“The review of our Generalised System of Preferences (i.e., the preferential tariffs for the poorest countries) has confirmed Vietnam’s success in diversifying its exports to the EU and reduce over-dependency on single commodities. Likewise, the review underlines the robustness and competitiveness of Vietnam’s footwear sector”, Ambassador and Head of the Delegation of the European Commission in Vietnan, Sean Doyle declared in a press briefing on June 13.

The EU remains willing to offer Vietnam an even more generous, long-term tariff regime for all sectors, including footwear, in the framework of the EU-ASEAN FTA talks, regarding the Vietnam bilateral chapter, said Mr Sean Doyle.

The Generalised System of Preferences (GSP) was created in 1971 with a view to fostering development through trade by providing developing countries with unilateral tariff preferences and a duty free/quota free regime to Least-Developed countries.

First, if GSP-covered imports of a good (e.g., textiles) from one country represent 15% of all imports into the EU of that good from all GSP beneficiaries, that country's sector is so competitive that does not need preferential treatment anymore – this is called graduation.

Second, in order to encourage diversification and not penalise over-dependency, the EU GSP regime foresees that sectors that meet the 15 % threshold shall continue enjoying GSP benefits if they constitute at least 50 % of all GSP imports originating from the country in question. This clause was created in 2005, to accommodate Vietnam’s over-dependency on shoe exports to the EU. To date, Vietnam is the only country to have benefited from it.

Based on the 2004-2006 data (GSP figures), the EU has conducted its review of the GSP regime and the Council approved on 11 June a new GSP regulation for the period 2008-2010.

The review, which covers all countries and is based on comparable statistical data provided by Eurostat, acknowledged the success of Vietnam’s government well-publicised policies of trade diversification towards the EU market. For example, Vietnam’s GSP-covered exports of textiles have increased by 4.20% between 2004 and 2006.

2007 figures confirm this tendency, with a further 10% increase in textiles bringing total Vietnamese textile exports to the EU to EUR 1.16 billion. Other big products such as coffee, exports of which increased by 36% in 2007 to reach some EUR 834 million.

The GSP review also confirms that the Vietnamese footwear sector is one of the most competitive worldwide. Total Vietnamese footwear exports to the EU in 2007 grew over 20% from 2004 to 2006 and, in 2007, by a further 10.6%.

Exports to the EU have only been marginally affected by anti-dumping duties, as such duties only apply to 20% of Vietnam shoes exported to the EU. Moreover, since such duties were first started, exports from Vietnam nevertheless increased already by over 16% in May 2006.

Vietnam’s GSP-covered exports of shoes represent an average of 19.9% of all EU GSP shoe imports for the period 2004-2006. Furthermore, GSP-covered footwear represents an average of 49.1% of Vietnam’s GSP-covered exports. In light of this, and in accordance with the GSP regulation and WTO rules, the EU concludes that Vietnam’s footwear is competitive and Vietnam is no longer over-dependent on footwear exports. As a result, Vietnam’s footwear is to be graduated out of GSP for this sector only. On the basis of 2006 data, even after graduation, EUR 1.4 billion of Vietnamese exports continue to benefit from GSP.

Experience from other countries shows that the graduation mechanism truly responds to the competitiveness of the sector going forward: the footwear sector in China, for example, continued to grow after the GSP benefits had been removed (and in spite of being subject to anti-dumping duties 6.5 points higher than Vietnam): between 2004 and 2006, China managed to enhance its share of footwear exports to the EU from 42.7 to 55.2%.

The Vietnamese footwear industry shows similar signs of strength, with some 20% of shoes exported to the EU not even claiming GSP benefits: This suggests that a growing number of shoe exporters are able to sell at competitive prices in the EU market without any privileges but rather leveraging on other vectors such as quality and branding.

The European Commission also pledged to continue supporting Vietnam efforts to increase international trade competitiveness and trade performance via our ODA. In this vein, it is worth mentioning the planned signature in the coming weeks, of agreements for a new EUR 10 million MUTRAP III project (to support Vietnam’s trade policy) and a EUR 20 million grant contribution to the World Bank–led 6th Poverty Reduction Support Credit (PRSC 6).

Last updated: 17:3 - June 14, 2008

Source: www.nhandan.com.vn