The authorization for the ambassadors of the two countries to sign directly in the UK is due to the context of the Covid-19 epidemic, the leaders of the Government of Vietnam and the Minister of Industry and Trade of Vietnam Tran Tuan Anh were unable to present and implement. signed by practice.
The UKVFTA Agreement is negotiated based on the principle of inheritance of the commitments made in the Free Trade Agreement between Vietnam and the European Union (EVFTA) with necessary adjustments to ensure compliance with the trade framework. bilateral trade between Vietnam and UK.
Accordingly, the Agreement includes 9 articles; 01 Appendix amending a number of articles of the EVFTA text; 01 Protocol and 01 bilateral letter exchanged between Vietnam and UK. Basically, the contents of the UKVFTA Agreement are similar to the EVFTA Agreement, including: trade in goods (including general regulations and market access commitments), rules of origin, and trade facilitation and concern, food safety and hygiene measures (SPS), technical barriers to trade (TBT), trade in services (including general regulations and market access commitments ), investment, trade defense, competition, SOE, government procurement, intellectual property, trade and sustainable development, cooperation and capacity building, and legal and processing.
Currently, the two sides are urgently completing domestic procedures in accordance with the laws of each party, ensuring that the Agreement can be implemented immediately from 23:00 on December 31, 2020.
In the context that the UK has officially left the European Union and the transition is about to end (December 31, 2020), the signing of the UKVFTA Agreement will ensure bilateral trade between Vietnam and Vietnam. The UK was not interrupted at the end of the transition period. In addition, with the foundation of inheriting the EVFTA Agreement, the UKVFTA Agreement will also create a comprehensive, long-term and stable economic-trade framework between Vietnam and the UK, thereby creating a driving force. for strengthening and deepening multifaceted cooperation between the two sides, especially in the context that the two sides have just extended the maintenance of bilateral relations at the strategic partnership level.
Since its in force, EVFTA has become a huge boost to Vietnam's exports, helping to diversify markets and export products. From August 2020, although the disease development in the EU and other countries in the world is very complicated, Vietnam's export to the EU market has continuously recorded a high increase. Specifically: the export turnover to the EU market in August, September and October 2020 reached 3.25 billion USD, 3.07 billion USD and 3.3 billion USD, respectively, up 4.2%, 8.7 % and 6.3% over the same period in 2019. From August 1 to December 18, 2020, agencies and organizations authorized to issue C / O form EUR.1 have issued more than 62,493 sets of C / O model EUR.1 with a turnover of more than 2.35 billion USD to EU countries. In addition, enterprises exporting goods to the EU also self-certify the origin with a value of nearly 6 million USD, are entitled to tariff incentives under EVFTA.
With UKVFTA, the benefits of the two sides' existing commercial relations under the EVFTA Agreement are maintained. This bilateral agreement is the start of a new phase in the relationship between the two countries for the development of key areas of trade. UKVFTA not only liberalizes trade in goods and services, but also integrates many other important factors, such as moving towards green growth and sustainable development.
The UK is the third largest trading partner of Vietnam in the European region. According to the General Department of Customs, in 2019, the total import-export turnover of the two countries reached 6.6 billion USD, of which exports reached 5.8 billion USD and imports reached 857 million USD. In the period 2011-2019, the growth rate of Vietnam - UK bilateral import and export turnover increased by an average of 12.1% / year, 10% higher than the average rate of Vietnam per year. The growth of total import-export turnover to this market is also high (over 10%).
The main products exported from Vietnam to the UK are: phones - components, textiles, footwear, seafood, wood and wood products, computers - components, cashew, coffee, pepper. ; Vietnam imported from the UK include: machinery, equipment, pharmaceuticals, steel, chemicals. Import and export goods between the two countries are complementary rather than competitive.
The market growth gap in the UK for Vietnamese products is still very large as all Vietnamese exports only account for less than 1% of the total market share in total imports of goods each year of nearly 700 billion. USD (2019) for the UK. However, when the UK leaves the EU, the incentives brought by the Vietnam - EU Free Trade Agreement (EVFTA) will not be applied in the UK market. Therefore, the signing of a bilateral FTA will facilitate the reform, opening of markets and trade facilitation in the two countries on the basis of inheriting relatively positive negotiation results in EVFTA. and avoid disruptions in commercial activities as a result of Brexit.
More information:
Some items with export growth potential
a) Textile products
In 2019, the UK imports mainly from Vietnam garment products. In which, the 10 largest garment products exported to the UK include: suits, jackets, blazers for women or girls, outerwear, gowns for women or girls; Jerseys, pullovers, cardigans, giles and the like, knitted or crocheted; Men's or girls' blouses, shirts and blouses; T-shirts, umbrellas and other bras ...
Although China accounts for the largest market share, but in the past 5 years, the growth rate of export turnover of textile and garment products to the UK market has decreased by 8%.
Besides China, the markets that supply textile and garment products to the UK also include Bangladesh, Cambodia and Pakistan, which all have advantages over Vietnam in terms of tax rates (Bangladesh is entitled to import duty exemption under the EBA program, Pakistan is also exempt from import tax under the GSP + program, so the FTA between Vietnam and the UK will provide tariff incentives to help our goods have a competitive advantage over their competitors.
b) Footwear
With a double-digit export turnover for many consecutive years, Vietnam currently ranks second in the world in footwear exports. Footwear export turnover of Vietnam continuously increased in the period 2010 - 2019, from 5.1 billion USD in 2010 increased by more than 3.5 times, reaching 18.3 billion USD in 2019.
Despite ranking 2nd in the world, Vietnam's exports only account for 8% of global exports, while China is nearly 40%.
The UK is a footwear export market with great potential but very competitive. In the UK, the footwear market is very diversified, covering a wide range of materials (textiles, plastics, rubber and leather) and products ranging from different men's, women's and children's footwear to specialized products. used as ski shoes and protective shoes.
Compared to competitors such as China, the Netherlands, Italy, Belgium, Germany, and Vietnam in 2019 still subject to the 2nd highest tariff among the 15 most footwear exporting countries to the UK with an average tax of 6. , 7%.
c) Rice
The UK rice market is quite large with the UK's rice import demand in 2019 of 671 thousand tons, up 10% compared to 2018. Although Vietnam is one of the leading rice exporters in the world, its rice exports Vietnam to the UK remained at a modest level with 0.2% and only ranked 22nd among the largest rice exporters to the UK (source: UN Comtrade statistic)
In 2019, rice exports from Vietnam to the UK had a leap forward with a turnover growth of 376%. However, the tariff on this item in 2019 is still high, making it difficult to compete with other countries. The leading countries in rice export to the UK are India (22%), Pakistan (18%), Spain (11%), Italy (10.9%), and Thailand (9.2%).
Thus, the UK is a very potential rice export market for Vietnam.
d) Fishery products
Seafood is Vietnam's key export industry, we have the advantage of both experience, production capacity and abundant supply. Import demand for seafood products of the UK is quite large, about 4.4 billion USD / year (source: statistics of ITC) while the export value of Vietnam accounts for only about 6.7%. The main seafood export markets to the UK are: China, Ireland, Sweden ...
A bilateral FTA between Vietnam and the UK, in addition to tariff preferences, will provide transparency in quality standards commitments. On the Vietnamese side, this is an important driving force to improve production activities in the direction of meeting the requirements of the target market, particularly the UK market - the country requires high product standards. The improved output quality not only boosts the export of this product to the UK but also meets the requirements of many other markets.
Translation Covid-19 changed the trend of consumption and import from the UK. Consumers aim for seafood products that are easy to consume at home, easy to store, easy to process, convenient and with average low prices. Vietnamese frozen pangasius is a great advantage and a bright spot for the seafood industry to export to the UK today as a leading supplier with the right price and processing process of many Vietnamese enterprises. EU and UK market accepted.
dd) Wood products and wood products
The UK is a market that needs to import a large amount of finished products and furniture materials each year. Vietnam is currently the 6th largest wood furniture exporter to this market with an export value of 421.8 million USD, accounting for 3.6% of the UK's import market share. Leading the way is China, Italy, Germany, Poland, the US. (according to ITC's source).
The export of wooden products to the UK has many opportunities because Vietnamese wood products are well received by the UK market thanks to their highly competitive prices, good raw materials, and high product quality. In addition, several major companies in the wood industry in the UK already have production facilities or have signed long-term partnership contracts with manufacturers in Vietnam such as IKEA, the largest market share furniture retailer in the UK. Brother.
FTA not only helps to increase exports of this commodity to the UK, but also creates an attractive business environment in Vietnam, attracting FDI inflows into Vietnam in the wood processing industry.
Source: Ministry of Industry and Trade
