The Vietnam - UK Free Trade Agreement (UKVFTA) was officially completed on December 11, 2020 and signed on December 29, 2020. The Agreement was negotiated based on the principle of inheriting commitments in the EU-Vietnam Free Trade Agreement (EVFTA) with the necessary adjustments to ensure compliance with the bilateral trade framework between Vietnam and UK.

Accordingly, the Agreement includes 9 articles; 01 Annex amending some of the EVFTA text; 01 Protocol and 01 bilateral letter exchanged between Vietnam and UK. Basically, the contents of the UKVFTA are similar to that of the EVFTA, including: trade in goods (including general regulations and market access commitments), rules of origin, customs and trade facilitation, Sanitary and Phytosanitary measures (SPS), technical barriers to trade (TBT), trade in services (including general regulations and market access commitments), investment, trade remedies, competition, SOE, government procurement, intellectual property, trade and sustainable development, cooperation and capacity building, and legal and processing.

The Agreement comes into effect on December 31, 2020.

The deal locks in the 65% of all tariffs that have been eliminated since the EU-Vietnam FTA entered into force. This will increase to 99% of tariffs after a schedule of between 6-9 years. This secures import tariff elimination for products such as clothing, fabric and footwear – meaning customers and businesses may benefit from lower prices on these products. Tariffs will be reduced per a schedule that stipulates equal annual reductions from entry into force of the agreement.

With such commitments, the UK exporters to Vietnam and the UK importers from Vietnam stand to benefit. Specifically:

• For goods exported by UK exporters to Vietnam:
  • 48.5% of tariffs lines were eliminated on 01 January 2021;
  • 91.8% of tariff lines will be eliminated by 01 January 2027;
  • 98.3% of tariff lines will be eliminated 01 January 2029;
  • 1.7% of tariff lines are partially liberalised through tariff rate quotas (the quota volumes are consistent with Vietnam’s WTO commitments and duties within quotas will be removed by 2031) or not entitled to preferential treatment
• For goods imported by the UK importers from Vietnam:
  • 85.6% of tariff lines were eliminated on 01 January 2021;
  • 99.2% of tariff lines will be eliminated by 01 January 2027;
  • 0.8% of tariff lines are partially liberalised through tariff rate quotas (with preferential tariffs for inquota products of 0%)

UK-Vietnam Free Trade Agreement (UKVFTA)

Content of the Agreement

Annex Modifying the Incorporation of the EVFTA into This Agreement

Appendix I: Bilateral Letter

Protocol I: The definition of the concept of "originating products" and methods for administrative cooperation

Annex I to Protocol I: Introductory notes to Annex II (List of Required working or processing)

Annex II to Protocol I: List of Required working or processing

Annex III to Protocol I: Materials referred to in Paragraph 6 of Article 3 (Cumulation of Origin)

Annex IV to Protocol I: Products referred to in Paragraph 6 of Article 3 (Cumulation of Origin)

Annex V to Protocol I: Products referred to in Paragraph 11 of Article 3 (Cumulation of Origin)

Annex VI to Protocol I: Text of the Origin Declaration

Annex VII to Protocol I: Specimens of a Certificate of Origin and of an Application for a certificate of Origin

Annex VIII to Protocol I: Explanatory Notes

Joint Declaration concerning a trilateral approach to Rules of Origin

Explanatory note on how the United Kingdom interprets references in incorporated trade agreements to European Union Law

Explanatory note on Mutatis Mutandis

In addition to import tax, the UK offers Vietnam a preferential tariff quota (TRQ) for a number of items with an import tax rate of 0%, specificly:

Regulations on Rules of Origin in UKVFTA similar to EVFTA.

Goods exported from Vietnam under the Agreement

UKVFTA regulations also use C/O form EUR. Under this agreement or the Circular 02/2021/TT-BCT.

For the accumulation: both parties commit to extend the accumulation scheme allows goods of both parties are used originating materials from EU member states (as well as Andorra and San Marino) to produce the final product export to the other country and enjoy preferential tax rates of the UKVFTA Agreement. Both parties agreed to conduct a review of the mechanism in the third year since the Agreement entered into force.

Self-certification of origin:

• Self-certification document in accordance with regulations issued by a certified exporter under UK regulations after the UK has informed Vietnam of the certification mechanism for goods issued for consignments of any value,
• or any consignments not exceeding 6,000 EUR issued by any exporter.

Commitments on services and investment provide a stable, predictable, and liberal framework for trade in services.

Vietnam has committed to higher standards of treatment for UK service suppliers and investors under the UKVFTA than those currently applied for other foreign service providers and investors under its WTO commitments.

Without any WTO binding commiment, Vietnam has unilaterally opened most non-service sectors to foreign investors, but Vietnam can change such policies at anytime. Under the UKVFTA commitments, Vietnam is to open definitely many non-service sectors to UK investors without any restrictions on the share of capital, size, or types of activity.

In the UKVFTA, Vietnam commits to opening its public procurement market to the UK, allowing UK suppliers access to procurement at the highest level and in Vietnam’s two largest cities, Hanoi and Ho Chi Minh city.

UK suppliers are covered by the UKVFTA’s rules when bidding for tenders above the threshold values laid out in the agreement, and where those tenders are advertised by covered procuring entities. The UKVFTA will gradually increase access to Vietnam’s procurement market for UK suppliers. Vietnam commits to allowing UK suppliers a wide range of goods procurements (with exceptions for sensitive goods) and a selection of services procurements, including accounting, market research, and taxation services.

The commitments in the UKVFTA include standards of protection for intellectual property rights, and strengthened enforcement measures.

UK IP businesses owners to enjoy higher protection standards than those committed under WTO:

• Vietnam will join and ensure the standards for protection of copyright and related rights agreed under the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT) before 1 August 2023.
• A public electronic database system listing trademark applications and registered trademarks will be available in Vietnam.
• Well-known trademarks of the UK are protected according to more appropriate and favourable standards.
• In the area of industrial design, protection is afforded to not only the overall design of finished products, but also the design of visible components/parts of the products.
• Vietnam has committed in the UKVFTA to the automatic protection of some geographical indications of the UK and Northern Ireland, including Scotland Farmed Salmon, Scotch Whisky, Irish Cream, and Irish Whiskey ‘Uisce Beatha Eireannach.’

UK IP owners have access to a series of versatile and robust tools to boost protection of their IP rights in Vietnam:

• IP owners can request that Vietnamese Courts apply temporary urgent measures in order to promptly prevent infringement at any time. They may also request the defendant provide banking transactions, financial or commercial documents under their control. Courts may further request any entities provide information related to the infringement, means of production, or distribution of infringed goods or services.
• Customs authorities must actively participate in preventing IP infringement and must cooperate with IP owners to enforce IP rights.
• Proportional monetary compensation measures may be provided to replace other sanctions if infringement is due to negligence.