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Standards must be clearly understood to diversify export markets

28/12/2022    82

The rate of using preferential tariffs from the UK-Vietnam Free Trade Agreement (UKVFTA) is not low, but there is still room for growth.

The turnover of goods using new tariff preferences reached 17.2%

According to Mrs. Nguyen Thi Thu Trang, Director of the Center for WTO and Integration - VCCI, if it is specifically about taking advantage of the UKVFTA Agreement in the UK market, according to the statistics of the Ministry of Industry and Trade in 2021 - the first year of official implementation under the agreement, the rate of turnover of goods using preferential tariffs is 17.2%; that is, out of VND 100 exported to the UK market, VND 17.2 can take advantage of tariff preferences.

"This 17.2% rate is not low compared to other trade agreements in the first year because many businesses have not known it yet, but compared to an agreement to be implemented at the same time as EVFTA, it is clear that UKVFTA is lower than EVFTA, the utilization rate in 2021 is 20%", said Mrs. Nguyen Thi Thu Trang. Analyzing and emphasizing further, if compared with the general average of all free trade agreements is more than 32%, it is clear that the rate of taking advantage of preferential tariffs of Vietnamese exports to the UK market is just over half.

The potential for export to the UK market in UKVFTA is very large because Vietnamese goods only account for less than 1% of the annual import demand of more than USD 600 billion in the UK market.

Mrs. Ton Nu Thuc Uyen - Deputy Director, Office of TBT Vietnam, General Department of Standards, Metrology and Quality, said that the UK has now left the EU, and shortly the UK will also issue a lot of measures and new regulations on commodity food safety standards to apply in the UK. Therefore, businesses need to understand the UKVFTA regulations and the new standards of conformity assessment organizations, ie the former EU testing and certification laboratories.

According to Mrs. Ton Nu Thuc Uyen, many Vietnamese enterprises are not ready to export to the UK because of the fear of many barriers and high standards. To overcome this limitation, the authorities need to take measures to help Vietnamese enterprises ready to transform, meet standards and boldly penetrate this market. Businesses need to distinguish between EU regulations and UK regulations clearly. In addition, the UK strives to develop and enact new regulations to avoid the cost of re-testing or re-certifying businesses.

Before 2021 the UK was a member of the EU, and UK regulations relating to the Agreement on Technical Barriers to Trade (TBT) include standards, and technical regulations; it means that mandatory measures are applied, and conformity procedures are assessed, i.e. those relating to testing and certification of products and goods will be harmonized in accordance with EU regulations. However, after 2021, the UK leaves the EU, there will be new UK regulations will be issued related to and will also have new UK regulations issued related to TBT for goods products. Despite leaving the EU, the UK is still a member of the World Trade Organization (WTO) and will have to implement the commitments of the WTO's TBT Agreement, including standards, technical regulations and assessment procedures will have to be based on international standards.

Actively approach the market

Mrs. Le Hang - Communications Director Vietnam Association of Seafood Exporters and Producers (VASEP), emphasized that, since the EVFTA came into effect, businesses have approached and know how to take advantage of opportunities from the favourable tariff of the EVFTA Agreement. However, Mrs. Le Hang also said that it is very fortunate that when the UK leaves the EU, there is the UKVFTA Agreement. That is a very favourable thing for business. Fortunately, UKVFTA is the successor to the EVFTA Agreement. Therefore, it is not surprising for businesses to access and continue the advantages of tariffs, as well as advantages in terms of opportunities, business environment and medium-sized opportunities, which have just changed the conditions for exporting to the UK market.

"By the end of the 11 months of 2022, the export turnover to the UK market reached USD 287 million. That is a very optimistic number because it does not decrease compared to last year's period. This shows that businesses have taken advantage of opportunities and advantages to export to the UK market in the context that inflation in this market is too high and consumers also have restrictions on consumption," said Ms Le Hang.

Besides, the conflict between Russia and Ukraine leads to an energy crisis; input costs also affect exports to this market. But in challenges, there are opportunities. For example, the UK is a very strong white fish consumption market when the supply of the Russian market to the UK is limited; it is an opportunity for Vietnamese pangasius to enter the UK market to increase its market share in 2022.

According to Mrs. Le Hang, in the future, the story that businesses must consider is that there will be British regulations that businesses have not yet known about, have not been communicated to, and have regulations that businesses cannot distinguish. So what is the EU market like? To avoid unfortunate situations for businesses in the future, it is required that state management agencies or VCCI will accompany, actively communicate and inform more about changes in the UK market.

Mrs. Nguyen Thi Thu Trang noted that businesses in the UK are ranked as one of the leading countries in environmental and emission reduction efforts, so it is impossible to exclude standards equivalent to the EU, even more than when the UK was working very hard on this issue. That will be the challenge for businesses in responding. Other factors will affect the export situation of enterprises. Therefore, many things will be needed for businesses to continue to maintain and grow their exports in the UK market. "First, businesses must help themselves, that is, businesses must also actively seek information so as not to be too afraid, and they must know how to take measures to approach consumers and partners, promote appropriate trade; besides the efforts of each enterprise, it may also need efforts from state management agencies and the Government so that businesses can take advantage of the agreement to expand the market", Trang said.

Source: Customs News