Vietnam UK Free Trade Agreement Signed

Vietnam News Agency reported on December 30 that the authorized representatives (ambassadors) of the Vietnamese and British governments officially signed the "Vietnam UK free trade agreement" (ukvfta) in London, UK at 21:00 on December 29, Vietnam time.

Earlier, on December 11, 2020, Vietnam's minister of industry and trade, Chen Junying, and British Minister of international trade, Elizabeth truss, signed a memorandum to conclude the ukvfta agreement negotiations, laying the foundation for the necessary legal procedures for the two countries to formally sign.

At present, the two sides are speeding up the completion of relevant domestic procedures, in line with the legal provisions of their respective countries, so as to ensure the immediate implementation of the agreement from 23:00 on December 31, 2020.

The signing of the ukvfta agreement will ensure that bilateral trade between Vietnam and the UK will not be interrupted after the end of the transition period (December 31, 2020) in the context of the formal brexit of the UK and the UK.

Ukvfta not only opens up trade in goods and services, but also incorporates many other important factors, such as green growth and sustainable development.

Britain is Vietnam's third largest trading partner in Europe. According to the statistics of Vietnam General Administration of customs, in 2019, the total import and export volume of the two countries will reach 6.6 billion US dollars, of which the export value will reach 5.8 billion US dollars and the import value will reach 857 million US dollars. From 2011 to 2019, the average annual growth rate of Vietnam UK bilateral import and export is 12.1%, which is 10% higher than that of Vietnam.

Vietnam's main exports to the UK include mobile phones and accessories, textiles and clothing, footwear, aquatic products, wood and wood products, computers and parts, cashew nuts, coffee, pepper, etc. Vietnam imports machinery, equipment, pharmaceuticals, steel and chemicals from the UK. The import and export commodities between the two countries are complementary rather than competitive.

Every year, the total import of British goods amounts to nearly 700 billion US dollars, and Vietnam's total exports to the UK account for only 1%. Therefore, there is still a lot of room for the growth of Vietnamese products to the UK market.

After brexit, the benefits from the evfta will not apply to the UK market. Therefore, the signing of a bilateral free trade agreement will create favorable conditions for promoting reform, market opening and trade facilitation activities on the basis of the positive negotiation results of evfta.

According to the Ministry of industry and trade of Vietnam, some commodities with export growth potential in the UK market include textiles and garments, and the UK mainly imports textiles and garments from Vietnam in 2019. Although China has the largest market share in the UK market, its textile and clothing exports to the UK have fallen by 8% in the past five years. In addition to China, the countries exporting textiles and clothing to the UK include Bangladesh, Cambodia, Pakistan, etc. These countries have an advantage over Vietnam in terms of tax rates. Therefore, the free trade agreement between Vietnam and the United Kingdom will bring about tariff preferences, which will help Vietnamese goods to have a competitive advantage with other competitors.