National Assembly ratifies UK’s CPTPP accession

June 29, 2024 - 07:16
With CPTPP and UKVFTA, Việt Nam’s goods, especially those of export strength such as agro-forestry-fishery, garment and textile, footwear and electronics, will have more access to the UK – a market with high consumption demand and spending levels.
Containers loaded at Gemalink International Port in Bà Rịa Vũng Tàu Province. The UK's accession to the CPTPP will further expand markets for Việt Nam. VNA/VNS Photo Hồng Đạt

The National Assembly’s ratification of the UK’s accession protocol to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will open significant opportunities to expand exports as well as create momentum to accelerate economic growth and leverage Việt Nam’s position in the international arena.

The National Assembly (NA) at its session on June 25 ratified the UK’s accession protocol with 94.25 per cent of votes in favour.

The ratification makes Việt Nam among the first six CPTPP member countries to approve the UK’s accession protocol, opening the door for the agreement to enter into force from December 16. The agreement will take effect if six out of 11 existing CPTPP members and the UK have finished their legislative processes by October 16.

Besides Việt Nam, Singapore, Japan and Chile have completed their legislative processes for the ratification of the UK’s accession protocol. Other countries such as New Zealand, Brunei, Malaysia and Peru are expected to finish the ratification in the next few months.

"Ratifying the UK’s accession protocol emphasises Việt Nam’s proactivity and responsibility in accelerating bilateral trade and investment relations with the UK, accelerating Việt Nam’s position in the regional and international arenas, creating new momentum for the country’s socioeconomic development, improving the legal system and enhancing the competitiveness of enterprises," Vũ Hải Hà, chairman of the National Assembly’s Foreign Affairs Committee, said.

The UK had committed to a higher level of market opening for Việt Nam than for other countries in the CPTPP and higher than the commitments under the UK-Vietnam Free Trade Agreement (UKVFTA) for some important issues, Hà said.

According to Iain Frew, UK ambassador to Việt Nam, the coexistence of the CPTPP and the UKVFTA will bring significant benefits to bilateral trade between the two countries in a number of fields, especially agricultural products and digital technologies.

Ngô Chung Khanh, deputy director general of the Multilateral Trade Policy Department under the Ministry of Industry and Trade, said: “The UK is an important partner of Việt Nam. Thus, their accession to the CPTPP will expand markets for Việt Nam.”

During the negotiations, Việt Nam achieved agreements with the UK in the direction that the UK would open more market access for Việt Nam in addition to existing bilateral free trade agreements, he said.

“Several large economies are interested in joining the CPTPP, such as China, showing the growing important role of the trade deal that will definitely create new impetus for trade and investment,” Khanh said.

Nguyễn Quang Vinh, vice president of the Việt Nam Chamber of Commerce and Industry (VCCI), said that the VCCI and the business community welcomed and appreciated the NA’s ratification of the UK’s CPTPP accession protocol with the expectation that the CPTPP coupled with the UKVFTA would promote trade and investment.

With CPTPP and UKVFTA, Việt Nam’s goods, especially those of export strength such as agro-forestry-fishery, garment and textile, footwear and electronics, would have more access to the UK – a market with high consumption demand and spending levels.

With regard to the commitment to recognise Việt Nam’s manufacturing industries operating under market economic conditions, Vinh said that the risk of facing trade defence lawsuits in the UK would be significantly less complicated.

Being the first country in the EU and one of the few developed markets in the world to recognise Việt Nam as a market economy in trade remedy cases, the UK could set a good example for Việt Nam to convince other markets to recognise Việt Nam’s market economy as well, especially the US, Vinh said.

Vietnamese consumers and manufacturing industries would also have greater opportunities to access high-quality products from the UK at better prices such as pharmaceuticals, machinery and equipment and raw materials to have better position for competition in production and export, he noted.

Export opportunities

Bilateral trade between Việt Nam and the UK has grown stably over recent years with an average trade value of US$6.56 billion in 2020-23.

Việt Nam’s main export products to the UK include textiles, footwear, electronics and components, and agricultural products including coffee, cashew nuts and seafood. Việt Nam mainly imports machinery, equipment, tools, pharmaceuticals and chemicals from the UK.

SIGNED AND SEALED: The UK business and trade secretary Kemi Badenoch (left), signs the accession protocol for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership in Auckland, New Zealand on July 16, 2023. RNZ/VNA Photo

The UK is among the top five largest import markets in the world with an annual export value of around $1.14 trillion. This coupled with attractive commitments under the CPTPP and UKVFTA will create significant opportunities for Việt Nam’s goods to expand in this large market.

The bilateral trade and investment between Việt Nam and the UK is expected to thrive in the future, according to the Ministry of Industry and Trade.

Under the CPTPP, the UK has committed higher levels of market opening for Việt Nam than with other member countries.

Specifically, the UK commits to removing 94.4 per cent of tariff lines after the agreement enters into force in comparison with the rate of 93.9 per cent for other CPTPP member countries.

Most agricultural products of Việt Nam’s export strength such as rice and seafood will enjoy better tariff incentives than under the UKVFTA.

"The UK will increase the rice quota from 3,300 tonnes in the first year for Việt Nam to 17,500 tonnes in eight years, nearly doubling the quotas that the UK commits for other CPTPP members altogether," Minister of Industry and Trade Nguyễn Hồng Diên said.

Diên also said that the UK’s recognition of Viêt Nam’s market economy for manufacturing industries would create stronger conditions for Việt Nam in trade defence lawsuits, adding that Vietnamese goods would be treated fairly.

According to Khanh, there will be great advantages for Việt Nam’s seafood industry in the UK markets when the agreement comes into force.

Statistics of the Việt Nam Association of Seafood Exporters and Producers showed that seafood exports to the CPTPP markets accounted for 25 per cent of Việt Nam’s total seafood export value in 2018 but rose to nearly 27 per cent in 2023, making these markets the second-fastest growing market, coming only after China.

There are also significant opportunities for other industries to access the UK as well as the CPTPP markets.

Phạm Công Thảo, deputy director general of Việt Nam Steel Corporation, said the UK’s accession to the CPTPP opened opportunities for the steel industry to increase exports because before Brexit, the UK was also a member of the EU with similar standards of product quality.

On July 16, 2023, CPTPP parties signed an accession protocol with the UK, welcoming them as the 12th member and paving the way for the entry of other new members. The UK’s entry will raise the block’s GDP to nearly 16 per cent of the global total from 12 per cent.

The CPTPP is a free trade agreement in force between 11 countries, including Canada, Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Việt Nam.

The trade deal came into being on December 30, 2018, with the first six countries to ratify the agreement being Canada, Australia, Japan, Mexico, New Zealand, and Singapore. The trade deal took effect in Việt Nam on January 1, 2019.

Besides the UK, several other economies have officially submitted requests to join the CPTPP, including China and Chinese Taipei in September 2021, Ecuador in January 2022, Costa Rica in August 2022, Uruguay in December 2022 and Ukraine in May 2023.

Statistics of the General Department of Customs showed that the bilateral trade between Việt Nam and the UK was estimated at US$3.3 billion in the first five months of this year, up 23.2 per cent. Of the figure, Việt Nam’s exports to the UK reached nearly $3 billion, up 26.6 per cent.

The UK is currently the third-largest export market of Việt Nam in Europe, after the Netherlands, which saw a bilateral trade revenue of nearly $5 billion, and Germany $3.2 billion.

The UK and Việt Nam are moving towards annual bilateral trade of $10 billion. VNS