The UK – Vietnam Trade Agreement (UKVFTA) was signed on December 29 in London, following the conclusion of the negotiation process early this month.
Due to the Covid-19 situation, ambassadors of the two countries were authorized to sign the UKVFTA on behalf of government leaders, with the trade deal set to take place at 11.00 p.m on December 31, 2020.
As the UK is set to leave the EU-Vietnam Free Trade Agreement (EVFTA) after the Brexit’s transitional period ends on December 31, 2020, a new FTA between Vietnam and the UK will help ensure the continuity in bilateral trade relations.
The fact that most of the clauses stipulated in the UKVFTA are similar to those in the EVFTA, significantly shortening the negotiation process for the two sides, which began in August 2018.
Under the UKFTA commitments, six years since the coming into effect of the deal, the UK will remove import tariffs for 99.2% of goods imported from Vietnam, or 99.7% of Vietnam’s exports to the country.
The EU in its EVFTA with Vietnam provides the tariff rate quotas (TRQs) with 0% tariff rate for certain imported products. The UK, meanwhile, is set to review actual trade figure with Vietnam during the 2014-16 period to make a similar decision.
On the other hand, Vietnam will immediately remove tariff for 48.5% of goods from UK, or 64.5% of import volume. The figure is set to rise to 91.8% or 97.1% of UK exports to Vietnam in six years.
|The conclusion of negoatiation process in Hanoi.|
Vietnam is set to have more opportunities in attracting investment capital, technology transfer, and tourists from the UK once the Covid-19 is rolled back, while the deal presages positive outlook for the Vietnam – UK relations on the occasion of 10th anniversary of the establishment of strategic partnership.
The UK is Vietnam’s third largest trade partner in Europe, behind Germany and the Netherlands.
In 2019, Vietnam’s exports to the UK reached US$6.1 billion, the country imported nearly US$800 million worth of goods and products in return.
As of August 2020, the UK has 400 valid projects in Vietnam with total investment capital of US$3.6 billion, ranking 16th among countries and territories having investment projects in Vietnam.