The UKVFTA agreement provides advantages for Vietnamese exports

1. The impact of the UKVFTA agreement on bilateral trade between the UK and Vietnam.

The UKVFTA, the Vietnam-United Kingdom Free Trade Agreement, came into effect on January 1, 2021. Under this agreement, the UK commits to:

For goods exported from the UK to Vietnam:

• Eliminating 48.5% of tariffs from January 1, 2021.
• Eliminating 91.8% of tariffs from January 1, 2027.
• Eliminating 98.3% of tariffs from January 1, 2029.
• The remaining 1.7% of tariffs will be partially liberalized through tariff quotas (with the appropriate quota volume based on Vietnam’s commitments in the WTO), and the tariffs within the quota will be eliminated by 2031, or they will not receive preferential treatment.

For goods exported from Vietnam to the UK:

• Eliminating 85.6% of tariffs from January 1, 2021.
• Eliminating 99.2% of tariffs from January 1, 2027.
• The remaining 0.8% of tariffs will be partially liberalized through tariff quotas (with a preferential tariff rate of 0% for products within the quota).

In the first two years of implementing the UKVFTA, bilateral trade between the UK and Vietnam increased by 16.4% in 2021 and 6.5% in 2022. The two countries achieved over USD 6.8 billion in trade in 2022 after establishing bilateral relations. Compared to 2010, this figure has tripled.

2. Opportunities for many export sectors of Vietnam.

The UK market has an annual demand for over $700 million worth of goods. Many export sectors of Vietnam can leverage this significant potential to increase exports. The UK government continues to push forward with the “Global Britain” strategy to promote exports. Alongside this strategy, the UK is willing to open its domestic market through a “reciprocal” approach with foreign partners. Vietnamese products are becoming more familiar to UK consumers. In the first year of the UKVFTA taking effect, Vietnamese businesses have utilized the tax incentives to a considerable extent when exporting to the UK.

3. Potential Export Industries

With the current advantage of existing tariff preferences, many strong products of Vietnam such as seafood, fruits, coffee, rice, textiles, wood products, etc. will have an advantage in accessing the UK market. Particularly, Vietnamese shrimp products will enjoy a 0% tariff. Some Vietnamese fruits and vegetables also benefit from the preferential tariff rate of 0% under the UKVFTA. Many unique Vietnamese fruits also have an additional advantage in accessing the UK market.

4. Requirements for Vietnamese exports to the UK

Starting from January 1, 2023, the UKCA mark is a mandatory requirement for most industrial products circulating and used in the UK. Vietnamese businesses need to familiarize themselves with the standards of each specific industry. This will enable them to understand and meet the market requirements, creating more export opportunities for their businesses.

 (Reference: Investment Journal, May 5, 2023)

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