Great Britain’s exit from the European Union (EU) will not immediately affect trade relations between Viet Nam and Britain, an official from the Central Institute for Economic Management (CIEM) said.
Dr. Tran Toan Thang, deputy director of Business Environment and Competitiveness Department of CIEM, however, told Viet Nam News on June 24 after Britain voted to leave the EU, “The pound devaluation would make Vietnamese goods more expensive in the United Kingdom (UK) market, therefore, Viet Nam’s export to UK might be affected in the long-term.” The pound fell more than 10 per cent against the dollar to levels last seen in 1985, its biggest one-day fall in history.
In 2015, the bilateral trade of the two countries reached US$5.4 billion. Of the total two-way trade, Viet Nam exports $4.876 billion worth of goods, producing a huge surplus for the country.
According to Thang, Viet Nam’s exports to the UK account for only 10 per cent to 12 per cent of the total export volume to the EU with key products including garments, footwear and seafood. Meanwhile, the UK’s exports to Viet Nam include machine components and pharmacy products.
“A direct impact on the Vietnamese economy would not be substantial because of the minimal trade volume, but Brexit could bring down the country’s expectations in the UK market, especially in key export products,” Thang said.
He explained that the benefits from the conclusion of negotiations on the Viet Nam – EU Free Trade Agreement (EVFTA) would now exclude the UK.
“But Viet Nam could sign a bilateral free trade agreement with the UK based on the existing negotiations,” Thang said.
Besides, he said, it is very important to closely watch the European Central Bank’s move to see whether it adjusts the euro exchange rate.
“So, the exact impact from Brexit on Viet Nam’s trade and economy cannot be determined right now,” Thang said.