The European Union last week decided to end preferential tariffs for Vietnamese-made footwear and other products starting Jan. 1, news agencies reported.
At a European Commission meeting to renew the EU's system of general preferences for products from developing countries from January 2009 to the end of 2011, the body withdrew Vietnam’s preferential market access for footwear, headgear, umbrellas, sun umbrellas, artificial flowers and other goods. The commission said Vietnamese goods were deemed to be competitive enough not to need preferential market access.
Last month, Vietnam’s footwear makers warned the move would cost them more than $100 million and harm workers already suffering from double-digit inflation, an argument supported by the European sporting goods industry, which sources much of its products from Asia, APF reported.
The GSP had provided preferential tariffs and a duty free quota regime. At the end of 2006, nearly 20 percent of the EU's GSP footwear imports came from Vietnam, and nearly half of Vietnam's footwear exports were covered by the GSP system, both thresholds considered important in considering whether a developing country qualifies for preferential status.
In a notice on Friday, the Hong Kong Trade Development Council said the EU move would make footwear producers in the Pearl River Delta region think twice before switching to factories in Vietnam.
Interestingly, the HKTDC report said that 20 percent of Vietnam footwear exports to the EU don't claim GSP status, meaning that some manufacturers are able to do business without the benefit of GSP.
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