Vietnam-UK FTA: new motivation for bilateral trade

The signing ceremony of the agreed minutes on the conclusion of negotiations over UKVFTA takes place in Hanoi on December 11. (Photo: VietnamPlus)

Hanoi (VNA) – The UK-Vietnam Free Trade Agreement (UKVFTA) is an important factor ensuring the continuity of the dynamic and expanding bilateral trade relations between the two countries, affirmed UK Secretary of State for International Trade Elizabeth Truss.

She said that the deal marks an important step forward in the context of the UK officially applying to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in early 2021.

Truss said that the UK’s joining the CPTPP will help foster the country’s ties with Vietnam, creating favourable conditions for the two sides to expand partnership with 11 economies in the Indo-Pacific region, benefiting the UK economy and people.

The UK and Vietnam share the strategic commitments towards the global trade and the facilitation of capital transactions and investment, she said after the signing ceremony of the agreed minutes on the conclusion of negotiations over the UKVFTA in Hanoi on December 11.

The FTA will maintain the benefits for Vietnam-UK commercial ties in the EVFTA. At the end of the tariff elimination roadmap, 99 percent of tariffs on goods traded between Vietnam and the UK will be cut. This means that Vietnam will save about 114 million pounds on exports to the UK, while the figure for the UK will be 36 million pounds. Trade of goods like garment and textiles, leather and footwear, and seafood will see no interruption, with commercial services like those in finance and e-commerce growing further.

Minister of Industry and Trade Tran Tuan Anh said that in order to ensure there would be no interruption to bilateral trade, the two sides began negotiations in August 2018. Based on the EU-Vietnam Free Trade Agreement (EVFTA), negotiations went through six official and five technical sessions between 2018 and 2020.

Vietnam and the UK will work together on the official signing of the trade deal, bringing it into effect at the beginning of 2021 to serve the mutual interests of their businesses and peoples, Anh said.

He expressed his belief that the UKVFTA will drive bilateral trade and investment and become a means for the two economies to overcome the challenges brought about by the COVID-19 pandemic and propel robust trade ties.

According to Vietnamese Ambassador to the UK Tran Ngoc An, the UKVFTA will help boost the volume of goods from both sides entering the other’s market and will enhance economic cohesion between the two strategic partners. The deal will also pave the way for a new wave of foreign direct and indirect investment from the UK in Vietnam in the former’s areas of strength, such as renewable energy and environmental technology.

He cited a proposal from a major British corporation to invest tens of billions of US dollars in wind power production, turbine manufacturing, and electricity transmission in Vietnam as an example. The UK can offer the most in the fields of pharmaceuticals, machinery, equipment, chemicals, automobiles, and banking and insurance, he said.

Meanwhile, a number of large Vietnamese firms are enthusiastic about seeking investment opportunities in the UK, the diplomat continued. As soon as the trade deal takes effect, Vietnamese rice will enjoy a zero percent import tariff compared to 17.5 percent now. A number of Vietnamese fisheries products, such as prawns and fish, will also benefit from lower customs duties.

Trade between Vietnam and the UK has developed steadily since the two countries established a strategic partnership in 2010. Over the last three years, Vietnam has exported around 6 billion USD worth of goods annually to the UK, accounting for less than 1 percent of the country’s total imports of nearly 700 billion USD. Meanwhile, Vietnam’s imports from the UK have stood at about 1 billion USD each year.

Vietnam’s shipments to the UK amounted to some 4.1 billion USD in the first 10 months of this year, down 14 percent against a year earlier. Exports have shown signs of recovery since August, however, thanks to the positive effects of the EVFTA, with October’s figure up 1.3 percent month-on-month to more than 477 million USD./.