Minh Phu Seafood Group's shrimp processing plant in Ca Mau province (Photo: VNA) Hanoi (VNS/VNA) - Vietnamese businesses must stayvigilant and do their homework to avoid trade and legal disputes in exportingto the UK to take full advantage of the UK-Vietnam Free Trade Agreement(UKVFTA), which officially went into effect last May, said industry experts andpolicymakers.
The agreement was intended to provide both sides with the sametrade benefits under the previously signed EU–Vietnam Free Trade Agreement(EVFTA ) as the UK has left the EU.
UKVFTA aims to go even further than the EVFTA to boost tradebetween Vietnam and the UK with 65% of all tariffs having been removed so far.In the next six years, the agreement is to remove up to 99.2% of all tariffs onVietnamese exports, with the Southeast Asian country to remove 48.5% of alltariffs on UK products in return.
Early signs have shown a positive effect on bilateral trade withVietnamese exports experiencing a 16.4% boost at 5.76 billion USD compared tofigures recorded in the same period before the agreement went into effect.Vietnamese agricultural products, in particular, have seen the strongest gainwith a 16% increase compared to the previous year, reaching over 230 million USD.
The trade agreement has provided Vietnamese products with acompetitive edge in the UK market over competitors who have yet to sign a tradeagreement with the kingdom. Key Vietnamese exports to the UK included seafood,agricultural products, textile, footwear, wood furniture and handicraft.
Huge potential
The UK is considered a major target for Vietnamese exporters witha large margin for growth. The kingdom, prior to Brexit, was Vietnam’s thirdlargest trading partner within the EU.
According to the MoIT, the UK imported 700 billion USD worth ofproducts in 2019. Of which, Vietnamese products only accounted for 6 billion USDwith key exports including textile, footwear, wooden furniture and rice.
Vietnam remained the world’s top producer of some of the UK’smajor imports, including cashew nuts, pepper and coffee. The UK imported 23,000tonnes of cashew, and 14,000 tonnes of pepper and last year Vietnam took thelion’s share with 16,000 tonnes of cashew worth 92 million USD and more than5,600 tonnes of pepper worth 48 million USD.
However, Vietnamese coffee and rice exporters have not been ableto take advantage of improved bilateral trade with Vietnamese rice and coffeeonly accounting for 0.45% and little under 5% of the UK’s imports,respectively.
Experts said a major hurdle for Vietnamese agricultural producehas been quality. The UK is and will remain a market with the highest standardswhen it comes to quality and safety. Vietnamese exporters must first acquireeither Global GAP or Euro GAP (Good Agricultural Practice) along with a host ofother internationally recognised quality standards such as the ISO, SA and ILObefore they may attempt to enter the UK market.
In addition, they must seek to improve product quality ascompetition in the UK market is fierce with strong contenders includingproducts from Thailand, Malaysia, Indonesia, South Africa and India.
Little understanding
Vietnamese businesses, however, will likely see an uptick in thenumber of trade and legal disputes in the years to come as a side-effect ofincreased bilateral trade, say industry experts and policymakers.
By the end of the first quarter of 2022, Vietnamese businesseshave been involved in more than 210 trade defence cases related to anti-dumpingor anti-subsidy activities with more than half of the cases arising in the lastfive years. The figure will likely continue to rise as the country has beenramping up its efforts to boost exports, said the head of the department ofeconomic integration under the Ministry of Industry and Trade (MoIT) Lam Thi QuynhAnh.
"It has a lot to do with the nature of the new generationFTAs Vietnam has been committed to," said Anh.
"New generation FTAs, the EVFTA and the UKVFTA for example,cover many more aspects than just commercial activities including labourrights, environmental preservation and fair trade with a focus on sustainabledevelopment," she said.
This requires businesses to evolve and take a more comprehensiveapproach to exporting, which at the moment has been identified as a majorweakness for Vietnamese exporters.
According to a recent study by the Vietnam Chamber of Commerce andIndustry (VCCI), 15% of the businesses surveyed admitted they possessed"none to little" understanding of the new generation FTAs, 60%admitted they only possessed a superficial understanding and just over 5% saidthey possessed "solid understanding" of the pros and cons.
To make matters worse, it showed little improvement over a studyby the chamber done in 2019. Of over 8,600 privately-owned businesses in thestudy, only 3% said they possessed a "solid understanding".
For example, when asked about the Comprehensive and ProgressiveAgreement for Trans-Pacific Partnership (CPTPP) only one out of 20 businessessaid they understood how the CPTPP would affect their business operations.Notably, nearly 7% admitted they possessed no understanding of the CPTPP.
Industry experts have voiced their concerns over Vietnamesebusinesses’ lack of preparedness and said they may soon face the consequencesof the rising number of trade and legal disputes as the UKVFTA drives upbilateral trade.
Nguyen Thị Thu Trang, director of VCCI’s WTO and integrationdepartment, said in order to mitigate damage caused by trade and legal disputesVietnamese exporters must take the initiative by conducting a comprehensivestudy of the trade agreement and employ the services of professionals ifnecessary.
She also urged government agencies and the media to step upefforts to raise awareness of the importance of fully understanding not justthe opportunities but also the challenges and potential disputes that are partof the FTAs./.
The agreement was intended to provide both sides with the sametrade benefits under the previously signed EU–Vietnam Free Trade Agreement(EVFTA ) as the UK has left the EU.
UKVFTA aims to go even further than the EVFTA to boost tradebetween Vietnam and the UK with 65% of all tariffs having been removed so far.In the next six years, the agreement is to remove up to 99.2% of all tariffs onVietnamese exports, with the Southeast Asian country to remove 48.5% of alltariffs on UK products in return.
Early signs have shown a positive effect on bilateral trade withVietnamese exports experiencing a 16.4% boost at 5.76 billion USD compared tofigures recorded in the same period before the agreement went into effect.Vietnamese agricultural products, in particular, have seen the strongest gainwith a 16% increase compared to the previous year, reaching over 230 million USD.
The trade agreement has provided Vietnamese products with acompetitive edge in the UK market over competitors who have yet to sign a tradeagreement with the kingdom. Key Vietnamese exports to the UK included seafood,agricultural products, textile, footwear, wood furniture and handicraft.
Huge potential
The UK is considered a major target for Vietnamese exporters witha large margin for growth. The kingdom, prior to Brexit, was Vietnam’s thirdlargest trading partner within the EU.
According to the MoIT, the UK imported 700 billion USD worth ofproducts in 2019. Of which, Vietnamese products only accounted for 6 billion USDwith key exports including textile, footwear, wooden furniture and rice.
Vietnam remained the world’s top producer of some of the UK’smajor imports, including cashew nuts, pepper and coffee. The UK imported 23,000tonnes of cashew, and 14,000 tonnes of pepper and last year Vietnam took thelion’s share with 16,000 tonnes of cashew worth 92 million USD and more than5,600 tonnes of pepper worth 48 million USD.
However, Vietnamese coffee and rice exporters have not been ableto take advantage of improved bilateral trade with Vietnamese rice and coffeeonly accounting for 0.45% and little under 5% of the UK’s imports,respectively.
Experts said a major hurdle for Vietnamese agricultural producehas been quality. The UK is and will remain a market with the highest standardswhen it comes to quality and safety. Vietnamese exporters must first acquireeither Global GAP or Euro GAP (Good Agricultural Practice) along with a host ofother internationally recognised quality standards such as the ISO, SA and ILObefore they may attempt to enter the UK market.
In addition, they must seek to improve product quality ascompetition in the UK market is fierce with strong contenders includingproducts from Thailand, Malaysia, Indonesia, South Africa and India.
Little understanding
Vietnamese businesses, however, will likely see an uptick in thenumber of trade and legal disputes in the years to come as a side-effect ofincreased bilateral trade, say industry experts and policymakers.
By the end of the first quarter of 2022, Vietnamese businesseshave been involved in more than 210 trade defence cases related to anti-dumpingor anti-subsidy activities with more than half of the cases arising in the lastfive years. The figure will likely continue to rise as the country has beenramping up its efforts to boost exports, said the head of the department ofeconomic integration under the Ministry of Industry and Trade (MoIT) Lam Thi QuynhAnh.
"It has a lot to do with the nature of the new generationFTAs Vietnam has been committed to," said Anh.
"New generation FTAs, the EVFTA and the UKVFTA for example,cover many more aspects than just commercial activities including labourrights, environmental preservation and fair trade with a focus on sustainabledevelopment," she said.
This requires businesses to evolve and take a more comprehensiveapproach to exporting, which at the moment has been identified as a majorweakness for Vietnamese exporters.
According to a recent study by the Vietnam Chamber of Commerce andIndustry (VCCI), 15% of the businesses surveyed admitted they possessed"none to little" understanding of the new generation FTAs, 60%admitted they only possessed a superficial understanding and just over 5% saidthey possessed "solid understanding" of the pros and cons.
To make matters worse, it showed little improvement over a studyby the chamber done in 2019. Of over 8,600 privately-owned businesses in thestudy, only 3% said they possessed a "solid understanding".
For example, when asked about the Comprehensive and ProgressiveAgreement for Trans-Pacific Partnership (CPTPP) only one out of 20 businessessaid they understood how the CPTPP would affect their business operations.Notably, nearly 7% admitted they possessed no understanding of the CPTPP.
Industry experts have voiced their concerns over Vietnamesebusinesses’ lack of preparedness and said they may soon face the consequencesof the rising number of trade and legal disputes as the UKVFTA drives upbilateral trade.
Nguyen Thị Thu Trang, director of VCCI’s WTO and integrationdepartment, said in order to mitigate damage caused by trade and legal disputesVietnamese exporters must take the initiative by conducting a comprehensivestudy of the trade agreement and employ the services of professionals ifnecessary.
She also urged government agencies and the media to step upefforts to raise awareness of the importance of fully understanding not justthe opportunities but also the challenges and potential disputes that are partof the FTAs./.
VNA
