Free Trade Agreements or FTAs are designed to reduce or eliminate certain barriers to trade and investment, and to facilitate stronger trade and commercial ties between participating countries. Ian Tandy, Managing Director of Global Trade and Receivables Finance at HSBC UK, talks us through the recent FTA between the UK and Vietnam to help show what businesses stand to gain from agreements like these.
“To trade optimally overseas, businesses need to operate with as little friction as possible,” he points out. “That means reducing as many barriers to trade as you can – both tariff and non-tariff. If we look at the FTA between the UK and Vietnam in more detail, we can see how the terms negotiated achieve that.
“Vietnam is a dynamic and growing economy, strategically significant within the ASEAN region and part of the CPTPP or Comprehensive and Progressive Agreement for Trans-Pacific Partnership (a free trade agreement between 11 countries around the Pacific Rim.: Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam), which the UK has applied to join.
“Vietnam has a large consumer market, young and increasingly middle-class demographic, and an increasingly liberal economy. Existing trade between the UK and Vietnam doubled between 2011 and 2020 and the new UK Vietnam FTA (UKVFTA) not only provides those businesses with certainty but presents opportunities for other firms considering trading with or investing in the region.”