Good solutions for the textile industry to take advantage of the UKVFTA Agreement

Completing the FTA ecosystem is expected to be a good 'push' for Vietnamese textile and garment enterprises to take more effective advantage of the UKVFTA.

Recently, the Ministry of Industry and Trade has been actively coordinating with ministries, branches and localities to conduct surveys and research to build an ecosystem to take advantage of free trade agreements (FTA ecosystem) to better exploit incentives from FTAs, including the Vietnam - United Kingdom of Great Britain and Northern Ireland Free Trade Agreement (UKVFTA), contributing to a strong increase in export turnover.

For textiles - an industry that is always in the top of the country's export turnover, having an FTA ecosystem helps connect central management agencies; local management agencies; textile enterprises/business associations, credit institutions; textile raw material suppliers to create an ecosystem to support businesses in optimizing benefits from FTAs. Especially connecting textile enterprises with raw material suppliers.

FTA ecosystem - A good solution for the textile and garment industry to take advantage of the UKVFTA. Photo: Khac Kien

In fact, the lack of raw materials is the 'bottleneck' of the textile industry in taking advantage of incentives from the UKVFTA in particular and FTAs ​​in general. Over-reliance on imported raw materials makes the added value of the industry in the country not high.

Considering the UKVFTA Agreement alone, after more than 3 years of implementation, Vietnam's textile and garment exports to the UK market have improved significantly. Export turnover in the past 3 months has remained stable at a high level, of which: August 2024 reached over 76.7 million USD; September 2024 reached over 52.5 million USD; October 2024 reached over 61.9 million USD. In the first 10 months of 2024, Vietnam exported over 622.8 million USD worth of textiles and garments to the UK.

Although this figure is recorded as stable, compared to the incentives brought by this agreement, the turnover achieved is not as expected. Because the UKVFTA Agreement eliminates tariffs immediately (42.5% of tax lines) or according to a roadmap (from 2 to 6 years) for textile and garment products from Vietnam to the UK.

In addition to the reason of not meeting the rules of origin, related to the origin of raw materials, in the UK market, Vietnamese garment products are having to compete directly with similar products from Asian markets such as China, Bangladesh, Turkey, India, Pakistan, Cambodia and some EU markets such as Italy, Germany, the Netherlands, Spain, and France.

In particular, Chinese garments still have a greater advantage thanks to competitive prices; Bangladesh still enjoys duty-free treatment for imported goods into the UK because it is a least developed country.

In the coming time, the UK will continue to reduce garment imports from the EU market, instead promoting imports from non-EU markets, including Vietnam. Therefore, in order to effectively take advantage of the benefits brought by the UKVFTA, Vietnamese enterprises are advised to meet the requirements and standards for imported textiles and garments from the UK.

In addition, grasp the fashion trends, consumer tastes of the British people (colors, styles). The trend of using natural, environmentally friendly materials. Along with that, improve and modernize textile technology to save production costs, reduce dependence on natural resources, reduce emissions as well as minimize the adverse effects of the production process on the environment, contributing to improving the competitiveness as well as the reputation and brand of the enterprise.

From many years of experience in monitoring the market, Mr. Nguyen Canh Cuong - Former Counselor of the Embassy in the UK - said that Vietnamese businesses are increasingly dynamic, especially young businesses, with new skills in digital technology , marketing on digital-based platforms, helping to find information faster and more than traditional methods.

In addition, there are still businesses that have not actively researched and sought market information, including the most basic information. Some Vietnamese businesses have good products but do not have a method to approach the market. This is a weakness that needs to be overcome.

On the part of state management agencies, a representative of the European - American Market Department (Ministry of Industry and Trade) also noted that Vietnamese enterprises exporting to the UK need to carefully look up information about the market, enterprises, and partners to avoid being scammed or cheated.

On the other hand, businesses need to strictly control the entire production process, ensure traceability, food hygiene and safety quality, etc.; clearly identify market segments; conduct in-depth research on market tastes and trends.

Source: https://congthuong.vn/he-sinh-thai-fta-giai-phap-tot-cho-nganh-det-may-tan-dung-hiep-dinh-ukvfta-360718.html