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COVER STORY

lation, and a GDP of about $26.2 trillion, be central in boosting the value of Vietnam’s ity of global commodity prices, the risk of
or about 30 per cent of global GDP, making exports to the market.” inflation, and increasing financial and cur-
it the largest free trade area in the world Mr. Takeo Nakajima, Chief Represen- rency risks also affect exports.
in terms of population. The partnership is tative of the Hanoi Office of the Japan Ambassador Ward pointed out that
expected to help create a stable and long- External Trade Organization (JETRO exporting to the UK demands high prod-
term export market for Vietnam. Hanoi), told VET that FTAs allow com- uct quality as well as robust hygiene and
The US is also seen as a market of panies to import cheaper raw materials safety standards. Improving production
increasing potential given that the impact and export them at low or zero tariffs. technology and ensuring that product
of the CPTPP on the development of export “Domestic companies can import low-cost quality follows UK standards will be vital
markets for Vietnamese goods in member raw materials and finished products,” he for Vietnamese businesses to succeed in
countries in the Americas will be substan- added. “Vietnam already has several FTAs the market. He affirmed that Vietnam
tial. According to the General Department with Japan, which is one reason why trade would benefit more from the UKVFTA if
of Vietnam Customs, January trade value has grown steadily. Both the EUVFTA it made commitments to enhance product
between Vietnam and the Americas reached and the RCEP bring the possibility of quality in line with market demand and
$13.18 billion, a 15.6 per cent increase expanding exports to larger markets.” UK standards. UK investors looking at
year-on-year. Exports were $11.29 billion, Minister of Industry and Trade Nguyen Vietnam, meanwhile, seek a transparent
up 18.4 per cent and accounting for 36.6 Hong Dien said that since the outbreak of and consistent regulatory framework.
per cent of total trade value. the pandemic in early 2020, total export “The UKVFTA aims to boost trade and
Elsewhere, the UK-Vietnam FTA turnover has maintained high growth sustainable development, including by
(UKVFTA) officially entered into force despite Vietnam and its trade partners improving labor quality, environmental
last May. British Ambassador to Vietnam, being severely affected and experiencing protection, climate change, and low carbon
H.E. Gareth Ward, told VET that the lockdowns and social distancing. “This and green standards,” he added. “This
implementation of the agreement is another shows that in addition to developing tra- poses a major challenge for Vietnam in
hugely significant milestone driving bilateral ditional markets, businesses have taken ensuring a comprehensive transition
trade. Sixty-five per cent of all tariffs on advantage of the opportunities to approach towards sustainability.”
UK-Vietnam trade have been eliminated new markets and grow exports, especially Mr. Nakajima said that as the number of
and this will increase to 99 per cent upon in markets that have signed FTAs with FTAs increases, the rules become more com-
full implementation in 2029. “There is still Vietnam, and also shows that the policy plex, and the government’s ability to process
plenty of room for trade growth between of deep and broad international economic them may be slow. “In the CPTPP, the gov-
the two countries, especially in Vietnam’s integration is correct,” he added. ernment delayed announcing notification
strengths, such as agricultural products, about the rules of origin,” he said. “Enterprises
where the UKVFTA has contributed sig- OBSTACLES TO OVERCOME could not use the agreement after it came
nificantly with commitments to tariffs and FTAs present an opportunity to remove into effect.” A JETRO survey revealed that
Tariff-Rate Quotas as well as removing tariff barriers and create a favorable envi- 50 per cent of companies cited an “under-
market access barriers,” he added. “In ronment for production and exports. “How- developed legal system and uncertain oper-
addition to the advantages the UKVFTA ever, along with opportunities are challenges ations” as significant management issues in
brings, capturing consumer tastes in from the risk of being sued for trade reme- Vietnam, while 46 per cent pointed to “the
imported products in the UK, enhancing dies abroad,” Minister Dien said. complexity of taxation and tax procedures”.
product quality, and transforming to envi- The rising prevalence of non-tariff trade According to JETRO, international
ronmentally-sustainable production will barriers in many major markets, the volatil- companies have concerns about the per-

MAIN IMPORT AND EXPORT MARKETS, JANUARY ($ BILLION)
20.8

18.3
Imports Exports

10.2

7.9
7.4
6.6
5.1
3.9 3.7
3.3
2.1 2.4

US China EU ASEAN Japan South Korea

Source: General Department of Vietnam Customs (GDVC)

www.en.vneconomy.vn MARCH 2022 | VIETNAM ECONOMIC TIMES | 9