors.
