LEVERAGING THE ADVANTAGES OF THE UKVFTA, VIETNAM-UK TRADE GROWTH AFTER THE COVID-19 PANDEMIC
After two years of disruption from the Covid-19 pandemic, bilateral trade between Vietnam and the United Kingdom recovered to nearly US$6.6 billion in 2021; In that period, Vietnam exported over US$5.7 billion, an increase of 16.4% compared to 2020. High-growth product groups included fruits and vegetables (up 67%), coffee (up 17%), pepper (up 49%), rattan, bamboo, and mat products (up 56%), raw iron and steel (up 1,269%), steel products (up 100%), and toys and sporting goods (up 19%). Following the Joint Statement between the two countries on December 29, 2020,
The Vietnam-UK Free Trade Agreement (UKVFTA) was signed in London, UK, and officially came into effect on May 1, 2021. The UKVFTA creates opportunities for Vietnam to cooperate with the UK in the construction and supply of goods in many important sectors such as industry and energy. The UK possesses strengths and capabilities in pharmaceuticals, high-tech industries (renewable energy, wind power, solar power), and energy efficiency. Vietnamese businesses have significant opportunities to cooperate, attract investment, and transfer technology from the UK. Simultaneously, Vietnamese businesses can participate in the UK’s industrial and energy supply chains, as well as export industrial products to the UK, taking advantage of the UKVFTA.
With the commitments under the UKVFTA, both UK and Vietnamese exporters benefit. Currently, 85.6% of tariff lines have been eliminated for Vietnamese goods exported to the UK. By 2027, this figure will rise to 99.2%, equivalent to 99.7% of Vietnam’s export value to the UK.
In June 2022, Vietnam’s exports to the UK reached US$536.3 million, a 20.4% increase compared to the previous month. For the first six months of 2022, exports to the UK totaled US$2.91 billion, a 1.1% increase compared to the same period in 2021. Leading the export value to the UK in the first six months was the group of goods including telephones and components, reaching US$492.8 million, a decrease of 26.8% (compared to the same period in 2021), accounting for 16.9% of total exports. Next was textiles and garments, reaching US$378.3 million in the first six months of 2022, a 39% increase, accounting for 12.9%. Following that were footwear, reaching US$357.2 million, a 10.9% increase, accounting for 12.2%. Other items showing significant growth include: coffee (up 138.8%); confectionery and cereal products (up 31.5%); pepper (up 26.7%); and electrical wires and cables (up 98.9%).
According to the latest data from the General Department of Customs, in the first seven months of 2022, Vietnam-UK import and export turnover reached over US$3.9 billion, a slight increase of 1.5% compared to the same period last year. Of this, Vietnam had a trade surplus of over US$3 billion.
Structure of Vietnamese goods exported to the UK in the first seven months of 2022
(Source: General Department of Customs)
Structure of Vietnamese goods imported from the UK in the first seven months of 2022
(Source: General Department of Customs)
In July 2022 alone, the total value of exports to the UK reached over US$569 million. Of these, machinery, equipment, tools, and other spare parts accounted for the largest share at 20.14%, followed closely by telephones and components at 19.3%.
Vietnamese agriculture, forestry, and fisheries products have an advantage when exporting to the UK thanks to the benefits from the UKVFTA agreement, with 94% of the total 547 tariff lines for agricultural products enjoying a 0% tariff rate, according to the International Cooperation Department (Ministry of Agriculture and Rural Development).
The 5 items with the largest export value to the UK in July 2022
(Data from the General Department of Customs)
Conversely, the total value of imports from the UK reached over 61 million USD in July. The majority consisted of other goods worth 17.8 million USD and machinery, equipment, tools, and other spare parts at approximately 16.3 million USD.
