UK's Trade Under The UK-Vietnam FTA

• Published date: 06 March 2023
• Subject Matter: Government, Public Sector, International Law, Government Contracts, Procurement & PPP, International Trade & Investment
• Law Firm: International Economics Consulting Ltd.
• Author: Mr Paul Baker, Loan Le and Alistair Elder

An overview of the UK-Vietnam relations

This year, 2023, the United Kingdom and Vietnam celebrate 50 years of diplomatic relations. The strategic partnership between the United Kingdom (UK) and Vietnam has been tightening over the years.

The UK established formal diplomatic relations with the then-Democratic Republic of Vietnam on 16th July 1973, following the signing of the Paris Peace Accords. The bilateral relationship however only really took off at the end of 1990s, with the opening of the Department for International Development (DFID) office in Hanoi in 1998.

The UK and Vietnam also have a Double Tax Agreement (BTA) signed in 1994 and a Bilateral Investment Treaty (BIT) signed in 2002. In 2010, the UK and Vietnam signed a Strategic Partnership Declaration that aimed to elevates cooperation in seven key areas: political, global and regional issues; trade and investment; sustainable socio-economic development; education and training; science and technology; security and defence; and people to people links.¹ The strategic partnership was then refreshed in 2020 to focus on trade and investment, sustainable economic growth, security, education, and human right.²

In addition to the UK, Vietnam is also party to other 14 FTAs with 52 countries globally. Vietnam is currently a member of two mega trade deals - the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP) - which give Vietnam access to a gross market accounting for 32% of world population and 35% of world GDP. The UK, on the other hand, has signed 38 FTAs with 94 countries globally. In enhancing partnership with existing Asian FTA partners, the UK has signed a Digital Economy Agreement (DEA) with Singapore in 2022 and is considering an enhanced deal with the Republic of Korea covering SME support, investment and digital trade, among others.³ The UK is also seeking to join the CPTPP and is under the process of accession negotiations, for which Vietnam, as a Party, showed support.⁴

Major commitments under the UK-Vietnam Free Trade Agreement

The UK-Vietnam Free Trade Agreement (UKVFTA) was signed on December 29, 2020. Following its entry into force on 1 May 2021, 65% of all tariff lines were eliminated, increasing to 99% by 2027, at the end of the transition period. ⁵ For exports from the UK to Vietnam, tariffs on computers, electronic products and components will be eliminated after 2-4 years; tariffs on...