An overview on trade relationship between the United Kingdom of Great Britain and Northern Ireland (UK) and Vietnam
According to statistics of Department for International Trade of the UK, in 2014, value of goods exported from the UK to Vietnam achieved 300 million pound, that increased 13% compared to 2013. The UK’s strong exported goods include medicines, pharmacies, generators, chemical materials, specific and scientific equipment, metal ores, machinery, food for animals, fish and crustaceans, electronics, specialized machines. By up-gradating to strategic partnership since 2010, bilateral relationship in trade and investment between Vietnam and the UK has been recently enhanced and boosted
Delegation of the UK visited Vietnam.
As being informed by the Vietnam Ministry of Trade and Industry, Vietnam is the second biggest exporting country in Southeast Asia (after Thailand) to the UK. In 2019, the two countries’ bilateral trade relation gained about $6.7 billion; main exporting products from Vietnam to the UK’s market include mobile phones, textiles and garments, and seafood. Meanwhile, the UK has been the biggest foreign investor in the education sector in Vietnam.
Comparison of exports of goods and services values between Vietnam and the UK.
Source: World Bank
With regard to foreign direct investment, as of December 2020, the UK have had 411 valid projects with a total capital of above $3.8 billion in Vietnam that is ranked 15th amongst 139 nations and territories having investing projects in Vietnam (Ministry of Planning and Investment, 2020).
Respond to demands and potentials of cooperation between the two countries in various fields and to catch up opportunities and handle challenges in practice, negotiations were boosted up by the both sides since August of 2018 and finally went to be signed in December 2020.
Some key points relating to the UKVFTA
The UK- Vietnam Free Trade Agreement (UKVFTA) was negotiated by the two governments inheriting commitments of the EVFTA with necessary adjustments to guarantee alignment with the framework of bilateral trade between Vietnam and the UK.
Vietnam Minister of Trade and Industry and British Minister for International Trade signed the negotiation completion protocol of the UKVFTA on December 11, 2020. Source: Website of Ministry of Trade and Industry
UKVFTA consists of 09 articles, 01 Appendix, 01 Protocol and 01 bilateral exchange letter between Vietnam and the UK. In the Appendix, it clarifies integration of the EVFTA into UKVFTA with the adjustments regarding to: Item A and Item B of Annex 2-A of EVFTA (reduce or eliminate tariff); Article 6.5.1(b) of EVFTA (measures of sanitary and phytosanitary), not integrating Notice 10 of Clause 8.2.1(j) of EVFTA, adjust and replace some clauses in Article 8.8 of EVFTA (free in investment, services trade, digital trade);some clauses in Sub-Annex 8-A-1 of EVFTA (specific commitment and trans-frontier service provision); adjustment of Sub-Annex 8-A-2 of EVFTA (specific commitment on investment liberalization); adjustment of Sub-Annex 8-A-3 of EVFTA (list of concrete commitments aligned to Item D of Chapter 8 on free investment, trade, services and digital trade); adjustment of Chapter 9 of EVFTA (Government procurement); adjustment of subsidy noted in Chapter 10 of EVFTA (competition policy); adjustment of Clause 2 of Article 12.26 and clauses 1,2,3 of Article 12.28 of EVFTA (intellectual property); adjustment of Annex 12-A of EVFTA (list of geographical indications); amendment of Protocol 1 relating to concept “product having origin” and method of administrative management cooperation; amendment of Protocol 2 of the EVFTA on mutual administrative support in custom; adjustment of common announcements; amendment of MOU on banking capital contribution.
Signing ceremony of the UKVFTA was authorized to take place in the UK. Source: VNA.
UKVFTA has been in validity in Vietnam since January 01st, 2021. By the end of the process of tariffs reduction, 99% of import-export tariffs between Vietnam and the UK will be eliminated. According to forecasts of British economic experts, Vietnam will get benefit from tax savings valued £114 million for Vietnam’s exported products to British market while exported goods from the UK to Vietnam will be saved to about £36 million.
UKVFTA is considered to bring advantages to the two countries’ economy in which economic development and modernization, part-time jobs, income increase of labors, enhancement of social progress and environmental enhancement.In the common situation of the country and localities, during these recent times cooperation between Haiphong and UK partners has grown in various fields from delegation exchanges, education to cultural exchange events; cooperation in terms of foreign direct investment has been at a humble level in comparison to capacity and cooperation potentials of the both sides. According to the City Customs Department, the UK has currently been one big trade partner of Haiphong. For instance, exporting value from Haiphong to the UK in 2020 was estimated at about $315 million. In 2020, exported goods value to the UK through Haiphong port reached to above $190 million that was 91% compared to 2019, while imported goods value from the UK was estimated to reach above $125 million that is about 109% compared to 2019. In the year of 2020, despite impacts of the pandemic to the economy in general and to trade in particular, Haiphong has maintained and stably provided in the long-run to British market the products in which Vietnam has had strength. For instance, Vietnam has supplied about 75% textile products, 9% electronic and supportive equipment, 4% footwear in its total exporting turnover to the UK. UKVFTA taking effect will open up many opportunities to enterprises of both sides in exploring markets and boosting ongoing cooperation in the fields of interest and having strengths./.