Profound CPTPP impacts on UK-Vietnam partnership

The United Kingdom’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) marks a pivotal milestone in global trade, presenting new opportunities for strengthening economic relations between Vietnam and the UK. As both nations are now part of this high-standard trade pact, the impacts on trade and investment are poised to be significant, fostering deeper ties and mutual benefits. The UK’s membership in the CPTPP complements the existing UK-Vietnam Free Trade Agreement, providing an expanded framework for trade liberalisation.

There will be numerous positive impacts on bilateral trade and investment ties, and the first is further reduction of tariffs. CPTPP membership ensures additional tariff reductions on a wide range of goods, enhancing competitiveness for Vietnamese and UK exports.

Vietnam’s agricultural products, such as coffee, seafood, and tropical fruits, are set to gain better market access in the UK, while British products like machinery, pharmaceuticals, and alcoholic beverages could enjoy lower tariffs in Vietnam. After the UK joins the deal, all the member states will contribute 15 per cent of global GDP, equal to $15.2 trillion. Another notable point is that together along with joining the agreement, the UK has recognised Vietnam as a market economy. This will make it more favourable for Vietnam to avoid trade barriers, especially anti-dumping investigations.

At the same time, Vietnam’s exports will not suffer from discrimination, and will be subject to more reasonable anti-dumping tax rates.

Under the CPTPP, tariff rates for UK imports have already dropped. Tariff rates on pork have dropped from 22-25 to 8.1 per cent, while tariffs on seafood have largely disappeared. Long-term advantages will continue to develop. Vietnam is expected to benefit from increased exports of agricultural and seafood products, while the UK should see a boost to meat exports. The second aspect is diverse market opportunities. The agreement expands the scope of trade for both nations by facilitating greater participation in regional supply chains. Vietnamese businesses could source advanced technologies and high-quality inputs from the UK, while UK companies could leverage Vietnam’s growing manufacturing base to access broader Asian markets.

The next factor is boosting investment flows. The comprehensive investment rules create a more secure and predictable environment for investors, encouraging bilateral investment between Vietnam and the UK.

It is forecast that the agreement will help increase UK investment in Vietnam. Vietnam’s participation in the CPTPP and its commitment to reforms make it an attractive destination for UK investors. Sectors like renewable energy, healthcare, and infrastructure are likely to benefit, aligning with Vietnam’s development priorities and the UK’s expertise.

Vietnam, on the other hand, is undergoing rapid and transformative development, particularly in its infrastructure sector. From urban planning and transportation systems to energy and telecommunications, the demand for professional services is growing exponentially as the country advances its modernisation agenda. This creates significant opportunities for collaboration, where the UK’s expertise in delivering complex services can contribute to Vietnam’s ambitious projects.

It will also help boost Vietnamese investment in the UK market. The deal offers Vietnamese businesses an avenue to explore investment opportunities in the UK, particularly in industries such as technology, food processing, and real estate. The UK’s strategic position as a gateway to Europe adds further appeal.

Moreover, the CPTPP will also help advance standards and regulatory alignment. CPTPP membership enforces high standards in areas such as intellectual property, environmental protection, and labour rights. These standards encourage greater regulatory alignment between both countries, reducing trade barriers and fostering a fairer business environment.

When it comes to improvement of transparency, with both countries adhering to the CPTPP’s transparency requirements, businesses can expect more consistent and predictable regulations, reducing risks for exporters and investors. Vietnam’s ongoing reforms under the agreement provide opportunities for collaboration with the UK in capacity building and sharing best practices, particularly in sustainable development and governance.

However, despite the potential benefits, businesses in both nations must navigate certain challenges. Firstly, the CPTPP’s rules of origin require exporters to carefully document the origin of their products to qualify for preferential tariffs, which may involve additional costs for compliance. Secondly, the agreement will create increased competition. While lower tariffs benefit exporters, they also introduce stiffer competition from other CPTPP members. Businesses in Vietnam and the UK must innovate and adapt to maintain competitiveness. The UK’s membership is set to deepen trade and investment ties with Vietnam, enhancing market access, fostering innovation, and boosting economic growth. Both nations have much to gain by leveraging this partnership to its fullest. By addressing challenges and capitalising on opportunities, Vietnam and the UK can chart a prosperous path forward in a rapidly evolving global landscape.

The United Kingdom has secured the sixth and final ratification required to trigger its accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) before the end of this year.

The United Kingdom joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) as a fully-fledged member on December 15, potentially boosting the UK economy by £2 billion ($2.53 billion) a year.

Already fuelled by a bilateral free trade deal, trade and investment between Vietnam and the United Kingdom will be expanded following the Comprehensive and Progressive Agreement for Trans-Pacific Partnership’s entry into force with Britain.