Currently, import and export turnover to the UK has recovered to the level before the Covid-19 epidemic. This is the clearest proof of the benefits that UKVFTA brings. So what is UKVFTA?

What is UKVFTA?

UKVFTA stands for the UK - Vietnam Free Trade Agreement. This Agreement will officially enter into force on May 1, 2021.

The UKVFTA Agreement is negotiated on the principle of inheriting the commitments already in the Free Trade Agreement between Vietnam and the European Union (EVFTA) with necessary adjustments to ensure compliance with the trade framework. bilateral trade between Vietnam and the UK, according to VNA.

Basically, the contents covered by the UKVFTA Agreement are similar to the EVFTA Agreement, including: trade in goods (including general regulations and commitments to open markets), rules of origin, and customs. and trade facilitation, food hygiene and safety measures (SPS), technical barriers to trade (TBT), trade in services (including general regulations and commitments to open markets) , investment, trade remedies, competition, state-owned enterprises, government procurement, intellectual property, trade and sustainable development, cooperation and capacity building, and legal - institutional .

How do Vietnamese businesses benefit from the UKVFTA?

UKVFTA brings positive impacts to businesses of Vietnam and the UK with significant tariff reductions for more than 70% of exports from Vietnam to the UK and 65% in the opposite direction, of which many goods are imported. Goods will enjoy 0% tax rate.

According to the commitment, after 6 years of UKVFTA taking effect, the UK will eliminate import tax on 99.2% of tariff lines, equivalent to 99.7% of Vietnam’s export turnover. The EU has committed to give Vietnam a tariff quota (TRQ) with an import tax of 0% for some items.

In addition, the Agreement also sets out commitments on rules of origin, customs and trade facilitation, food hygiene and safety measures, technical barriers in trade and services (including common agreement and commitment to market opening), investment, trade remedies, competition, state-owned enterprises, government procurement, intellectual property, trade and sustainable development, cooperation and construction. capacity building, legal - institutional.

According to the Ministry of Industry and Trade, through UKVFTA, Vietnam will have more competitive advantages compared to strong competitors from China, India, Thailand, Malaysia, Indonesia... which have no prospect of signing. FTA with the UK for many years to come. On the other hand, Vietnam has more opportunities to cooperate, invest, transfer technology, and attract British tourists after Covid-19 ends. The agreement also creates a positive message in the general relationship between Vietnam and the UK, especially when the two sides have just issued a joint statement on the vision of bilateral cooperation on the occasion of the 10th anniversary of the strategic partnership between the two countries.

For Vietnam, with the commitments to open the goods market equivalent to the EVFTA Agreement, plus the addition of quotas for products with high competitive advantages such as agricultural and aquatic products, will help Vietnamese businesses to more opportunities to promote export of goods. According to calculations, the value of import tax that Vietnamese goods save when entering the UK is estimated at 3.5 trillion VND/year.

However, commitments to open markets with goods and services for the UK will create certain competitive pressures for the economy, businesses and domestic goods and services, especially in industries where the UK has strengths such as financial services, pharmaceuticals, etc. Along with that, technical standards and quality requirements for goods imported from the UK are very high. Vietnamese enterprises still have to comply with the quality requirements set forth by this market, along with guaranteed certifications.

To support Vietnamese businesses to export to international markets, especially difficult markets like the UK. Indochina Holdings provides trade promotion services for Vietnamese businesses. With a team of experienced consultants, we always accompany Vietnamese enterprises in the process of exporting goods. At the same time, support businesses in the stages of finding and connecting with partners, as well as notes to be able to successfully export orders to the European market in particular and the international market in general.

Cao Duy