In mid-December 2020, Vietnam’s Minister of Industry and Trade and the UK’s Secretary of State for International trade finalized the ongoing negotiations between the two countries. They introduced a new trade deal between the two countries, and it was named as the UK – Vietnam Free Trade Agreement (of UKVTA).
The deal was signed on the 29th December 2020 and took effect from 1st January 2021, improving the relations between the two states. The main idea of the deal was to improve the trade between the two countries by reducing the tariffs and easing the regulations. Ultimately, the tariffs would be brought down to almost zero.
Here is a brief introduction of few key points of the deal and how they impact the Business Opportunities in both countries:
Bringing down Tariffs
The main goal behind the deal was to bring down the tariff on the exports and imports between the two counties. Specifically, Britain will remove the tariff on 99 % of the tariff lines within the first six years of the deal being implemented. At the same time, Vietnam brings down the tariff rates to 48.5 % of the previous rates.
Vietnam is the second-biggest export market of the UK in Europe. That is why this deal will help both countries save huge funds in terms of taxes. According to the prediction, the UK will save about 36 Million USD, and Vietnam will save about 150 Million USD in terms of tariff thanks to the UK – Vietnam Free Trade Agreement.
Vietnam has always been open to foreign investments. Foreign investors will take great advantage of the deal as the tariff is reduced to nearly zero for Exports and Imports in Vietnam. About 60 % of tariffs have been eliminated between the two countries, but it will soon be increased by 99%.
This new trade deal will go a long way in paving the road to Vietnam’s success. It will ultimately improve the country’s economic condition, such as the Medical Industry and services industry of Vietnam.
Improving the Trade Routes
UKVTA is also playing a role in making trade easier and safer between the two countries. The trade agreement also specifies various safety rules and regulations that both countries must take to ensure that the product can get safely to the consumer. It includes adopting rules of origin and trade facilitation.
The agreements also bound both countries to follow the International Labour Organization and UN Framework Convention on Climate Change regulation. It is because it helps to improve the environment, especially in the field of machinery and automobile. These regulations are strictly obeyed in importing sensitive Exports to Vietnam, such as Pharmaceutical Equipment, banking, and insurance.
Boosting Service Industry of Vietnam
Vietnam is famous for its service industry, including the engineering and software development sector, especially for investors in the UK. It makes this ideal time for the service industry of Vietnam to flourish, giving them better Business Opportunities.
Vietnam has a competitive edge over the UK when it comes to air freight, as well as software design services. The UK is in high demand for these services. It gives the services industry a chance to expand its market share in Great Britain.
Impact of the new FTA on the Medical Industry
Most of the Medical Equipment in Vietnam needs to be imported from countries such as the UK. The new trade deal will help improve the imports of medical equipment in the country, improving the healthcare condition. The ministry of health is hopeful that Vietnam’s Pharmaceutical industry will increase greatly with the UKVTA.
How can Cekindo help?
Our talented team of professionals at Cekindo are ready to help improve your trade relations in the country. We are fully versed in the trade deal and ensure you the license set up and much more. Our services include providing a complete trade strategy to the clients to ensure that they get the most out of their trades. We will also help you set up your business and the product registration process to help make the investment easier for you.
Get registered with us today and forget all about your Trade troubles.