EU Cancels Vietnam Preferential Treatment For Shoes Export

With the rapid development of China's footwear industry and the continuous growth of footwear export trade, China's footwear industry has encountered large-scale anti-dumping in the European and American markets in recent years. The international trade barriers have further expanded, and China's footwear industry has gradually weakened its advantages in production.

Then, some Chinese footwear processing enterprises and foreign footwear enterprises that invested and built factories in China gradually turned their attention to Vietnam, a growing new investment destination.

Footwear processing is a labor-intensive industry, while Vietnam has rich and cheap labor force. Footwear in the international market will often encounter trade barriers such as anti-dumping and trade quota restrictions. Vietnam has enjoyed many preferential policies in exporting to the United States, the European Union and ASEAN. It is one of the countries that are less affected by international trade restrictions and anti-dumping. Especially exported to the United States and the European Union, Vietnam has been enjoying GSP preferential tariff rate for a long time, which has become an important reason for Vietnam to attract a large number of investors.

The development of Vietnamese footwear can be described with the speed of progress. Footwear has become an important export commodity for Vietnam in just over 10 years.

Footwear products are important export products of Vietnam. According to statistics from the Ministry of Commerce and industry, Vietnam exported footwear products to 3 billion 190 million US dollars in 1~10 months in 2007, and finished 80% of the export target of footwear products in 2007 for us $4 billion.

In 2008 1~4, Vietnam exported footwear products of US $13.5, an increase of 15.7% over the same period last year.

In April 2008, Vietnam exported 87 million 900 thousand pairs of sports shoes, an increase of 16.7% over the same period, and 13 million 900 thousand pairs of leather exports, down 37.4% from the same period last year.

Because Vietnam's footwear products are exported to Europe with no quota restrictions and can enjoy the GSP, and the United States enjoys the most favored nation treatment, Vietnam's footwear products are mainly exported to the United States and the European Union, and the main export products are high-grade leather shoes and sports shoes.

Vietnam's Ministry of industry and Commerce said that Vietnam exported 4 billion 500 million dollars of footwear products in 2008.

At present, Vietnam has more than 380 footwear enterprises, including small and medium-sized enterprises that produce leather products, providing about 500000 jobs. Vietnam's footwear exports amounted to 3 billion 600 million US dollars in 2006, with a growth rate of 18%, mainly exported to the European Union, Japan and the United States.

Vietnam has become the fourth largest export footwear country after China, Hongkong and Italy.

In recent years, Vietnam's footwear exports to China are also growing faster. Vietnam exported footwear products to China for 42 million 50 thousand US dollars in 2006, an increase of 48.2% over the same period last year.

In the first 7 months of 2007, 4 million 400 thousand pairs of footwear products were exported to China, with an export volume of US $33 million 870 thousand, representing an increase of 54% and 62.4% respectively over the same period last year.

Among them, the export of cortical sports shoes grew fastest, exports amounted to 1 million 114 thousand and 500 pairs of shoes, exports increased by 3 million US dollars over the same period last year; the largest exports were tennis shoes and basketball shoes, accounting for 27.2% of China's total export footwear products.

The reason for the EU's abolition of preferential treatment for Vietnam's footwear exports to Europe is in late July 2008. The EU has decided to cancel the preferential treatment for footwear exported to Vietnam by EU countries.

This means that from January 1, 2009, the preferential tariffs on leather shoes will no longer exist, because the EU believes that Vietnam's footwear industry has always been highly competitive in the European market.

In this regard, the representative of the EU office in Vietnam explained that the EU would provide unilateral tariff preferences to developing countries in accordance with preferential tax treatment.

If the value of exports to the EU by a beneficiary country, such as Vietnam, accounts for 15% of the total value of the same products exported to all EU countries, that means that the relevant industries in the country are sufficiently competitive and no preferential treatment is required.

Over the two years ended 2006, the average value of Vietnam footwear exports covered by GSP accounted for 19.9% of all EU shoe imports under the same tax system.

In addition, the average value of the footwear products exported from Vietnam to the EU is 49.1%, which is also in line with the minimum requirement for the EU to abolish the GSP treatment in a country.

The EU's decision to abolish the European preferential treatment for Vietnam's shoe exports sparked a strong reaction from the European Union's decision to win the European sportswear and accessories industry federation, including world famous sportswear and shoe makers such as Nike, Adidas, fella and Puma.

A spokesman for the European Federation of sportswear and accessories industry pointed out that the EU's decision will strike a heavy blow on the Vietnamese footwear industry and the European footwear manufacturers who rely on Vietnam's footwear industry to maintain their competitiveness.

At the same time, this action is worth the attention of Hongkong producers, because many Hong Kong businessmen are considering the relocation of production bases from Vietnam's increasingly expensive Pearl River Delta to Vietnam next year to produce exports to the EU.

However, many people are worried that under the current economic slowdown in Vietnam, with the increase in the number of local shoe workers in recent years, the EU's elimination of the GSP treatment will affect the livelihoods of many Vietnamese workers.

An industry source in Vietnam said the EU may continue to impose anti-dumping duties on Vietnamese leather shoes, making the situation worse.

According to the Vietnam leather and Footwear Association, the Italy producers' Union will lodge a complaint to extend the EU's anti-dumping duty on Vietnamese leather shoes.

Once the Italy shoe manufacturers Union lodge a complaint, the European Commission will conduct a re investigation of Vietnamese leather shoes for a period of 15 months, during which Vietnamese leather shoes will continue to pay anti-dumping duties.

Vietnamese industry organizations have repeatedly assured members that they are trying to urge the EU to lift anti-dumping duties. Vietnamese producers are also urging the government to cancel import tariffs on footwear and accessories so as to enhance the competitiveness of the industry.

At present, about 20% of Vietnamese footwear exported to the EU do not apply for GSP preferential treatment.

This means that more and more Vietnamese shoe exporters are able to sell products in the EU market at competitive prices without any preferential treatment with the help of quality and brand advantages.

The EU pointed out that the number of Vietnamese shoe workers has doubled over the past 3 years, reflecting the size of the shoe export trade and the need for GSP to provide support.

On the other hand, Vietnam's footwear industry still relies heavily on imported materials, accounting for about 75% of its material consumption.

In 2007, the total value of Vietnam footwear exports was about $3 billion 900 million, and it is expected to rise 17% this year to 4 billion 500 million US dollars, of which the EU market accounts for about 54%, and the total value of exports will increase to about $6 billion 200 million by 2010.