The Vietnam Leather and Shoes Association recommended its members to apply new management methods to reduce management cost in addition to seeking new outlets for their products when they no longer enjoy the European Union’s Generalised System of Preferences (GSP) status.

In its announcement issued on June 16, the Vietnam Leather and Shoes Association said “these measures are necessary in order to retain the competitiveness of the footwear industry when it faces difficulties in the EU market”.

The association also said it will ask the Government and relevant ministries to continue negotiating with the European Commission (EC) on extending GSP treatment for Vietnamese-made footwear to help stabilise local production and exports of the commodity to the EU.

The EU’s GSP provides preferential tariffs for low-competitive countries without discriminations or conditions of mutual interest. Under the GSP rules, however, any country, whose exports account for 15% of the gross export revenues by GSP beneficiaries, is considered to reach a certain level of competitiveness and therefore it is not necessary for the country to be given preferential tariffs.

According to the EC Delegation, Vietnam’s footwear exports to the EU accounted for 19% of footwear exports of GSP beneficiaries in the 2004-2006 period.

Assessing the impact of the EU’s GSP decision, President of the Vietnam Leather and Shoes Association Nguyen Duc Thuan said footwear producers will have to pay US $110 million more in additional expense for the same earning as in 2007, as import tariff on each pair of shoes will increase by 3.5% to 5%.

Thuan predicted that several foreign customers would shift their orders to other GSP benefiting countries in the region.

In the past two years, the Association and its members have taken moves to diversify export markets and invest in the production of hi-end shoes and those footwear exempted from import tariff in order to gradually adapt to changes in tariff levels, Thuan said.

Head of the EC Delegation in Vietnam Ambassador Sean Doyle affirmed last week that his mission was willing to offer Vietnam’s exports, including footwear, a long-term, even broader tariff system during negotiations on an EU-ASEAN Free Trade Area (FTA).

He said pending an agreement on FTA and the GPS’s expiration in several months, Vietnam should consider a so-called “early harvest” agreement as a solution to its concerns.

He also affirmed that the EU would continue to support Vietnam’s efforts in improving its competitiveness in international trade through official development assistance (ODA). (VNA)