Taking advantage of UKVFTA, enhancing trade promotion, boosting exports to the UK

Two-way trade turnover increased by 21.7%

According to preliminary statistics from Vietnam Customs, in the first 6 months of 2024, the total two-way trade turnover reached more than 3.9 billion USD, an increase of 21.7% over the same period in 2023. Of which, Vietnam had a trade surplus of more than 3.2 billion USD (an increase of 28.5% over the same period in 2023).

In the first six months of 2024, the value of Vietnamese goods exports to the UK reached more than 3.57 billion USD, an increase of 24.7% over the same period in 2023.

All of Vietnam's export items increased quite well, led by Computers, electronic products and components 142.7%; rubber +110%; electric wires and cables nearly 68%; machinery, equipment and tools 44.8%, vegetables and fruits 55.5%; confectionery and cereals 46.6%; Machinery, equipment, tools and spare parts 44.8%; Textile, garment, leather and footwear materials 30.7%; coffee 30.7%; Footwear of all kinds 27.8%; ceramic products 21.2%; toys and sports equipment +23.3%.

The export items with the largest proportion of turnover are: Phones of all kinds and components 17.9%; Machinery, equipment, tools and other spare parts 17%; Footwear of all kinds 13.4%; Textiles and garments 9.8%; Computers, electronic products and components 9.6%; Seafood 4%; Wood and wood products 3%, iron and steel of all kinds 3.5%, coffee 1.8%.

In the opposite direction, the value of imported goods from the UK to Vietnam reached more than 368 million USD, down -1% compared to the first 6 months of 2023.

According to the assessment of the Vietnam Trade Office in the UK and Northern Ireland, the UK market has many opportunities for Vietnam's exports, first of all, the preferential tariff basis under the Vietnam - UK Free Trade Agreement (UKVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

In addition, the mechanism for applying Fast track Digital UKCA instead of CE for industrial products. Specifically, when the UKVFTA Agreement comes into effect, many wood products will have a 0% tax rate within 5 years.

In particular, Vietnamese enterprises have the opportunity to increase exports of the following items: rubber, electric wires and cables; telephones and components of all kinds, coffee, cereals, confectionery, ceramics, vegetables, food, leather shoes, garments, seafood, wooden furniture, rice, etc. to the UK. Recently, the UK has tended to increase its demand for importing these items.

Furthermore, the UK market is quite large (about 68 million people), with diverse needs from an Asian community of more than 5.5 million people, which is also a favorable condition for Vietnamese goods, including wooden furniture, to increase exports to this market.

Strengthening trade promotion activities, boosting exports to the UK

Despite many opportunities, according to the Vietnam Trade Office in the UK, the challenge of bringing Vietnamese goods to this market is quite large when international trade is weak, the global economy is slowing down and geopolitical conflicts are escalating. Therefore, demand in the UK market is decreasing due to high inflation and people are tightening their spending due to concerns about high living costs and an unstable economic situation.

In addition, the CCI (consumer confidence) index in June 2024 was at -14, a slight increase of 3 points compared to -17 in May 2024 and still much lower than the pre-Covid 19 period. Fluctuations in the USD/GBP exchange rate increase financial risks for Vietnamese export enterprises.

Along with that, the requirement for high quality and competitive prices. The law on anti-deforestation and forest degradation will affect the export of wood products, coffee, rubber, vegetable oil, soybeans, leather. The trend of products for dieters is more popular such as: vegan, gluten-free (for people with gluten allergies), sugar-free, salt-free... making the production and supply of agricultural products more specialized and complicated. The requirements for green certificates, fair trade are increasingly popular and applied to businesses exporting goods and services, forcing businesses to invest more, increasing input costs and product prices.

Global geopolitical fluctuations have affected the UK market. The Red Sea conflict has pushed up freight rates and extended shipping times. Soaring container prices are an obstacle for Vietnamese export businesses. Fraud and trade disputes between Vietnamese and UK businesses have increased due to the financial difficulties of many UK businesses, with a record number of UK businesses going bankrupt in 2023.

Faced with intertwined opportunities and challenges, to increase exports to the UK market, First Secretary Hoang Le Hang, Embassy of Vietnam in the UK said that after the election, replacing the ruling party, the Vietnam Trade Office in the UK and Northern Ireland needs to build and re-establish good new relationships with UK Government agencies such as the Department of Trade and Industry, Department of Agriculture (DEFRA), Department of Energy and net zero, Department of Standards and Quality, UK-ASEAN Business Community... to access and update the economic and trade policies of the locality.

In addition, strengthen the network with the British Business community and Vietnamese businesses in the UK to connect and introduce partners to Vietnamese businesses. At the same time, update and provide Vietnamese businesses with updated information on product quality standards and import regulations into the UK.

The Trade Office continues to update information on the website www.vietnamtradeoffice.co.uk to disseminate policy information and market opportunities for businesses; respond to requests for support from Vietnamese businesses related to the UK market, find and verify partners in the UK, and support commercial mortgage release.

In addition, the Vietnam Trade Office in the UK will actively work with UK supermarket systems, continue to implement under the guidance of the European and American Department to bring Vietnamese goods into UK supermarket chains, continue to implement in 2024; participate in consulting and propaganda seminars to support exports organized by the European - American Market Department and the Trade Promotion Agency - Ministry of Industry and Trade; participate in specialized trade fairs, trade promotion programs according to approved plans.

Source: https://moit.gov.vn/tin-tuc/thi-truong-nuoc-ngoai/tan-dung-ukvfta-tang-cuong-xuc-tien-thuong-mai-day-manh-xuat-khau-sang-anh.html