Ambassador and Head of the European Commission delegation to Vietnam, Sean Doyle, told a news conference in Hanoi that on June 13 the abolition “confirmed Vietnam’s success in diversifying its exports to the EU and reducing over-dependency on single commodities”.

“The review underlines the robustness and competitiveness of Vietnam’s footwear sector,” said Sean Doyle.

“The EU remained 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. I wish Vietnam fully avails itself of this opportunity sooner rather than later,” he said.

The GSP was created in 1971 to foster development through trade. It provides developing countries with unilateral tariff preferences (i.e. lower entry tariffs, or taxes, on entry into the EU, 3.5 points below the general ‘MFN’ rate) and a duty free/quota free regime to least-developed countries.

Three years ago, the EC wanted to remove the GSP for Vietnam’s shoes, but this decision was temporarily delayed because of Vietnam’s protests.

A Vietnamese trade official said the GSP would be changed to Most Favoured Nations status, meaning that tariffs would be raised to about 5 to 10 percent from their GSP levels of 3 to 5 percent.

Other exports that benefit from the GSP were not affected. “It is very difficult to change the EU’s ruling, and some footwear businesses will have a hard time ahead,” said Dinh Van Hoi, deputy director of the Europe Department of the Ministry of Trade and Industry.

Under the GSP rules, if GSP-covered imports of a line of goods from one country represents 15 percent of all imports into the EU of those goods from all GSP beneficiaries, that country’s sector is considered so competitive and it does not need preferential treatment any more. This is called graduation.

Vietnam is in this category as its footwear exports made up for between 28-29 percent of these GSP goods.

The footwear industry now employs half a million workers in Vietnam, 80 percent of them are women. About 90 percent of the products are exported, with the EU being the largest market, fetching EUR1.7 billion in 2007.

The Vietnam Leather and Footwear Association said it forecast leather and footwear exports to all countries would rise nearly 13 percent this year over last year, to about US$4.5 billion.