UK deems Vietnam a market economy

July 25, 2023 | 15:30

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The United Kingdom will consider Vietnam as operating under market economy principles following the UK's accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Accordingly, the UK will not apply adverse regulations to products imported from Vietnam when investigating trade remedy cases. This means the export of Vietnamese goods to the UK will be treated more fairly and penetrate more deeply into the UK market.

Once such recognition is forthcoming, it will boost investment and trade activities between Vietnam and the UK, thereby contributing to economic development.

Vietnam was the UK’s 40^th largest trading partner in 2022, accounting for 0.4 per cent of total UK trade. Total trade in goods and services (exports plus imports) between the UK and Vietnam was £6.9 billion ($8.86 billion), an increase of 29.1 per cent or £1.6 billion ($2 billion) at the end of 2021.

Kenneth Atkinson, chairman of the British Chamber of Commerce Vietnam, is expecting continued growth in bilateral trade relationship and investments and the UK will continue with the UK's accession to CPTPP, which will be another major boost to UK-Vietnam trade. This will likely lead to high level bilateral visits both to Vietnam and the UK.

“I expect to see continued visits by trade missions looking at sectors favoured by UK companies like energy, smart cities, education, healthcare, pharma, and fintech,” Atkinson said. “We expect a particularly exciting time for growth in renewable energy and sustainability linked trade too, following the agreement of the Just Energy Transition Partnership with Vietnam.”

Currently, 71 countries and territories have recognised Vietnam in various forms as a market economy.

UK investors confident in Vietnam’s GMT response

Many British investors in Vietnam are large multinational corporations, who view the country as an emerging market or an increasingly promising place for future investment. That said, Vietnam will find many of them to be in the scope of the global minimum tax (GMT) regime and Pillar 2 by the Organisation for Economic Co-operation and Development (OECD).

UK formally inks deal to join CPTPP

The United Kingdom formally signed a treaty to accede to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) trade group in New Zealand on July 16, kickstarting its membership of a modern and ambitious trade deal spanning 12 economies across Asia, the Pacific, and now Europe.