In December 2020, the UK and Vietnam officially signed the UK Vietnam Free Trade Agreement (UKVFTA). Under the UKVFTA, the UK will first eliminate 65% of tariffs, moving up to 99% after seven years to boost bilateral trade. Vietnam will initially remove 48.5% of tariffs from UK imports, which after six years will rise to around 91.8% or 97.1%. According to the Joint Ministerial Statement, following the conclusion of the UKVFTA, Vietnam stands to benefit from tariff savings of £114 million (USD 150.6 million) on Vietnamese exports. For UK exports, this figure will be £36 million (USD 47.5 million).
Vietnam’s key exports to Britain include garments, mobile phones, seafood, and wooden furniture. Its main British imports are pharmaceutical products, machinery, and chemicals. According to the General Department of Vietnam Customs, in the 2011-2019 period, bilateral trade grew between UK and Vietnam by an average of 12.1% per year, higher than Vietnam’s average trade growth of 10% per year with other countries.
The UKVFTA not only ensures the ongoing trade is not interrupted following Brexit but also offers to the UK access to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a free trade agreement of which Vietnam is a member.
(Sources: Vietnam Investment Review; Vietnam News; Reuters)