A free trade pact between Vietnam and the UK came into effect on Saturday, paving the way for 99 percent of tariffs to be eliminated after six years and for the kingdom to join a separate Trans-Pacific deal.
"Today marks an important symbolic step in this partnership as the Vietnam-UK Free Trade Agreement enters into force," both countries said in a joint statement.
Vietnam and the UK have a strong and growing bilateral trade relationship and share a strategic commitment to global trade, the free flow of capital, and investments, according to the statement.
The Southeast Asian country's share of total UK trade doubled between 2011 and 2020.
The free trade agreement covers £5.1 billion (US$7 billion) in trade and provides a platform to grow trade and investment, as well as certainty to UK and Vietnamese businesses.
Trade in goods ranging from clothing and footwear to seafood and pharmaceutical products can continue uninterrupted, as the accord secures access to staged tariff reductions between Vietnam and the UK.
"The deal locks in the 65 percent of all tariffs that have already been eliminated on Vietnam-UK trade," the joint statement reads.
"This will increase to 99 percent of tariffs after six years.
"This includes eliminating tariffs for UK exporters of machinery, mechanical appliances, and pharmaceutical products."
The preferential tariffs of the free trade pact will provide identical opportunity for Vietnam to increase exports of key products such as phones and components, garments, footwear, and fish to the UK.
Vietnam will continue to receive duty-free tariff quotas for its 14 products, including rice, with improved market access.
Trade in services can continue to flourish since Vietnam has not only opened additional sub-sectors to UK service providers, but also made commitments deeper than those outlined in the WTO – offering the UK favorable access to the Vietnamese market.
Sub-sectors that have higher commitments under the agreement include financial services, telecommunications, and education services.
Both sides are committed to a high level of protection when it comes to intellectual property rights.
The pact also maintains access to public procurement markets in Vietnam, thereby allowing UK firms more opportunity to bid for public procurement contracts.
It also serves as a stepping-stone toward the UK's membership of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which has been effective since December 30, 2018.
Vietnam supports and welcomes the UK's application for accession to the CPTPP, as it is London's priority, according to their joint statement.
"This will bring us closer to the CPTPP's vision of advancing economic integration and supporting the liberalization of trade and investment globally," the statement reads.
According to the Canadian government's estimation, the full implementation of the CPTPP will help 11 member countries including Canada, Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam create a trade bloc equivalent to 495 million consumers and 13.5 percent of global GDP.
In September, Vietnam and the UK signed a refreshed bilateral strategic partnership agreement, which will sit alongside and complement their free trade accord.
The UK said it is committed to deepening its engagement in the Indo-Pacific as an energetic and dependable partner in the growing prosperity of the region, where Vietnam is a key partner.
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