Avoid commercial and legal disputes with the UK

HANOI: Vietnamese companies must remain vigilant and do their homework to avoid trade and legal disputes when exporting to the UK to take full advantage of the UK-Vietnam Free Trade Agreement (UKVFTA) , which officially went into effect last May, according to industry experts and policy makers.

The deal aimed to provide both sides with the same trade benefits under the European Union (EU)-Vietnam Free Trade Agreement (EVFTA) signed earlier as the UK left the EU. .

UKVFTA aims to go even further than the EVFTA to boost trade between Vietnam and the UK, with 65% of all tariffs removed so far.

Over the next six years, the deal was to remove up to 99.2% of all tariffs on Vietnamese exports, with the Southeast Asian country in turn to remove 48.5% of all customs duties on British products.

Early signs showed a positive effect on bilateral trade, with Vietnamese exports surging 16.4% to $5.76 billion (RM26.3 billion) from the figures recorded during the same period. period before the entry into force of the agreement.

Vietnam’s agricultural products, in particular, saw the biggest gain with a 16% increase over the previous year, reaching more than 230 million US dollars (RM 1.05 billion).

The trade agreement has given Vietnamese products a competitive advantage in the UK market over competitors who have not yet signed a trade agreement with the kingdom.

Major Vietnamese exports to the UK included seafood, agricultural products, textiles, footwear, wooden furniture and handicrafts.

The UK is seen as a major target for Vietnamese exporters with ample room for growth. The kingdom, before Brexit, was Vietnam’s third largest trading partner in the EU.

According to the data, the UK imported US$700 billion (RM3.21 trillion) worth of products in 2019.

Of which, Vietnamese products accounted for only US$6 billion (RM27.5 billion) with key exports such as textiles, footwear, wooden furniture and rice.

Vietnam remained the world’s top producer of some of the UK’s main imports, including cashews, pepper and coffee.

The UK imported 23,000 tonnes of cashew nuts and 14,000 tonnes of pepper and last year Vietnam took the lion’s share with 16,000 tonnes of cashew nuts worth 92 million (RM421.4 million) and more than 5,600 tons of pepper worth $48 million (RM220 million).

However, Vietnamese coffee and rice exporters have not been able to take advantage of improved bilateral trade, with Vietnamese rice and coffee accounting for only 0.45% and just under 5% of UK imports respectively. United.

Experts said a major hurdle for Vietnamese agricultural products is quality.

The UK is and will remain a market with the highest standards of quality and safety.

Vietnamese exporters must first acquire the Global Good Agricultural Practices (GAP) or Euro GAP along with a host of other internationally recognized quality standards before they can attempt to enter the UK market.

In addition, they must seek to improve product quality as competition in the UK market is fierce with serious competitors including products from Thailand, Malaysia, Indonesia, South Africa and India.

Vietnamese companies, however, are likely to see an increase in trade and legal disputes in coming years as a side effect of increased two-way trade, industry experts and policymakers said.

As of the end of the first quarter of 2022, Vietnamese companies have been involved in more than 210 trade defense cases related to anti-dumping or anti-subsidy activities, with more than half of the cases occurring in the past five years.

The figure is likely to continue to rise as the country steps up its efforts to boost exports, said the head of the economic integration department of the Ministry of Industry and Trade or MoIT Lam Thi Quynh Anh.

“It has a lot to do with the nature of the next-generation FTAs ​​that Vietnam has committed to,” Lam said.

“The next generation FTAs, the EVFTA and the UKVFTA for example, cover much more than just commercial activities, including labor rights, environmental conservation and fair trade by putting the focus on sustainable development,” she said.

This requires companies to evolve and adopt a more holistic approach to exporting, which is currently identified as a major weakness for Vietnamese exporters.

According to a recent study by the Vietnam Chamber of Commerce and Industry or VCCI, 15% of companies surveyed admitted that they have a “none to little” understanding of next-generation FTAs, 60% admitted that they don’t only had a superficial understanding and just over 5% said they had a ‘strong understanding’ of the pros and cons.

To make matters worse, it showed little improvement from a 2019 study. Of more than 8,600 private companies participating in the study, only 3% said they had a “strong understanding”. — Viet Nam News/ANN

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