However, the industry will face a new challenge as the European Commission recently announced that it will abolish the Generalized System of Preferences for Vietnamese leather shoes imported into the European markets as of January 1.

This new policy will not hurt the leather industry much, according to Mr. Diep Thanh Kiet, deputy chairman of Ho Chi Minh City Leather and Shoe Association. Tariffs imposed on leather products under GSP are 3 percent to 5 percent versus 8 percent without. With the anti-dumping surcharge, the tariff is about 8 percent anyway. So the end of the anti-dumping tax and of the end of GSP will balance off.

Kiet however pointed out that the end of GSP will affect medium and small-scale enterprises that produce sneakers. The selling prices of products offered to European importers will be increased, so importers will little choice but to reconsider the price issue, which could squeeze local manufacturers.

The anti-dumping lawsuit against Vietnamese -made leather hats and shoes was filed by European shoes makers in 2005. In April 2006, Europe decided to impose a tax rate of 16.8% percent on Vietnamese-made shoes.

Viet Nam protested that it did not dump shoes on the European markets and that the imposition of an anti-dumping tax is unreasonable without taking into account Viet Nam’s low labor costs and modern technologies. These are the two main advantages of Viet Nam’s shoe industry.

Europe is currently is one of key export markets for Vietnamese leather producers.

Analysts predicted that the export of leather and shoes from Viet Nam to Europe will become easier when the European Union signs a trade agreement with ASEAN.

SGGP

11:15' 17/06/2008 (GMT+7)

Source: english.vietnamnet.vn