While Washington may have become inward looking, the UK has been taking some important steps in Asia.
The UK is on a relationship advancing spree in Asia, first with a Free Trade Agreement (FTA) with Japan, followed by one with Vietnam. On December 11, 2020, Vietnam’s Minister of Industry and Trade Tran Tuan Anh and UK Minister of International Trade Elizabeth Truss officially signed an Agreement after the conclusion of the UK-Vietnam Free Trade Agreement negotiation (UKV FTA).
The bilateral implications of the FTA certainly include a boost to bilateral economic relations between Vietnam and the UK. UK-Vietnam trade stood at a little over 7.5 Billion USD in 2019.). Vietnam’s main exports to the UK include garments and wooden future, while it’s British imports are pharmaceutical products and manufacturing equipment.
The UK-Vietnam FTA will seek to reduce 99% of tariffs over a period of seven years, and even give United Kingdom access to preferential tariffs post-Brexit.
Both countries will seek to further enhance economic linkages and there are three specific sectors where they could be a significant rise; firstly, products like garments, merchandise and seafood, secondly, pharmaceuticals and vehicles and thirdly, machinery electronics and aircrafts. These three areas will help the two countries build a strategic partnership and foster their participation in global value chains. The FTA will hope to improve the Intellectual Property (IP) protection in Vietnam, through wide IP provisions of the UKVFTA.
Timing and Strategic Relevance of the FTA
The deal comes at an important time, as the UK seeks to exit from the EU on December 31, 2020. It is undeniable that the China factor has played an important role in propelling UK-Vietnam bilateral ties, paving the way for the proposed deal. Vietnam is keen to reduce its dependence upon Beijing, and this explains its focus on strengthening economic ties not just with the EU, via an FTA (EVFTA), but also with the UK. In the aftermath of the COVID-19 pandemic, the UK too had suggested that democracies needed to work together and provide alternatives to existing Chinese technologies. The Boris Johnson administration had proposed a club of 10 democratic countries, the D-10 (which will include G7 + South Korea, India and Australia) to work towards providing an alternative to China.
Watch: Talks around converting G7 to D-10
It would be pertinent to point out, that the UK has also been attempting to increase its economic and strategic links with Asian countries in general, and the ASEAN region in particular. London has defended its policy towards Asia by citing UK companies having around US $130 billion in investments among TPP member countries.
UK’s entry into the CPTPP
For UK, signing an FTA with both Japan and Vietnam also paves the way for its entry into the CPTPP. Both Japan and Vietnam have extended support to UK’s entry into the CPTPP. This will further strengthen the group, which consists of countries like Canada, Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, and Singapore, part of the 11 member states with whom UK shares trade volume of over US $146 Billion.
While the CPTPP was a US initiative, China has also expressed its interest to join the group recently. Chinese President Xi Jinping has made statements alluding to the same. At such a time, Japan and Vietnam have openly backed the UK’s candidature for induction into the TPP. In the Association of Southeast Asian Nations group, Vietnam is the only country apart from Singapore to have a trade pact with EU, so the UK-Vietnam FTA is very significant in sending a message that as the UK’s ties to the rest of Europe weaken, its gaining greater access to markets across Asia which will only strength if UK gets inducted into TPP.
Role of Japan, UK and Vietnam in countering China
President Donald Trump‘s administration did provide a vision for a Free and Open Indo Pacific. But while here was emphasis on enhancing economic cooperation in a post COVID world during a meeting of Foreign Ministers of Quad countries at Tokyo, in October 2020, no economic vision was put forward.
Like Japan and Vietnam, the UK has also been working towards ensuring that an alternative discourse is created in Asia to counter China’s growing economic influence. UK-China trade relations are substantial, but a lot of Chinese policies directly impact the UK. While China claims the entirety of the South China Sea, UK’s trade interests worth 92 Billion GBP pass through the sea. So a technology partnership between the UK and other Asian countries could be crucial in countering China.
The Broader Question
The question on many people’s minds is whether the US too would think about joining the TPP given that UK is getting on board. This is not going to be easy, but can not be ruled out. After the signing of the RCEP, the US president-elect Joe Biden had clearly stated that China can not be permitted to set the rules of the game. At the same time, there has been opposition to the TPP not just from the Republicans, but Democrats as well, and getting back into the CPTPP is not likely to be an easy task.
In conclusion, it is important for western liberal democracies and Asian countries to work together. While Washington may have become inward looking, Japan, Vietnam and the UK deserve credit for taking some important steps. The Indo-Pacific narrative too needs to have a far more robust economic vision and this requires a truly collaborative approach.
The article is co-written by Mahitha Lingala, a Hyderabad, India based Freelance Policy Analyst.