UKVFTA promotes Vietnam-UK trade to increase rapidly

VCN - Recently the Vietnam - United Kingdom and Northern Ireland Free Trade Agreement (UKVFTA) has been an important "lever" to help Vietnam - UK trade turnover achieve significant results, despite the pandemic.
Regulations on UKVFTA bidding documents issued Regulations on UKVFTA bidding documents issued
Two-way trade between Vietnam and the UK recovers thanks to UKVFTA Two-way trade between Vietnam and the UK recovers thanks to UKVFTA
Vietnam emerges as major agricultural supplier to UK following UKVFTA Vietnam emerges as major agricultural supplier to UK following UKVFTA
UKVFTA promotes Vietnam-UK trade to increase rapidly
Textile is one of the main export items of Vietnam to the UK today. Photo: Nguyen Thanh

It is forecasted that trade cooperation between the two countries will continue to grow when the structure of the two sides' import-export industries is complementary instead of competitive.

Huge potential for cooperation

The UKVFTA Agreement was applied temporarily from January 1, 2021 and officially took effect from May 1, 2021. Immediately after taking effect, this FTA had a clear impact on trade between Vietnam and the UK.

Statistics from the General Department of Customs show that two-way trade turnover in 2021 reached US$6.6 billion, up 17.2% compared to 2020. This growth has helped the bilateral turnover to officially recover to the turnover level in 2019 after suffering a serious decline in 2020 due to the impact of the Covid-19 pandemic. In which, Vietnam's exports reached nearly 5.8 billion USD, up 16.4%; UK exports reached 849 million USD, up 23.6%.

In the first five months of 2022 alone, due to the impacts of the Covid-19 pandemic and the complicated geopolitical situation in the world, leading to disruptions in global production and supply chains, trade turnover between the two countries reached $2.68 billion, equivalent to the turnover of the same period in 2021. Main export products of Vietnam to the UK include; telephones, textiles, footwear, iron and steel, seafood, and vegetables.

In the opposite direction, Vietnam mainly imports machinery, pharmaceuticals, textile raw materials, and chemical products from the UK.

According to Chris Milliken, Vice President of the British Chamber of Commerce in Vietnam (Britcham), two-way trade turnover is gradually showing positive signs of recovery after the Covid-19 pandemic. This is the clearest proof of the benefits that UKVFTA brings to the economic and trade development of Vietnam - the UK.

Analyzing agricultural, forestry and fishery products, Bui Thi Thanh An, Deputy Director of the Trade Promotion Department (Ministry of Industry and Trade), said that since UKVFTA took effect, agricultural exports, forestry and fishery products into the UK recorded many positive results.

In the first six months of 2022, Vietnam's coffee export turnover to this market has increased spectacularly by nearly 180% over the same period last year. Furthermore, in the first six months of 2022, Vietnam's agricultural, forestry and fishery products appeared in a number of large British supermarkets, proving that Vietnamese enterprises were quick to take advantage of the Association. UKVFTA.

According to the Ministry of Industry and Trade, Vietnamese enterprises have initially taken advantage of the opportunities offered by UKVFTA. The value of Vietnam's export goods to the UK only accounts for 0.88% of the total import value of the UK market, so the market space for cooperation between the two countries is still large.

Focus on product quality

From the perspective of businesses sharing stories about their experience in conquering ‘difficult’ markets like the UK, Nguyen Van Hieu, Export Director (Loc Troi Group) said: “Every year, aout 100,000 tons of rice are exported around the world, of which about 20,000 tons are exported to the EU and the United Kingdom (accounting for about 20-25% of output).

“To export to the EU market in general and the UK in particular, enterprises must meet many different regulations and standards. Particularly for fertilizers and pesticides, enterprises had to meet the standards of more than 800 different active ingredients. A few years ago, it was very difficult for Loc Troi to export to the UK because there was no production process and no clear standards, which made the products produced do not meet quality. However, from 2020, businesses have changed their ways of doing, producing according to a sustainable value chain from seeds, fertilizers, drugs, agricultural services..., cooperating with farmers to harvest, transport to warehouses, produce, and export.

“In order to create products with stable quality and bring branded products to the world market, enterprises are required to build growing areas, which must meet more than 800 active ingredients required by the market. Besides, the units must also have certificates, which are travel permits for buyers in difficult markets to accept," said Hieu.

Expressing interest accessing partner information, Dang Hoang Giang, General Secretary of the Vietnam Cashew Association, said: “Of the 100 countries and territories where the cashew industry is exporting, the UK is the market. School is very important. Vietnam is the fourth country to export cashew nuts to the Netherlands, while the Netherlands is the number one exporter of processed cashew nuts to the UK market. Meanwhile, the Netherlands does not have a single cashew tree. Cashew nuts, all Dutch materials are imported and most of them are imported from Vietnam. That raises the question, why can't Vietnamese businesses do it?".

With the advantage of the UKVFTA Agreement, the tax on Vietnam's deep-processed products entering the UK market is zero. However, it is a matter of concern that Vietnamese enterprises do not have access to information. Customers, partners, consumption habits, habits, trends..this is something that needs to be actively opened up to help businesses make better use of opportunities from the UKVFTA.

Bui Thi Thanh An further noted: “Currently, Vietnam's agricultural products exported to the UK are quite competitive compared to similar products from countries such as China, Indonesia, Thailand, and Malaysia. These countries do not have tax advantages in signing FTAs ​​with the UK.

“However, in the near future, the UK's policy will be to sign a series of FTAs ​​with 19 countries and territories, applying free trade mechanisms; In addition, the UK is also joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CTTTP), the tax advantages of Vietnamese enterprises are no longer available. Therefore, enterprises need to focus on product quality, how to meet the criteria of quality and sustainable production. This is the most important thing to bring products to the UK market,” emphasized An.

By Thanh Nguyen/ Huu Tuc

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