Pressure on Vietnam to scale up ahead of EU FTA

21 November 2017

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

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

Vietnamese leather and footwear manufacturers and exporters will face challenges, so technologies and manufacturing process must improve to ensure high standards to meet EU requirements.

The majority of leather and footwear manufacturers in the country have foreign investors, so locally-owned enterprises must be competitive to increase market share.

Vuong Duc Anh, deputy head of the origin of goods division under the Ministry of Industry and Trade’s Export-Import Department, said exporters must comply with EV-FTA’s original rules.

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

In the first nine months of 2017, Vietnam earned $13.1 billion from leather and footwear exports, up 11.4% compared with the same period last year.

According to Lefaso, Vietnam was the third-largest footwear manufacturer in the world in 2016 behind China and India.

The EV-FTA will begin in 2019, connecting Vietnam, one of ASEAN’s dynamic manufacturing hubs, with the EU, which has a GDP of more than $18 trillion.

The EU will also eliminate import duties on 85.6% of its tariff lines on Vietnamese products when the agreement takes effect. After seven years, 99% of EU tariffs will be removed for Vietnamese products.

Vietnam’s leather and footwear exports to the EU reached $5 billion, making the EU the second-largest importer of Vietnamese leather and footwear, behind the US.

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