UK Ambassador to Viet Nam Iain Frew - Photo: VGP/Quang Thuong

According to Iain Frew, the agreement reached with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) builds on a very strong relationship between the UK and Viet Nam and places at the heart of that strong relationship.

The trading relationship has gone from strength to strength over recent years. Trade volumes between the UK and Viet Nam doubled between 2013 and last year, from £3 billion to £6 billion per year and that has been supported by the free trade agreements.

"As the UK joins the CPTPP, we are going to see some real benefits to our bilateral trade in areas where the CPTPP agreement goes further than the UKVFTA in areas of agriculture and digital trade which are areas where we want to see further growth", he shared.

The diplomat said, there is a real benefit to the UK joining this group which will now represent 15 percent of the global GDP. This is a block with strategic importance. The development of the CPTPP with the UK joining, it becomes interesting not just from an economic and trade perspective but also from a political and strategic perspective.

"We are looking forward to the UK and Vietnamese businesses really taking advantage of the new deal and our value chain in the region which links in both the UK and Viet Nam", he told.

FTAs open up important export markets

Regarding opportunities that the bilateral and multilateral free trade agreements (FTAs) have brought for Viet Nam, Iain Frew said, looking at Viet Nam's network of trade agreements and the development of the nation over the past two decades, these things are linked directly together.

Viet Nam has grown more prosperous as the country has grown more open and traded more with the world. The nation has a network of 16 existing trade agreements and more under negotiations that has led to huge investment into Viet Nam's economy. Trade becomes a very important part of the economy, accounting for almost 200 percent of the nation's GDP, which globally is a very high number.

Viet Nam is clearly an attractive destination for investors thanks to its network of trade agreements and predictable and solid conditions.

At the same time, these agreements have opened up important export markets for Viet Nam's manufacturers and agricultural products to penetrate into the UK, the EU, the U.S. and other markets. So there are huge benefits to Viet Nam's economy.

Particularly in the case of the UK, the benefits of the free trade agreement are building up over time. The UK-Viet Nam Free Trade Agreement (UKVFTA) came into force in 2021. Over the past few years, tariffs and non-tariff barriers liberalised.

"At present, we have a tariff free trade on 62 percent of our trade and over the next 4-6 years, that will become 99 percent. It will become almost entirely liberalized", he noted.

Vietnamese and British consumers will access a wider range of higher quality and cheaper goods and services while the two nations' businesses will become increasingly integrated as they participate in value chains together. It is clearly to see particular sectors of the economy that have benefited from that so far. There is huge potential to build on that further.

Exploiting benefits of FTAs to maximum

The Ambassador said, the UKVFTA has now been in place for three years and in that time a regular rhythm of dialogues were organized between the UK and Vietnamese authorities around how the free trade agreement is functioning, how to make it better and how to exploit the benefits to the maximum.

In those discussions, both sides do identify barriers and obstacles and together work to overcome. A really good example for UK businesses is in the agriculture sector. UK businesses have been able to benefit from getting export health certificates for pork and poultry products from the UK to provide these products to Vietnamese consumers and the traders are right now taking advantage of the first opportunities to do that.

The pharmaceutical sector is a very important sector for the UK economy. Viet Nam is developing its pharmaceutical sector rapidly and UK companies are part of that. The legislative and institutional base is one that continues to develop here. The UK is working closely with the Vietnamese government and the National Assembly in doing so.

Another very important area for the future is energy and renewable energy, noted the diplomat, adding that is an area both sides are looking to have more trade and more investment based on a predictable and effective regulatory framework.

To make the most of the opportunities and advantages brought by FTAs as well as promote the early signing of FTAs under negotiation, Iain Frew said, it is necessary to make sure that both Viet Nam and the countries that Viet Nam is partnering with are taking full advantage of those FTAs.

"So communication is the first key. We need to make sure that companies understand what the benefits and opportunities opened up by an FTA are", he emphasized.

Companies should work with the Ministry of Industry and Trade and the Viet Nam Chamber of Commerce and Industry (VCCI) to understand exactly the details of FTAs and how they can take advantage, the Ambassador suggested.

"Under the UKVFTA, we have recently conducted a study to look at FTA utilisation, where the benefits are being used and where companies are not yet taking advantage. If we continue to make these efforts, we will be able make the most of FTAs in the future and develop the next phases and the next stages of our cooperation through trade agreements", shared the diplomat.

Working together for sustainability, low carbon future

Regarding the British government's support for Ho Chi Minh City to become the financial and business center of the region, Iain Frew shared, this is a really exciting project to help Ho Chi Minh City develop an international financial centre. Now the UK, particularly with London, has a world-class international financial centre.

It is part of the partnership that the UK has with Viet Nam to help to share some of that experience, building on the initiative from the government, from the parties central economic commission and from the National Assembly, all of whom have expressed a strong interest in this project.

The British Government has worked with an organisation called the TheCityUK that brings together real expertise at the UK's financial and professional services sector.

They have produced two phases of a report which sets out options and ideas around how Viet Nam and Ho Chi Minh City, in particular, could build on its existing framework and develop an attractive environment for international financial centre.

It is important for Viet Nam's own economy. The financing of the next stages of development is going to require more capital channeled in effective ways and the financial centre can really help with that, underlined the diplomat.

"It is also important because the financial and professional services sector is part of the next phase of Viet Nam's own development as it moves up the scale from middle income to a higher income country by 2045. We are excited to work together with the city and with the government to develop the idea and to support the next phase", told Iain Frew.

In term of the bilateral cooperation on green, fair and sustainable trade liberalization in the coming time, Iain Frew said, under the UKVFTA, both sides have a trade and sustainable development committee which looks at and ensures that all of the elements of the trading relationship meet high sustainability standards. Both nations are working together for green growth and the free trade agreement has a lot of potential to support that.

"We have seen a golden thread going from the COP26 summit which took place in the UK in 2021. At the event, the Vietnamese government committed to net-zero emissions by 2050 the same objective that the UK has", he said.

Both countries are now working to achieve that and one of the really key initiatives to do that is the Just Energy Transition Partnership worth of US$15.5 billion of capital investment.

Importantly, the UK also supports technical assistance and reform and ensure the right regulatory framework so that Viet Nam can take advantage of its enormous potential for renewable energy.

"With the 3,200 kilometers of coastline, it is the incredible potential for both offshore wind and solar power which the Vietnamese government has set out huge ambitions for. Working together, we are going to achieve some really important things for sustainability and for a low carbon future", highlighted the diplomat.