Trade deals to fuel UK-Viet Nam trade
Viet Nam and the UK are amplifying their trade and investment partnership through the materialisation of commitments within their bilateral free trade agreement, and the former’s advocacy for the latter’s efforts to participate in the 11 trillion USD Asia-Pacific free trade pact already taking effect.
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| Viet Nam and the UK are beefing up their bilateral trade and investment via a new free trade agreement. (Phôt: NDO) |
Graham Stuart, UK Prime Minister’s Trade Envoy to Viet Nam, Cambodia and Laos, has just concluded a busy trip in Viet Nam where he has worked with the government, the Ministry of Industry and Trade, and other authorised agencies on boosting the implementation of the UK-Viet Nam Free Trade Agreement (UKVFTA) which took effect on May 1, 2021, and on the UK’s upcoming accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Stuart said an English guidebook has been released to explain the UKVFTA to any British business looking to swell its trade and investment in Viet Nam.
“Viet Nam is immensely significant to the UK’s trade agenda, as well as to the county’s growing focus on ASEAN and Asia-Pacific,” Stuart said. “The UKVFTA is a strong propellant for amplifying trade. Our trade ties will be strengthened, especially on renewable energy, following Viet Nam’s recent commitment to net zero”, Stuart said, revealing that the UK had recently secured a UK-linked offshore wind development project in Viet Nam. Once completed, the wind farm will generate enough electricity for 1.6 million homes.
At the 26th Conference of the Parties (COP26) to the United Nations Framework Convention on Climate Change (UNFCC) in the UK last October, Viet Namese Prime Minister Pham Minh Chinh announced that Viet Nam “will make use of our own domestic resources, along with the cooperation and support of the international community, especially from developed countries, in terms of finance and technology, including through mechanisms under the Paris Agreement, in order to achieve net-zero emissions by 2050”.
More than a week ago, Viet Nam’s Deputy Minister of Industry and Trade Tran Quoc Khanh also visited the UK to work with the UK Minister of State Penny Mordaunt on reviewing all commitments under the UKVFTA, the great opportunities that the deal has brought to both nations, and the remaining challenges that need to be tackled moving into the second year of the agreement.
Viet Nam and the UK have agreed to soon revise legal documents on market access, simplifying import procedures, and removing all possible obstructions for trade and investment with prohibition on unfair treatment of investments into their respective territories.
At the eighth UK-Viet Nam Strategic Dialogue held in Hanoi more than one week ago, both sides agreed that new mechanisms will be created to foster both nations’ bilateral ties in trade, investment, defence and security, climate change and sustainable development.
“Both countries will continue closely work with each other to remove all obstructions and take advantage of all opportunities from the UKFTA to make breakthroughs in trade and investment cooperation and expand ties in the new sectors of digital economy, energy transformation, green finance, infrastructure development, and finance and banking”, as shared in a statement from Viet Nam’s Ministry of Foreign Affairs.
Viet Nam will also work closely with the UK on boosting the latter’s negotiations to join the CPTPP as soon as possible.
“Currently the Ministry of Industry and Trade (MoIT) is drafting a document covering opinions from relevant ministries and sectors before submitting a report to the prime minister on a master scheme for Viet Nam’s negotiations on the UK’s accession to the CPTPP,” said the MoIT’s European-American Market Department in a report.
The UK on March 20, 2022, sent its offer to join the CPTPP to the deal’s member states, whose representatives will meet to discuss the offer before launching official negotiations with the UK. It is expected that the negotiations, which will be conducted with countries individually and simultaneously, will conclude by the year’s end.
One month ago, the UK reached a major milestone towards joining the CPTPP that its government hailed as “one of the largest and most exciting free-trading clubs in the world”.
According to the Department for International Trade (DIT), this means the UK has moved into the second ‘market access’ phase of negotiations to enter a free trade area worth £8.4 trillion (11 trillion USD) in GDP.
“Market access negotiations will now begin in which the UK will agree new trading relationships with CPTPP countries, which could lead to 99.9 percent of UK exports to CPTPP members being eligible for tariff-free trade,” the DIT said in a statement. “We will ensure that the terms are in line with the UK’s broader policies and will negotiate in the nation’s interest”.
Benefits of UK accession could include new guarantees of access to services markets, providing valuable opportunities for the UK’s world-class services industry to increase exports to CPTPP countries.
Membership will also help ensure British businesses are in an even better position to expand their digital reach in the global marketplace thanks to the deal’s modern rules for digital trade across all sectors of the economy.
In addition, it would make it easier for some UK exports to qualify for preferential tariff treatment than under bilateral free trade agreements alone and to increase demand amongst CPTPP members for imports of British goods such as engines. CPTPP’s rules of origin mean that traders can more easily import goods from other members.
According to experts, the UK’s decision to join CPTPP falls under the UK government’s ‘tilt’ towards the Indo-Pacific - a cornerstone of the ‘Global Britain’ agenda.
The Global Britain agenda seeks to rebalance the UK’s foreign policy and pursue independent trade opportunities shaped by national security concerns, while offsetting the economic costs of Brexit. The UK believes that CPTPP membership will address some of these concerns while offering economic benefits.
The agreement includes provisions for expansion. In addition to the United Kingdom, China, and Taiwan, other markets expressing interest in joining an enlarged CPTPP include the Republic of Korea, Indonesia, Thailand, and Colombia.
In 2021 when the UKVFTA took effect, the Viet Nam-UK two-way trade turnover hit 6.61 billion USD, up 17.2 percent year-on-year. This included the Southeast Asian nation’s export turnover of 5.77 billion USD, up 16.4 percent year-on-year, and import turnover of 850 million USD, a year-on-year climb of 23.6 percent compared to the same period of 2020.
As of March 20, 2022, the total for directly-registered investment capital into Viet Nam from the United Kingdom sat at 4 billion USD across 452 projects.
However, according to the Viet Namese Embassy to the United Kingdom, if British investment into Viet Nam via third nations is included, the total capital likely equates to tens of billions of US dollars.
| Opportunities for some types of UK goods under the UKVFTA Pharmaceutical products The UKVFTA has secured easier access to the UK’s high-quality innovative drugs for Viet Namese importers. Provisions related to pharmaceuticals are covered in the agreement’s various chapters. Tariffs: More than 71 percent of UK pharmaceutical products will enjoy tariff elimination immediately. The remainder will be eliminated after six years, except for: • HS 3004.50.21 after four years. • HS 3006.92.10 and 3006.92.90 after nine years. Market access: Viet Nam will allow foreign pharmaceutical companies to establish foreign-invested enterprises (FIEs) for imports of authorised pharmaceuticals. FIEs work can cover the right to sell to wholesalers in Viet Nam; the ability of foreign suppliers to build their own warehouses; and the right to hire healthcare professionals to carry out marketing activities. • Government procurement: public procurement market access is granted to all pharmaceutical goods purchased by the Ministry of Health, the departments of health of Hanoi and Ho Chi Minh City, and 34 hospitals. After a transitional period of two years from the UKFTA’s entry into effect, UK suppliers will secure market access to a pre-determined portion of the market. • Viet Nam will maintain a set-aside scheme for pharmaceuticals. This means that the market share reserved for domestic suppliers will gradually scale back to a final share of 50 percent from 2036. • Improvements on intellectual property rights that make Viet Nam an attractive market for producers of pharmaceutical products and enable better access to qualified medicines for the population: - Viet Nam will provide regulatory data protection to pharmaceutical products for five years. - Competitors are prohibited from relying on submitted test data in support of an application for market authorisation for at least five years. - An extension of patent protection duration will be provided, up to a limit of two years, to compensate for delays in the marketing approval of pharmaceutical products if the approval process takes more than 24 months. • Viet Nam will withdraw existing clinical trial requirements that are not in line with international standards such as the International Conference on Harmonisation of Technical Requirements for Registration. • Other commitments on pharmaceutical products and medical devices: These provisions ensure the use of international standards, practices and guidelines for pharmaceutical products and medical devices recognised for trade between the UK and Viet Nam. The standards are those set by the World Health Organisation and the Organisation for Economic Co-operation and Development, among others. Food and beverage products Tariffs: Most food and beverage products tariffs will be gradually eliminated over 2-9 years. Some products may use a tariff quota, which brings tariff rates to 0 percent for approved exporters as part of a pre-determined quota. Tariff schedules: • Meat: tariff rates eliminated on beef after two years, while chicken will be fully liberalised after nine years. • Dairy products will be duty free after four years. • Chocolate will be duty free after 4-6 years. • Frozen pork meat, food preparations, wine, spirits, and pasta will be duty free goods after six years. • For fisheries, salmon, halibut, trout and rock lobster are immediately duty-free, with others following after two years. • Wine and spirits will be duty free after six years. Market Access: Under the sanitary and phytosanitary measures chapter, there are commitments relating to mutual recognition, list of approved exporters, commitment to international standards, and simplification of import procedures. Several UK geographical indications are protected, including Irish whiskey/uisce beatha eireannach, Irish cream, Scotch whisky, and Scottish farmed salmon. |
(NDO)
