Further blow could cost Vietnam’s footwear sector $100m
16/06/2008
With proposals to renew the anti-dumping measures the European Union has in place to control imports of leather shoes from Vietnam, the Asian country’s footwear industry has received another blow.
The EU announced an additional decision to remove non-leather Vietnam-made footwear from the general system of preferences (GSP) from June 16.
Europe’s trade mission in Hanoi held a press briefing on June 13 to say that it was no longer able to include Vietnam in the current GSP. EU Ambassador Sean Doyle said that Vietnam”s footwear industry had become very competitive.
The Vietnam Leather and Footwear Association (Lefaso) said intended to issue a formal response after consulting with the ministry of industry and trade. It said immediately that the EU’s decision was unfair to Vietnam’s footwear industry.
Under GSP rules, any country whose exports account for 15% of the combined gross export revenues of all GSP beneficiaries is considered to have reached a competitiveness threshold and therefore does not need to be given preferential tariffs.
As a result, Vietnam’s footwear exports to the EU will be subject to 5%–10% in tax instead of the preferential tariffs of 3.5%–5%, commencing on January 1, 2009.
A representative of Lefaso warned that the new tax rates would cost Vietnamese footwear enterprises more than $100mil a year. More importantly, he said, the decision will have severe impacts on the lives of labourers in the footwear industry, mostly women and poor people.
Though it can offer cheap labour costs, Vietnam’s productivity remains very low: profit is just 25% of the added value average. A 450-labourer factory can make 500,000 pairs a year, equal to 1/35 of the productivity of Japanese workers, 1/30 of Thai, 1/20 Malaysian and 1/10 Indonesian workers.
At the end of 2007, Vietnam’s footwear industry had 600,000 workers, 80% of whom were women.
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