The European Commission’s recent decision on extending Vietnam’s eligibility under its Generalised System of Preferences (GSP) is expected to propel local footwear exports to the EU.
The EC’s Decision No.1213/2012 removed eight countries’ exports from the list of GSP beneficiaries. Accordingly, Vietnamese products, primarily footwear, were not affected.
The newly-adjusted tariff scheme, which supplements the previous EC Decision No.978/2012, will come into force from January 1, 2014 to December 31, 2016.
Under the new GSP scheme, the removal from the GSP list applies when the total export volumes to EU market of export countries’ products exceeds 17.5 per cent of total import volumes of the same products from all countries benefiting from the EU’s GSP system in three years.
In the past, the EU market grabbed up to 70 per cent of Vietnam’s total footwear exports.
However, this proportion has slid gradually since Vietnamese footwear export items incurred anti-dumping tax and Vietnam did not enjoy EU’s GSP scheme from 2009 until present.
Tran Quang Huy, head of External Relations Department at wholly Taiwan-backed Ngoc Te Footwear Company based in northern Hung Yen province, said exports to the EU market accounted for around 60 per cent of the company’s total export value.
“The move is a good news to our company particularly and all Vietnam-based footwear exporters generally,” said Huy.
“In light of the GSP scheme, current export tariffs to EU of most Vietnam’s footwear export items like canvas shoes, leather upper shoes and leatherette shoes would remarkably go down. For instance, import tariffs on canvas shoes will slide to nearly 12 per cent from current 17 per cent,” said Lefaso deputy secretary Nguyen Thi Tong.
Tong, however, said while the GSP preference was an advantage to footwear exporters, firms needed to pay due attention to the ‘threshold’ to be benefited from the GSP system (the 17.5 per cent benchmark) to avert risks.
“Lefaso does not encourage firms to abruptly hike exports to the EU market since it would bring risks associated with anti-dumping lawsuits or trade protectionism measures,” Tong said.
Lefaso figures show that Vietnam earned $2.7 billion from footwear export to EU market in 2012, tantamount to 30 per cent of the footwear industry’s total export value of $7.26 billion.