The Department of Industry and Trade said the UK would recognize Vietnam’s market economy manufacturing industries as part of the UK’s accession to the Comprehensive and Progressive Trans-Pacific Partnership Agreement (CPTPP).

On this basis, the UK will not apply prejudicial rules to goods imported from Vietnam when investigating trade remedy cases.

Market economy is a concept used by some countries when conducting investigations into trade measures against goods imported from other countries.

The identification of a country with a market economy is often based on an assessment of the extent of government intervention in business decisions by firms, as well as the extent of government control and intervention in factors of production such as capital and labour.

A country with too much government intervention may not be considered a market economy.

According to the Department of Trade Defenses (Ministry of Industry and Trade), if the exporting country of the goods is not considered a market economy country, the importing country will use representative information from companies in an alternative third country, which is considered a market economy country, to calculate the dumping margin instead of using cost and price information from the producing and exporting companies themselves.

As a result, the dumping margin is often estimated to be higher, resulting in a significantly higher trade defense tax compared to countries considered to be market economies.

Even in some cases, the trade protection tax rate can be as high as 100% for companies from non-market economy countries.

So far, Vietnam has been recognized as a market economy in various forms by 71 countries and territories, including many important trading partners.

Recognition as a market economy creates conditions for fairer treatment of export goods, better conditions for market penetration and expansion, and more stable production and business activities. A stable and transparent environment will attract investment capital and contribute to economic development.

On July 16, 2023, the UK formally signed an agreement to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

With the signing of the Accession Agreement, the UK officially became a member of a modern and ambitious trading bloc that includes 12 economies in Asia, the Pacific and now Europe.

UK Chamber of Commerce in Vietnam Chairman Chris Jeffery said the existing UK-Vietnam Free Trade Agreement (UKVFTA) and now joining the CPTPP opens up even more business opportunities for both Vietnam and the UK. The opportunities for British companies in Vietnam are among the best in the trading world right now.

“Bilateral trade will continue to grow rapidly, marking the beginning of the next 50 years of partnership and growing ties between the two countries,” said Chris Jeffery, adding that British companies now have ample opportunities to take full advantage of the UK’s focus on developing relationships and connections with Asia.