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UK carbon tax will affect Vietnam’s exports

UK carbon tax will affect Vietnam’s exports

The reminder was made by Hoang Le Hang, First Secretary of the Vietnam Trade Office in the United Kingdom, during a conference on how to prepare for the British market, held recently in Hanoi.

Vietnam’s exports to the UK have increased significantly since the implementation of the UK-Vietnam Free Trade Agreement (UKVFTA). The UK is currently Vietnam’s third largest export market.

“The UK government is leading a legislative process to establish a carbon border adjustment mechanism, under which a carbon tax will be applied in the UK from 2027,” Hang said. “Companies will need to prepare a roadmap to comply with this mechanism. »

According to the Vietnam Chamber of Commerce and Industry (VCCI), the mechanism aims to impose a tax on goods subject to import regulations in the UK, depending on the level of greenhouse gas emissions during the production of these goods in the exporting country.

Although the specific list of products, through the Harmonization System (HS), has not been determined, the UK government has agreed to apply the CBAM to seven categories, namely aluminum, cement, ceramics , fertilizers, glass, hydrogen and iron and steel. .

Exporters of goods subject to CBAM are responsible for paying the carbon tax, which will be determined for each imported consignment based on its carbon emissions.

Unlike the European Union’s CBAM, the UK’s CBAM does not apply to electrical products and does not involve the trading of carbon certificates.

Once the UK CBAM is implemented, the scale and impact of this mechanism on Vietnamese exports will be significantly greater than that of the EU CBAM.

Indeed, Vietnam does not export electricity to the EU or the UK, but exports large quantities of ceramic and glass products to the UK, especially those used in construction.

Regarding the forms of goods subject to the CBAM, like the EU, the UK government defines that they can vary, provided that they appear in the list of goods regulated by the CBAM. These may be finished products, raw materials, components or energy, produced or processed for sale.