Exploring the Bilateral Trade Agreement between UK and Vietnam completed on December 11, 2020, after the UK voted for Brexit.
UK and Vietnam Negotiate a Bilateral Trade Agreement to keep trade flowing.
In 2016, when England voted to leave the European Union, a series of adjustments were witnessed in terms of economic and trade agreements. The country’s exit from the EU also led to its withdrawal from the European Union-Vietnam Free Trade Agreement (EVFTA).
The EVFTA was scheduled to come into force in 2020 – after the UK was expected to exit the EU single-market.
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As a result, Vietnam-UK trade, assuming no other arrangements were made, would fall back on WTO guidelines and tariff schedules.
Neither party, however, wanted to miss out on the benefits that the EVFTA had promised.
The UK had, at the time, declared its intention to join the CPTPP to which Vietnam is a party, but with 10 countries in the agreement already, being confirmed as a member would take some time.
Consequently, the UK and Vietnam moved ahead with a bilateral trade agreement to keep trade flowing.
The negotiations for the United Kingdom-Vietnam Free Trade Agreement (UKVFTA) were completed December 11, 2020, with the agreement signed December 29 of the same year.
The UKVFTA has significantly reduced tariffs and strengthened the trade relationship between Vietnam and the UK, resulting in substantial benefits for both countries.
British luxury carmaker McLaren, for example, opened its first showroom in Vietnam last year. AstraZeneca is also working with the Vietnamese government on disease prevention and control and pharmaceutical research.
It is worth noting that the two-way trade between Vietnam and the UK experienced a decrease in 2020, which can be attributed to the lower demand caused by the COVID-19 pandemic.
However, the trade bounced back in the following year, reaching the highest level ever recorded between the two countries.
Earlier this year, the relationship between Vietnam and the UK took another step forward when the UK’s accession to the CPTPP was confirmed.
Among the advantages resulted from the UKVFTA:
- Tariffs on engines and medicines exported to Vietnam will come down faster.
- Tariffs on chocolate and port will be eliminated sooner.
- Duties on beef exported to Vietnam will be eliminated at entry into force.
- Duties on pork and chicken will be eliminated from years 3 and 5, respectively.
- Vietnam will receive access to a separate duty-free TRQ on long-grain milled rice. The volume will increase incrementally over eight years, capped at a permanent quota of 17,500 tons.
- Vietnam along with Chile, Malaysia, Brunei, and Peru will share a single, duty-free TRQ on sugar – the volume of which will increase incrementally over 10 years. This will be capped at a permanent quota of 25,000 tons.
- UK businesspersons travelling to Vietnam for short-term business will be allowed to stay for up to six months as opposed to the three months currently permitted.
- British citizens will have guaranteed access to Vietnam.
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These changes will liberalize trade between these two countries further and allow for better and smoother supply chain integration for the UK among the member states.
Source: Vietnam Briefing