UKVFTA Strengthens Vietnam-UK Trade and Investment

Deputy Minister Tran Quoc Khanh spoke at the conference on the one-year journey of the UKVFTA agreement. Photo: VNP

Although Covid-19 caused a significant disruption to the import-export supply chain, other economic and trade activities, the two-way trade in goods between Vietnam and the UK still grew.

This is the outstanding information given at the Conference "One year journey of the UKVFTA - Remarkable achievement and the vision ahead", organized by the Ministry of Industry and Trade on the afternoon of March 15, in Hanoi.

Advantage during the pandemic

The UK-Vietnam Free Trade Agreement (UKVFTA) was officially signed in London, UK on December 29, 2020. It has been provisionally applied since January 1, 2021, and has officially taken effect from May 1, 2021.

According to Luong Hoang Thai, director general of the Multilateral Trade Policy Department of the Ministry of Industry and Trade, the agreement has created strong spillovers, not only in trade but also in attracting investment from the UK to Vietnam and vice versa.

Statistics show that the bilateral turnover between Vietnam and the UK in 2021 has reached US$6.61 billion, an increase of 17.24% compared to 2020; in which many products of Vietnam have high growth, such as agricultural products up 67%, pepper up 49%. In the opposite direction, Vietnam's imports from this market also had positive results, when it increased by 23.6% last year.

"This result shows that Vietnam's preparation is careful, in the overall strategy to carry out the agreement, from government procurement, trade remedies, to taxes," said Luong Hoang Thai.

At the conference, Deputy Minister of Industry and Trade Tran Quoc Khanh said that the double-digit growth rate (17.2%) has helped the bilateral turnover between Vietnam and the UK to officially recover to the level in 2019, when it suffered a serious decline in 2020 due to the Covid-19 pandemic.

In 2021, there were 48 direct investment projects from the UK into Vietnam, with newly registered capital reaching more than US$53 million, up 157% over the same period. Currently, the UK is in the group of 12 countries with the largest direct investment capital in Vietnam.

“This data shows that UKVFTA is a two-way highway, helping to strengthen bilateral trade in a more balanced direction. These positive results allow us to be optimistic about the positive impact of UKVFTA on Vietnam and the UK,” said Tran Quoc Khanh.

Opportunity to speed up

With the UKVFTA agreement, Vietnamese goods will enjoy many positive incentives. Accordingly, UK import tax will be eliminated up to 99.2% within 6 years, creating great advantages for Vietnamese exports.

Garments are one of the export items enjoying preferential tariffs in the UK market thanks to the UKVFTA. Photo: VNA

Under this agreement, the UK also grants Vietnam an additional tariff quota, which allows duty-free importation of an additional quantity of goods into the UK; including rice, as well as 36 geographical indications of Vietnam protected in the United Kingdom (including famous products such as Ban Me Thuot coffee, Phu Quoc fish sauce), helping these products penetrate deeper into the UK market.

However, to make the most of the opportunities, the conference also shared more solutions to increase the advantage for domestic goods.

Nguyen Thi Thu Trang, director of the VCCI's Center said that like Europe, the UK is a difficult market. Therefore, trade promotion agencies need solutions to help businesses access the market, connect with customers, especially improve product quality, meet British standards and regulations.

Meanwhile, with practical experience, the representative of the British Chamber of Commerce Vietnam also said that commercial transactions need to avoid disputes, understand the market and its partners.

The Ministry of Industry and Trade said its functional units will continue to coordinate with relevant agencies of Vietnam and the UK to organize diverse activities. This is to contribute to the development of practical policies to help the community make the most of the opportunities from the UKVFTA.

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