Some of commodities with growth potential in Vietnam through UKVFTA Agreement

Since 2021, the UKVFTA Agreement is the Agreement between Vietnam and the European Union (EVFTA) had been come into force.

 

Law Firm in Vietnam

After the UKVFTA Agreement is signed, some goods in Vietnam, when exported to the UK market, if they meet the conditions, will enjoy tariff preferences from the Agreement, this is a good opportunity to Vietnamese goods are imported to the UK market.

In 2019, the UK imports mainly from Vietnam garment products. In which, the 10 largest garment products exported to the UK include: suits, jackets, blazers for women or girls, outerwear, gowns for women or girl; Jerseys, pullovers, cardigans, men’s or girls’ blouses, shirts and blouses, and other bras. Vietnamese garments entering the UK had to compete with those of other countries with tariff reduction schemes/agreements with the UK such as Bangladesh, China, Pakistan, and Cambodia, however, after UKVFTA takes effect, garment products from Vietnam will enjoy equivalent tariff benefits, thereby enhancing the competitiveness of textile and garment products from Vietnam.

Previously, with a double-digit export turnover for many consecutive years, Vietnam currently ranks 2nd in the world in footwear exports. Footwear export turnover of Vietnam continuously increased in the period 2010 – 2019, from 5.1 billion USD in 2010 increased by more than 3.5 times, reaching 18.3 billion USD in 2019.

Despite ranking 2nd in the world, Vietnam’s footwear exports account for only 8% of global exports. The UK market is a footwear export market with great potential but very competitive. However, compared to competitors such as China, the Netherlands, Italy, Belgium, and Germany, in 2019, Vietnam is still subject to the 2nd highest tariff among the 15 most footwear exporting countries to the UK, with average tax of 6.7%. Since the UKVFTA Agreement is implemented, the tax rate will be reduced according to the schedule and will be down to 0% depending on each item, thereby helping Vietnam’s footwear products to compete with products of other countries.

Besides, the seafood product is Vietnam’s key export industry, we have the advantage of both experience, production capacity and abundant supply. Import demand for seafood products of the UK is quite large, about 4.4 billion USD/year, in which the export value of Vietnam accounts for only about 6.7%. The main seafood export markets to the UK are: China, Ireland, Sweden …

The Covid-19 pandemic changed the trend of consumption and import from the UK. Consumers find seafood products that are easy to consume at home, easy to store, easy to process, convenient and with average low prices. Vietnamese frozen pangasius is a great advantage and a bright spot for the seafood industry to export to the UK today, as a leading supplier with the possible price and processing process of many Vietnamese enterprises is accepted by EU and UK market.

However, in order to bring Vietnamese products into the UK market, Vietnamese goods need to meet high standards of quality, aesthetics, hygiene and environment at competitive prices, ensuring the standards of origin, to be able to take the best use of the incentives provided by the Agreement. In addition, the choice of using the British pound or USD in negotiating and signing commercial contracts requires the company to closely monitor the exchange rate fluctuation between the British pound and the USD, from which to consider, and sign economic contracts that are most beneficial to their businesses.

Finding the right business partner in Vietnam is equally important as choosing the right products to export to the UK market to compete. It is suggested to undertake the research for the reputation of the company and each shareholders being corporate or individual, obtain public information of the company, and undertake background check for key personnel to access potential risks for cooperation. Working with a reliable partner can help achieve economic benefits, save time and costs in business.