UKVFTA maintains smooth Vietnam-UK trade after Brexit

The signing of the UK – Vietnam Free Trade Agreement (UKVFTA) has ensured continuity of mutual trade after the end of Brexit’s transitional period on December 31, 2020.

Vietnam’s Minister of Industry and Trade Tran Tuan Anh and UK International Trade Secretary Liz Truss at the signing of the free trade agreement in Hanoi on December 11. Photo: Nhac Nguyen/AFP/Getty Images

The UKVFTA, which was signed in Hanoi last week, will reproduce similar effects from the EU – Vietnam Free Trade Agreement (EVFTA) as the UK will be out of the EU by the end of 2020, according to Savills Vietnam.

For Vietnam, the UKVFTA will primarily boost exports, while for the UK, it is considered an essential first step in gaining access to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), said Savills Vietnam, one of the largest real estate practice in the country.

Under the UKVFTA, the UK will first eliminate 65% of tariffs moving up to 99% after seven years to boost bilateral trade. Vietnam will first remove 48.5% of tariffs from UK imports, which after six years, will rise to around 91.8% or 97.1%. The tariff rate quotas provided in the EVFTA have been agreed to guide those in the UKVFTA, after the UK reviews their actual trade value with Vietnam.

In addition, UKVFTA will spark new opportunities for Vietnam as one of the few Asian countries to secure an exclusive FTA with the UK, Savills Vietnam said.

As the representative of a leading UK company in Vietnam, Mr Matthew Powell, Director of Savills Hanoi, who attended the UKVFTA signing ceremony last week, shared his outlook for Vietnam and the economic development.

The agreement will facilitate extensive benefits and opportunities for both sides. The UK has been Vietnam’s third largest trading partner in Europe, with 400 ongoing projects worth over US$3.6 billion as of August 2020. With the FTA, more investment capital, technology transfer, and transactions are expected from the UK.

Mr. Matthew Powell said both business communities have developed mutually strong and lasting relationships and he hopes to see more UK investments into services, products, and more business expansions as the agreement comes into effect.

“The UK is known for its consultancy expertise, particularly in real estate. Besides being the sector of choice for local investors, property remains the safest and most effective investment channel. Our 25 years in Vietnam has given us a greater understanding of the culture and business environment which will add value to strengthening and developing even greater business ties between the two countries,” Mr. Powell added.