The UK-Vietnam Free Trade Agreement (UKVFTA) has sparked a remarkable surge in Vietnamese exports to the United Kingdom, following the removal of tariffs on 94% of agricultural product lines. In early 2022, premium UK supermarket chains like Whole Foods, Marks and Spencer (M&S), Waitrose, TESCO, and Sainsbury’s started featuring Vietnamese tropical fruits and agricultural products, marking a significant shift.
Previously, only a limited selection of Vietnamese agricultural goods found their way into British supermarkets, primarily consisting of cashews, coffee, and black pepper. However, the UKVFTA’s implementation has breathed new life into the market, extending the availability of Vietnamese goods.
These promising outcomes are a testament to the combined efforts of Vietnamese agricultural exporters and the benefits that the UKVFTA has delivered. Importantly, the complete elimination of import tariffs for fruits and vegetables on January 1, 2021, resulted in a 67% surge in Vietnam’s fruit and vegetable exports to the UK in 2021, reaching $19.35 million. Overall, Vietnamese exports to the UK in 2021 escalated by 16.4%, amounting to over $5.76 billion.
Notably, the UKVFTA’s removal of tariffs on 94% of the 547 agricultural product lines has made Vietnamese products more competitive in the UK market, compared to similar products from countries without a Free Trade Agreement with the UK. This tariff reduction incentivized Vietnamese businesses, particularly those dealing in aquatic products, rice, textiles, wood products, fruits, vegetables, and leather, to maximize their exports.
The UKVFTA has not only been a catalyst for reviving Vietnam-UK trade relations but has also delivered substantial growth in bilateral trade. In 2021, bilateral trade exceeded $6.6 billion, representing a 17.2% increase compared to 2020, with Vietnam enjoying a trade surplus of about $4.92 billion, a 15.2% increase from the previous year. UK exports to Vietnam also saw a substantial 24% increase.
Despite facing challenges such as container crises and rising sea freight costs, the positive impact of the UKVFTA on the recovery of the UK economy has been noteworthy. Vietnamese exporters have seized opportunities arising from the agreement, transforming the UK into a more favourable trading partner.
However, it’s crucial to note that the UKVFTA’s stringent requirements for technical quality standards mean that only high-quality Vietnamese products meeting specific criteria enjoy the tariff benefits. This emphasizes the need for Vietnamese businesses to uphold their reputations while delivering quality and competitive pricing in a highly competitive UK market.
To excel in the UK market, companies must adhere to the rule of law and maintain transparent information, reliable websites, and solid business histories with reputable partners. Moreover, they must establish clear contracts and actively engage in corporate social responsibility, addressing issues such as child labour, labour contracts, working conditions, and environmental concerns.
Building a national brand based on trust and quality is seen as a pivotal step to dominance in the UK market. This model advocates for top-tier companies with the necessary resources to manage quality and brand development, allowing them to access and persuade UK partners to enter contracts. Supporting this top group is a bottom tier of product suppliers, subject to rigorous quality management to ensure they meet the required standards.
While facing challenges, Vietnamese businesses have a significant opportunity to explore the UK market. By maintaining quality, reputation, and social responsibility, and by adhering to the UKVFTA’s requirements, they can tap into the vast potential of the UK market, as it continues to recover and open up to international trade.
Deputy Minister of Industry and Trade Tran Quoc Khanh expressed optimism about the positive impact of the UKVFTA on Vietnam and the UK, as reflected in the promising growth of Vietnamese exports to the UK during the initial year of its implementation.