Shoes lose EU tariff preferences

The EU decision to remove Vietnamese footwear from the Generalised System of Preferences (GSP) as of January 1 is expected to put even greater pressure on domestic producers and exporters.

Higher import duties will be added to the anti-dumping duty of 10% that the EU has slapped on 33 categories of Vietnamese leather-upper shoes since 2006.

Viet Nam Leather and Footwear Association (Lefaso) Vice Chairwoman Nguyen Thi Tong said the loss of the GSP status and the anti-dumping duty will compound the current difficulties of domestic shoemakers arising from the global economic crisis and falling demand.

As a result, Tong said, many businesses, especially small-and medium-sized enterprises, have already cut production and laid off workers.

Under the GSP-a programme that normally helps developing countries facilitate exports to the EU market-Vietnam shoes are qualified for lower import tariffs. Those import duties will now increase by 3.5-5.5 percent on average.

Duties on leather shoes will surge to 8 percent while those on canvas footwear will spike by 17 percent.

While the EU is the biggest importer of Vietnamese footwear, accounting for around 55 percent of the country’s export turnover, the anti-dumping tariff has already driven that figure down from a high of 66 percent in 2004.

The domestic footwear industry was estimated to have earned a total of US$4.5 billion in exports to all markets in 2008, an increase of 10 percent over 2007. Vu Van Cuong, deputy director of the Ministry of Industry and Trade’s Light Industry Department, said shoemakers would suffer great losses due to higher tariffs in an EU export market worth about US$2 billion a year.

The GSP has also attracted a number of foreign investors to invest in footwear production in Vietnam, Cuong said, adding that when the advantage disappears, it is likely that foreign enterprises would shift production to other nations.

A delegation of the European Commission (EC) will commence its dumping investigation this month.

The deputy director of the Ministry of Industry and Trade’s Competition Administration Department, Bui Son Dung, said this is the final review to consider whether anti-dumping measures would be lifted, with the final decision expected in mid-year.

To overcome the current difficulties, the department recommended shoemakers focus on the domestic market, seek new export markets and try to cut production costs. (VNS)