Leather, footwear industries expand exports to EU

The meeting, organised by the Ministry of Industry and Trade and the European Trade Policy and Investment Support Project (EU-Mutrap), was held to help exporters take advantage of the EV-FTA when it takes effect in 2019.

Phan Thi Thanh Xuan, vice chairwoman and general secretary of the Vietnam Leather, Footwear and Handbag Association (Lefaso), said the EV-FTA would increase exports because of lower tariffs and contribute to eliminating other trade barriers.

However, Vietnamese leather and footwear manufacturers and exporters will confront challenges as well. To meet EU requirements, Vietnamese businesses will have to improve technologies and manufacturing processes to ensure high quality.

Because most leather and footwear manufacturers in the country are foreign-invested, locally-owned enterprises will have to enhance competitiveness to increase market share.

Vuong Duc Anh, deputy head of the origin of goods pision under the Ministry of Industry and Trade’s Export-Import Department, said that exporters should comply with EV-FTA’s rules of origin in order to make the most of EV-FTA.

“Exporters will not be able to enjoy tariff cuts to zero percent unless they meet EV-FTA’s rules of origin,” Anh said.

Professor Sanggeeta Khorana, an expert from EU-Mutrap, said Vietnamese businesses subjected to EU barriers and anti-dumping measures should be able to prove that they do not receive subsidies.

An anti-dumping investigation can be initiated whenever the Directorate General for Trade of the European Commission decides that information is sufficient to launch an official investigation.

Vietnam earned US$13.1 billion from leather and footwear exports in the first nine months of the year, an increase of 11.4% over the same period last year.

Last year Vietnam ranked as the third-largest footwear manufacturer in the world, after China and India, according to Lefaso.

The EV-FTA will come into force in 2019, connecting Vietnam - one of ASEAN’s most dynamic manufacturing hubs with the EU – one of the world biggest markets with GDP of over US$18 trillion, accounting for 22% of the world’s total GDP and a population of over 500 million.

Once the EV-FTA agreement goes into effect, the EU will eliminate import duties on 85.6% of its tariffs lines on Vietnamese products. After seven years, 99% of EU tariffs will be removed for Vietnamese products.

Vietnamese textiles, footwear and seafood products (except for canned tuna and fish balls) will incur no import duties within seven years after the agreement takes effect.

As of the end of last year, Vietnam’s leather and footwear exports to the EU reached nearly US$5 billion, making the EU the second-largest leather and footwear importer of Vietnam after the US.

This comes two years after Vietnam enjoyed the EU’s generalised system of preferences (GSP) with tariffs reduced from 13-14% to 3-4%.

In recent years, Vietnam has become one of the most active players in negotiating and implementing free trade agreements.

The EU is Vietnam’s second-biggest export market, while Vietnam is the EU’s 11th biggest source of imports.

About 900 European enterprises have invested in Vietnam, which has the largest European business community in Southeast Asia.