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New advantages for Vietnam exports to the UK

21/08/2023    100

The UK is set to recognize that Vietnam’s industries are operating in a market economy and will not impose unfavorable rules should they be investigated under trade defense measures. When recognized as a market economy, Vietnamese goods will be treated fairer and exporters will gain more access to other markets.

The UK-Vietnam Free Trade Agreement (UKVFTA), taking effect on May 1, 2021, has freed and will exempt many Vietnamese exports (including coffee, fruit, bags, suitcases, footwear, textiles, garments, and seafood, among others) to the UK from import taxes. This increased the 2021 trade between the UK and Vietnam by 17.2 percent over 2020 to US$6.6 billion, including Vietnam's exports worth almost US$5.8 billion (up 16.4 percent) and British exports worth US$849 million (up 23.6 percent). The bilateral trade hit US$2.68 billion in the first five months of 2022.

There will be more opportunities for Vietnam’s exports to the UK, as the UK formally signed the treaty to accede to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and recognized Vietnam’s industries are operating in a market economy and will not impose unfavorable rules should they be investigated under trade defense measures.

The Trade Remedies Authority of Vietnam’s data show that Vietnam has been so far recognized as a market economy by 71 countries and territories, including many important trade partners.

The recognition of Vietnam as a market economy by the UK is expected to create fairer and better conditions for market penetration and growth in Vietnam. It will also support sustainable production and business activities within the country. According to the World Trade Organization (WTO), as of the end of June 2022, the UK investigated four trade remedy cases and applied one trade remedy measure.

According to the agreement to withdraw from the EU from January 1, 2021, the UK is no longer a member of the EU, so the application of trade remedies will proceed independently between the EU and the UK. For Vietnam, the UK is currently applying only one safeguard measure for steel products. In June 2022, the UK Trade Remedies Authority officially applied separate tariff quotas on a quarterly basis and residual tariff quotas for a number of steel products imported from Vietnam have been valid from July 1, 2022 to June 30, 2024. Imports within the quotas are exempt from duty, and the over-the-quota tax is 25 percent.

The UK has made commitments to opening new markets for a number of Vietnamese goods when joining the CPTPP, including tariff quotas for fragrant rice, tuna, and honey, among others, making exporters of those products more competitive in the UK market.

Source: Vietnam Economic News