United Kingdom prepares to jump onto CPTPP benefit bandwagon

Emily Hamblin, consul general in Ho Chi Minh City and trade director for Vietnam

The UK aims to join the agreement (CPTPP), putting the nation at the centre of a network of free trade deals with dynamic economies. How could it affect the investment activities and strategies of UK enterprises here?

Pursuing potential accession to the CPTPP is a priority for the UK government and a key part of our free trade strategy. CPTPP membership would help unlock new opportunities for UK businesses, increase trade and investment, and build on the strong economic ties we already hold with CPTPP members. In 2019, each region and nation of the UK exported at least £1 billion ($1.28 billion) worth of goods to CPTPP member countries and we are keen to expand this relationship with accession to the agreement.

UK companies held nearly £98 billion ($125.27 billion) worth of investment in CPTPP countries in 2018. In 2019, we carried out over £110 billion ($140.2 billion) worth of trade with nations in this area.

We believe the CPTPP will complement the existing and new bilateral agreements that the UK is party to, or is currently negotiating, with CPTPP members. Currently, the UK and Vietnam are working closely together to transition of the EU-Vietnam Free Trade Agreement (EVFTA) that recently came into effect into a bilateral UK-Vietnam FTA by the end of this year. This will ensure trade continuity and benefits for both British and Vietnamese businesses, and UK businesses that are new to Vietnam will want to take advantage of the attractive trade conditions.

What sectors will see growing interest if the UK joins the CPTPP?

The UK was the 15th largest investor by accumulated investment in Vietnam and the 13th largest foreign investor in Vietnam in 2019. Established British investors in Vietnam include financial services companies like HSBC, Standard Chartered Bank, and Prudential; Jadines in real estate; as well as pharmaceutical companies such as AstraZeneca and GSK. It is estimated that bilateral trade in both goods and services between Vietnam and the UK amounted to £5.8 billion ($7.41 billion) in 2019. Total trade between the two has grown on average by 13 per cent a year between 2009 and 2019.

The World Economic Forum’s 2019 Global Competitiveness Index 4.0 named Vietnam as the most improved country globally. The national vision for a digital economy recently announced by the Politburo aims for the digital economy to account for 25 per cent of GDP by 2030. In pursuing this ambition, Vietnam is mindful of the challenges around developing regulations, a digital structure, and a skilled labour force.

This is where the UK can add significant value, especially by providing support on areas such as smart cities, digital in construction and healthcare, and utilising fintech to support business growth and financial inclusion.

The CPTPP removes tariffs on 95 per cent of goods traded among its members, and establishes modern rules in areas of increasing importance for UK industry and business, including digital trade, data, financial, professional, and business services.

Where is Vietnam placed among the UK’s partners in ASEAN, and how will the UK joining the CPTPP increase the attractiveness of Vietnam among British investors?

Vietnam has positioned itself as a regional leader during the COVID-19 crisis. Its impressive performance in keeping the number of cases and deaths low is not only a remarkable achievement for public health – it has also demonstrated the country’s economic resilience. The International Monetary Fund is forecasting potential growth of 2.7 per cent for Vietnam in 2020, making it the fastest-growing economy in the region outside Singapore.

Vietnam has been increasingly open to global trade. Trade almost quadrupled over the last decade and is now twice the size of the economy. The country has an extensive network of trade agreements with 13 signed FTAs including the CPTPP and the recently effective EVFTA.

This year has been a remarkable one in which we celebrate 10 years of the UK-Vietnam Strategic Partnership. We are pursuing a closer long-term trading relationship with Vietnam through our own bilateral FTA, and CPTPP membership would enhance this even further. The UK is committed to a closer strategic relationship with Vietnam and the wider region.

This is evidenced by the new UK Mission to ASEAN; our ongoing application for ASEAN Dialogue Partnership status; and the recent successful UK-ASEAN Economic Dialogue co-chaired by UK International Trade secretary Liz Truss and Chair of the ASEAN Economic Community Minister Tran Tuan Anh of Vietnam. As 2020 ASEAN chair, Vietnam has an opportunity to lead the region by championing innovative and sustainable methods of recovery from COVID-19.