The free trade agreement signed between Vietnam and the UK (UKVFTA) will officially take effect from December 31.

The free trade agreement between Vietnam and the UK (UKVFTA) was officially signed in London, UK at 9pm on December 29 (Vietnam time). Due to COVID-19 pandemic, the Vietnamese Government leaders and the Minister of Industry and Trade Tran Tuan Anh were not present in person to sign as usual. Instead, the two governments have authorized the ambassadors.

Currently, the two sides are rushing to complete domestic procedures in accordance with the laws of each party, ensuring that the Agreement can be implemented immediately from 23:00 on December 31, 2020.

Earlier, on December 11, Minister of Industry and Trade Tran Tuan Anh and Secretary of State for International Trade Elizabeth Truss signed a Memorandum of Understanding on the conclusion of the free trade agreement between Vietnam and the United Kingdom and Northern Ireland (UKVFTA) creating a basis for the two countries to implement the necessary legal procedures for official signing.

The UKVFTA Agreement is negotiated based on the principle of inheriting the commitments made in the Free Trade Agreement between Vietnam and the European Union (EVFTA) with necessary adjustments to ensure compliance with the bilateral trade framework between Vietnam and the UK.

With UKVFTA, the benefits of the two sides' existing commercial relations under the EVFTA Agreement are maintained. The UK is the third largest trading partner of Vietnam in the European region. According to the General Department of Customs, in 2019, the total import-export turnover of the two countries reached USD 6.6 billion, of which exports reached USD 5.8 billion and imports reached USD 857 million.

In the 2011-2019 period, the growth rate of Vietnam - UK bilateral import and export turnover reached an average rate of 12.1%/year, 10%/year higher than the average rate of Vietnam. The growth of total import-export turnover to this market is also high (over 10%).

There is still large market growth potential in the UK for Vietnamese products because all Vietnamese exports only account for less than 1% of the total market share in the total annual import turnover of nearly 700 billion USD ( 2019) of the UK.

However, when the UK leaves the EU, the incentives brought about by the Vietnam - EU Free Trade Agreement (EVFTA) will not be applied in the UK market. Therefore, the signing of a bilateral FTA will facilitate the reform, opening of markets and trade facilitation in the two countries on the basis of inheriting relatively positive negotiation results in EVFTA, avoiding disruption of commercial activities due to the consequences of Brexit.

Kylie Nguyen