New trade policies of the UK’s Labour government will significantly facilitate Việt Nam’s export to this market, a representative of the Ministry of Industry and Trade (MIT) has said.

They urged Vietnamese firms to focus on improving competitiveness to better exploit opportunities from the UK-Việt Nam Free Trade Agreement (UKVFTA).

Vũ Việt Thành at the MIT European-American Markets Department has pointed out noticeable trade policies of the UK’s Labour government, which came back to power after 14 years in July and how these policies might impact trade with Việt Nam.

UK Prime Minister Keir Starmer has said the UK will not rejoin either the EU, the single market or the customs union. However, the UK is keen to improve relations with the EU and has announced a review of the UK-EU Trade and Cooperation Agreement (TCA) due in 2025-26.

Labour’s election manifesto outlined a veterinary agreement, also known as a sanitary and phytosanitary (SPS) agreement, as one of three specific areas to improve the UK’s trading relationship with the EU, in addition to mutual recognition of professional qualifications and easing restrictions on touring artists.

With regard to the veterinary agreement, the party said that it aimed to prevent unnecessary border checks and help tackle the cost of food.

Thành said that the agreement would clearly benefit the UK, whose trade has been heavily affected by the imposition of post-Brexit border controls.

Findings by the UK Research and Innovation’s academic think tank, the UK in a Changing Europe, showed that while the EU continued to be the biggest market for UK agri-food, accounting for 67 per cent of the value of sales in 2022, exports in this sector contracted by five per cent between 2019 and 2022.

The agreement could lead to a 22.5 per cent increase in UK agri-food exports to the EU and a 5.6 per cent increase in imports, which would translate to a ‘small boost’ of 2 billion GB pounds (US$2.5 billion) for UK agri-food exporters.

For Việt Nam, the policy of improving trading relations with the EU of the UK Government would not affect the relations of Việt Nam with the UK nor the EU, Thành said.

In case the agreement is implemented, Vietnamese goods would benefit from the reduction of intermediate stages or inspection costs when exported to third-party territories, he said.

The UKVFTA had helped ensure access for Vietnamese agricultural products to the UK market, thus there was huge potential for export expansion, he said.

Thành also said that the UK’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) was also among the main priorities of the UK Government.

“The UKVFTA and CPTPP will create a strong impetus to accelerate the bilateral economic, trade and investment relationship between Việt Nam and the UK,” he said.

Besides obvious benefits in trade and investment, the agreements would promote deeper integration of supply chains.

“The UKVFTA and CPTPP will increase the attractiveness of both Việt Nam and the UK in sourcing each other’s inputs, thereby products can be eligible for preferential tariffs from other CPTPP countries,” Thành said.

The agreements also help facilitate business between the two countries through increasing security for investors and resolving disputes during investment and business process while generating more growth potential as the Indo-Pacific is forecast to account for around half of the world’s middle-class consumers over the next few decades, according to Thành.

Việt Nam and the UK can also directly participate in establishing CPTPP rules which are considered to be the most modern and advanced in the world.

While there is spacious potential to enhance trade cooperation with the UK, Vietnamese firms should focus on improving competitiveness to be able to grasp opportunities for expansion, experts have said.

The former trade counsellor of Việt Nam to the UK, Nguyễn Cảnh Cường, said that it was important to build a production chain and strictly control the entire production process, ensure origin traceability, quality and food hygiene and safety to meet requirements of the UK market.

Vietnamese producers and exporters must also increase the application of science and technology as well as investment in deep processing system to optimise the production process and enhance quality and added value for products towards international standards and creating competitive advantage.

“To export to the UK, Vietnamese firms need plans to research the market and approach importers, distribution channels and retail systems,” Cường said, urging attention to brand building, product label design and packaging and suitableness to British sustainable shopping behaviours.

Experts also urged companies to regularly update regulations about sanitary and phytosanitary measures, certificates of origin (C/O), tariff preferences, marking and labelling to make preparations for compliance and avoid unnecessary problems when exporting to the UK.

There are various sources for firms to get market information and see the latest policies and regulations such as Trade Map of the International Trade Centre (ITC), Việt Nam FTA portal at the address https://fta.gov.vn/, the Ministry of Industry and Trade’s e-portals https://goglobal.moit.gov.vn/ and https://connectviet.moit.gov.vn/ or from the Việt Nam trade offices abroad.

SPS notifications are updated by SPS offices of Việt Nam and the World Trade Organization.

After three years of enforcement, the UKVFTA has contributed to promoting the bilateral trade between Việt Nam and the UK with an average growth rate of 8.9 per cent per year, an impressive figure in the context that exports to other major markets in the EU saw double digit declines.

The ministry’s statistics showed that the bilateral trade between Việt Nam and the US reached nearly $6.3 billion in the first nine months of this year, up 18.8 per cent over the same period last year.

According to ITC Trade Map, Việt Nam was a large exporter of many products to the UK, such as footwear, with a market share of 25.6 per cent, cashew nuts 88.9 per cent, fishery products 5.7 per cent, coffee 8.4 per cent, and garments 5 per cent.  VNS