In 2021, the UKVFTA Agreement officially took effect. Is this a good opportunity for many Vietnamese agricultural products to export to the UK?
Pangasius is one of the commodities that have an opportunity to boost exports to the UK under the UKVFTA Agreement. Photo: Le Hoang Vu
According to the Ministry of Industry and Trade, the Free Trade Agreement between Vietnam and the United Kingdom (UKVFTA Agreement) was officially signed by the authorized representatives (ambassadors) of the two governments in London. , UK. The agreement will officially take effect from 23:00 on December 31, 2020.
The signing of the UKVFTA Agreement will create a great opportunity for many Vietnamese exports, including many key agricultural products. Because the UK is currently the third largest trade 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 6.6 billion USD, of which exports reached 5.8 billion USD and imports reached 857 million USD. In the period 2011-2019, the growth rate of Vietnam – UK bilateral import and export turnover increased by an average of 12.1% / year, 10% higher than the average of Vietnam per year.
The main agricultural products exported from Vietnam to the UK are seafood, wood and wood products, cashew nuts, coffee, and pepper … After the UKVFTA Agreement officially came into effect, many Vietnamese agricultural products. There will be more great opportunities to boost exports to this market.
The UKVFTA Agreement, in addition to tariff preferences, will provide transparency in quality standards commitments. On the Vietnamese side, this is an important driving force to improve production activities in the direction of meeting the requirements of the target market, particularly the UK market – the country requires high product standards. The improved output quality not only boosts the export of this product to the UK but also meets the requirements of many other markets.
In terms of seafood, the UK is one of the largest import markets in the world, about US $ 4.4 billion / year. The main markets for seafood exports to the UK are China, Ireland, and Sweden … For Vietnamese seafood exports, the UK is currently the largest market in Europe. In the first 11 months of 2020, seafood exports to the UK reached 322 million USD, up 24.1% over the same period in 2019.
However, the market share of Vietnamese seafood in the UK’s total seafood import value is still modest (accounting for about 6.7%). Therefore, with UKVFTA, Vietnamese seafood will have many opportunities to boost exports and increase market share in the UK.
Translate Covid-19 has changed the trend of consumption and import of seafood in the UK. Consumers aim for seafood products that are easy to consume at home, easy to store, easy to process, convenient and with average low prices. Therefore, Vietnam’s frozen pangasius is a great advantage and a bright spot for the seafood industry to export to the UK today. Vietnam is a leading supplier of Pangasius with suitable prices and the processing process of many Vietnamese enterprises is accepted by EU and UK markets.
In terms of wood and wood products, the UK is a market that needs to import a large number of finished products and wood materials and accessories every year. According to statistics from the International Trade Center (ITC), the demand for importing wooden furniture from the UK in the period of 2016 – 2019 reached an average of 3.9 billion USD / year. The average growth rate in wood furniture imports is 2.5% / year.
Vietnam is currently the 6th largest wooden furniture exporter to the UK with an export value of 421.8 million USD, accounting for 3.6% of the UK’s import market share. Leading the way is China, Italy, Germany, Poland and the US. Particularly for wooden furniture, in the first 10 months of 2020, Vietnam is the third largest supplier to the UK with a value of USD 224 million.
The export of wooden products to the UK has many opportunities because Vietnamese wood products are well received by this market thanks to their highly competitive prices, good raw materials, and high product quality. With the UKVFTA Agreement, many wood products and wood products have a tax rate of 0% within 5 years (raw wood currently has the tax rate of 2 – 10%). Therefore, Vietnam’s wood industry will benefit from this Agreement.
In addition, some major companies in the wood industry in the UK already have production facilities or have signed long-term partnership contracts with manufacturers in Vietnam such as IKEA (the largest furniture retailer in the UK). .
UKVFTA not only helps to increase exports of wood and wood products to the UK, but also creates an attraction for the business investment environment in Vietnam, attracting FDI inflows into Vietnam in the wood processing industry.
With UKVFTA, the UK gives Vietnam a tariff rate quota (TRQ) of more than 13 thousand tons of rice / year, including: 3,356 tons of milled rice; 5,001 tons of milled rice; 5,001 tons of ground rice meets the requirements of the right type. In addition, the UK also committed to review and increase the amount of TRQ for Vietnamese rice after 3 years from the effective date of UKVFTA.
Tariff quotas on some other agricultural products exported to the UK under UKVFTA: cassava starch 12,215 tons / year; sugar and other products containing high sugar content 2,724 tons / year; tuna 1,566 tons / year; 681 tons / year of sweet corn; eggs and egg yolk 68 tons / year; surimi 68 tons / year; garlic 54 tons / year; special sugar 54 tons / year; mushrooms 48 tons / year.
