Bags / Shoes & Accessories

Benefiting from preferential tariffs under the EU-Vietnam Free Trade Agreement, Vietnam’s footwear exports to the 27 EU member states in the first quarter of 2021 increased by 19.2% year-on-year.

In the first quarter, Vietnam’s exports to EU countries totaled nearly 4.8 billion U.S. dollars, and its main export products were aquatic products, textiles and clothing, footwear and agricultural products. The main export countries are Belgium, Germany, the Netherlands and France.

The EU-Vietnam Free Trade Agreement came into effect in August last year, opening the door to a $15 trillion GDP market for Vietnamese companies. The EU is Vietnam's fourth largest market, with imports of 43.7 billion U.S. dollars last year.

To enjoy tariff preferences, leather products and footwear need to comply with the rules of origin and obtain a certificate of origin.

The Ministry of Industry and Trade of Vietnam stated that about 32%-34% of exported products benefited from obtaining the certificate of origin, which also shows that more and more Vietnamese companies and products are taking advantage of preferential tariffs in the free trade agreement partner markets. As of April 4, Vietnam's authorized agencies had issued 127,300 certificates of origin, with an export value of nearly 4.8 billion U.S. dollars.

Vietnam has become the world's "shoe product processing factory", with a population of 96 million in the domestic consumer market.

The new crown pneumonia epidemic has disrupted the global supply chain and sounded a wake-up call to the Vietnamese leather and shoe industry, because Vietnam is heavily dependent on raw material imports. In order to achieve sustainable development and make full use of the tariff preferences and opportunities brought by EVFTA and the Trans-Pacific Partnership Comprehensive Progress Agreement, leather and shoe manufacturers need to develop domestic resources or diversify their import sources.

According to Phan Thi Thanh Xuan, secretary general of the Vietnam Leather, Footwear and Handbag Association (Lefaso), 60% of the raw materials are imported from China. Many companies have begun to seek to import raw materials from other markets such as India, Europe, Singapore and Japan.

Experts said that the epidemic is still a major obstacle, but if companies strive to find partners and improve competitiveness, the export potential is still huge.