The UK’s departure from the European Union, also known as the Brexit event, has attracted the attention of world public opinion since 2016 and has become hotter in recent times. Because this issue has not only shocked the whole UK, but also affected the economies of many countries around the world, including Vietnam. However, the emergence of Brexit after the Covid-19 pandemic has brought both opportunities and challenges for Vietnam’s textile and garment industry.
1. Challenges that Brexit directly affects Vietnam’s textile and garment industry:
- According to the commitment, after 6 years UKVFTA comes into effect, the UK will eliminate import tax on 99.2% of tariff lines, equivalent to 99.7% of Vietnam’s export turnover. When the UK leaves the EU, the EU’s tariff policy may be adjusted, affecting the EU-Vietnam Trade Agreement (EVFTA). Besides, the trade relations of Vietnam – UK in the textile and garment market will be affected because the UK’s trade and tariff policies will change after Brexit.
- It can be assessed, after signing a Free Trade Agreement with the EU. The products of the textile industry directly benefit the general market of the country. The export turnover of textile and garment products will be affected because the EU is a very important market for Vietnam, which is experiencing great changes in size and stability.
- For many years, the UK has become the second largest market in Europe (after Germany) for Vietnamese exports. The Vietnam-UK trade relationship develops in a beneficial direction for many Vietnamese products, which is reflected in the trade surplus of nearly 5 billion USD/year. After the UK withdraws from the EU, it will directly affect the revenue of the whole industry, especially the Vietnamese textile and garment industry.
2. Brexit brings opportunities for Vietnam’s textile and garment industry:
Opportunities and challenges of the textile industry in the future after Brexit
- The main benefit for Vietnam’s textile and garment industry is that goods between the EU and UK will not be subject to import tax. However, such goods must be circulated within the UK or EU member states (including Vietnam). Accordingly, if the fabric or yarn is produced in the UK or an EU member state according to one of the production processes specified in the agreement, the textile product will be subject to a duty-free provision (see details at page 446 of the agreement).
- For certain products, weaving is combined with dyeing; yarn dyeing combined with weaving; textiles associated with printing may be subject to an agreed-upon exemption from trade and origin duties.
- Other provisions relating to voluntary, compulsory assistance and linkage controls are also included in the section on customs, including anti-counterfeiting (see pages 1 to 126). This is especially important for the UK (with the exception of Northern Ireland under a special protocol) which has now left the EU.
- The agreement establishes communication systems between the UK and the European Police Agency (Europol) and the European Justice Service (Eurojust), helping companies fight piracy and counterfeiting. In addition, the agreement also contains provisions on digital commerce, requiring the two sides to commit to protecting consumers (who make e-commerce purchases) from fraud and fraudulent acts. commercial island.
- In the end, this is unlikely to be the final deal between the UK and the EU on trade rules for fabrics. A powerful Partnership Council will be set up to enforce the deal and change it, with the UK and EU having veto power over such amendments.
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