The Ministry of Industry and Trade yesterday held a seminar to assess the development of trade relations between Vietnam and the UK after more than 3 years of implementing the Vietnam - UK Free Trade Agreement (UKVFTA).
During the seminar, experts have noted that following the implementation of the Vietnam-UK Free Trade Agreement for three years, it has been observed by experts that the UK market is increasingly prioritizing high-value goods with strong environmental credentials. This presents a compelling opportunity for Vietnamese enterprises, despite the potential for initial investment, to capitalize on this trend by adopting green and sustainable production methods.
During the seminar, Head Nguyen Son Tra of the WTO and FTAs Department and Multilateral Trade Policy Department under the Ministry of Industry and Trade highlighted that the UKVFTA has established a strong basis for trade growth between the two nations.
The tariff commitments outlined in this agreement have bolstered growth in Vietnam's goods exports, establishing the UK as Vietnam's third largest European export market.
The high growth rate of export turnover between the two countries over the years highlights the significant effectiveness of the UKVFTA for Vietnamese businesses.
Head Nguyen Son Tra also said that the UKVFTA is not only a modern FTA, but also includes commitments on sustainable development through regulations on labor, environment and green development. It is the coverage of these commitments that has created new opportunities for Vietnamese enterprises when entering the UK market.
Former Counselor of the Vietnamese Trade Office in the UK Nguyen Canh Cuong noted that trade and sustainable development are essential components of modern free trade agreements. He said that the requirements for green products, low emissions and clean production are becoming increasingly important for businesses wishing to export to the UK market.
He added that despite potential increased costs from shifting production models, businesses that excel in green products can seize a valuable opportunity, as the UK market consistently values these items with premium pricing.
According to the Coordinator of the Vietnam Green Growth and Global Climate Change Program Le Huy Huan, green trade policy is not only a trend but also a decisive factor in the global economy.
He highlighted Vietnam's proactive approach in creating strategies to help businesses meet international green product standards.
Vietnam can effectively prepare for this transition by implementing strategies like green growth, carbon markets, and circular economy regulations.
During the discussion experts highlighted that while adopting a green production model might lead to immediate cost pressures, it is essential for Vietnamese businesses’ long-term competitiveness in the global supply chain. Furthermore, they said that Vietnamese businesses should recognize the importance of sustainable development and swiftly adjust to tap into export opportunities, particularly in the UK market.
Mr. Nguyen Canh Cuong added that the UK market is increasingly showing a trend of sustainable consumption, becoming one of the important factors that the government, businesses, consumers and communities in the UK value. In the UK, consumers and distributors have become more sensitive to factors related to sustainable development such as environmental protection and ensuring a transparent supply chain.
Consumers are increasingly opting for high value-added products like organic food, sustainable fashion, and recycled packaging, even if these products come with a higher price tag.
Mr. Cuong noted that the UK's interest in sustainable products is evident in its high import standards. This is a crucial consideration for Vietnamese businesses aiming to export to the UK. When he spent his time in London, he observed that the UK market demands products that adhere to stringent standards on food safety, plant quarantine, and especially climate change regulations.
He also underscored that these regulations have been integrated into the foundation of UK trade policy, consequently exerting a direct influence on the capacity of products originating from overseas, including those manufactured in Vietnam, to gain market entry.
Mr. Cuong further noted that while numerous enterprises encounter challenges due to stringent green standards and clean production technologies, innovative companies will generate positive spillover effects, facilitating the collective growth of other businesses. Companies at the forefront of adopting green technology can enhance the value of their products, thereby fostering trust in Vietnamese goods among British businesses and consumers.
According to him, production costs may increase, but selling prices can be up to 20 percent higher than the average price. This proves that sustainable development can bring high profits and help businesses maintain competitiveness in the long term.
The former Counselor of the Vietnamese Trade Office in the UK highlighted three crucial considerations for Vietnamese enterprises seeking to penetrate the UK market. Firstly, establishing a green brand is essential for gaining access to this market. Acquiring international certifications for environmentally friendly products will enhance competitiveness, as domestic certifications hold limited value outside Vietnam.
Secondly, companies must invest in green technology. While this presents significant challenges, it is an essential trend in the current landscape.
Lastly, businesses should have a comprehensive understanding of British consumer preferences, allowing them to adapt their products and marketing strategies accordingly. This includes providing transparent and detailed product information on online platforms to foster trust with British partners and consumers.
