Once coming into force, the UK – Vietnam Free Trade Agreement (UKVFTA) would serve as a major boost for a number of Vietnam’s export staples, including seafood, rice, garment, vegetables, among others, suggested the Ministry of Industry and Trade (MoIT) in a report.
|Prime Minister Nguyen Xuan Phuc and UK International Trade Secretary Liz Truss in a meeting yesterday. Photo: Quang Hieu.|
In 2019, Vietnam exported seafood worth US$298.2 million to the UK, or 6.7% of the latter’s total fishery imports. With the UKVFTA in place import tariffs for fresh or frozen shrimp would immediately go down to 0%.
A zero-tariff rate is set to continue boosting Vietnam’s exports of shrimp and catfish to the UK market, which also makes the sector more attractive in the eyes of investors looking to take advantage of the trade deal.
A study from the Ministry of Planning and Investment (MPI) predicted export turnover of Vietnam’s garment products to the EU market would expand by 67% by 2025 with the EU – Vietnam Free Trade Agreement (EVFTA). A similar effect is expected from the UKVFTA, stated the MoIT.
At present, Vietnam’s textile exports to the UK only accounts for 2.77% of total import turnover of the latter for garment products, indicating huge potential for Vietnamese textile companies to further penetrate the market.
The MoIT also views the UK as a potential rice buyer for Vietnam. In 2019, the country’s rice exports to the UK surged by 376% against that of in the previous year. Needless to say, the UKVFTA is set to put Vietnam in a favorable position compared to other rice exporters that do not possess a similar deal with the UK, including Thailand, China or India.
Vietnam remained 6th largest exporter of wooden products to the UK in 2019 with turnover of US$432.8 million, accounting for 3.6% of the market share. The UKVFTA would remove import tariffs for certain products in five-year period.
Given its huge demand for vegetable and fruits, the UK is committed to removing import tariffs for 94% of fruits and vegetable imported from Vietnam, including the latter’s key export staples of lychees, dragon fruits, watermelon, among others.
Amid the Covid-19 pandemic, there has been a strong growth in demand for electronic products and medical protective gear from the UK market, the UKVFTA, thus, would continue to boost exports of these items from Vietnam to the UK.
Besides a boost in trade turnover, Vietnam’s commitments in the UKVFTA would help the country further improve its business/investment environment towards greater transparency and fairness.
In return, UK enterprises and products would have an open access to a market with 100 million people.
In a ceremony marking the conclusion of the negotiation process for the UKVFTA yesterday, UK International Trade Secretary Liz Truss expected the deal to be a major step for her country to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a move that is supported by the Vietnamese government.
The Trade Secretary, in a previous meeting with Prime Minister Nguyen Xuan Phuc on the same day, said the UKVFTA would open a new chapter in Vietnam – UK relations, expecting the two governments to accelerate the ratification process for the soon implementation of the deal.