Vietnam needs to control export volume to enjoy EU’s GSP

VietNamNet Bridge – Vietnam has been advised to take strict control over the export to the EU market in order to be the long term beneficiary from the EU’s Generalized System of Preferences (GSP).

eu, gsp, export

According to Tran Ngoc Quan, Deputy Director of the European Market Department under the Ministry of Industry and Trade, the EU would deprive the right of any country which has the export turnover of one category of products exceeding 17.5 percent of the total export turnover of all the GSP enjoyable countries in the same sector.

The threshold was 15 percent stipulated in the previous GSP.

Quan has warned that the limit would be a big challenge for Vietnam. Since many other countries would not be able to enjoy the EU’s GDP, the market share the Vietnamese goods hold in the EU would increase sharply. Therefore, many Vietnam’s categories of products may not be subject to the new GSP.

Vietnam’s footwear products once enjoyed the EU’s GSP prior to 2009. However, late the preferential tariff has been removed for footwear exports, because of the high export growth which has exceeded the limit for GSP granting.

If referring to the statistics released by the European Commission EC, some kinds of Vietnamese products would be excluded from the GSP list after 2016. These include coffee, tea, spices, seafood, and footwear.

The Vietnamese footwear products have been put again into the list of the products subject to GSP in 2014-2016. However, since Chinese footwear cannot enjoy GSP any longer, the Vietnamese footwear market share in the EU may reach 34 percent, or higher than the ceiling level set up by the EU.

Some other products are also forecast of exceeding the threshold, or may be the subject to safeguard measures, such as plastics, clothes and garments. Wood, textile materials, electronics and phone sets are believed to be able to enjoy the GSP for a long time.

Therefore, according to Quan, as for the categories of products which may be excluded from GSP after 2014-2016 and the categories of products which may be able to enjoy stable preferences, Vietnam should try to dominate the market I the period, when China, the main rival of Vietnam, bears the MFN, which is 3.5 percentage points higher than GSP.

He emphasized that this should be seen as the great opportunity for Vietnam to take full advantage of the Vietnam – EU Free Trade Agreement FTA which is expected to take effects from late 2016.

Nguyen Huu Nam, Head of the Legal Department of the HCM City Branch of the Vietnam Chamber of Commerce and Industry VCCI, has warned that once some countries cannot enjoy GSP any more, there would be more trade frauds and more anti-dumping investigation cases against Vietnamese products.

For example, Vietnamese enterprises or foreign invested enterprises in Vietnam may import materials or semi-products from some countries, including China. To export to the EU to exploit the preferential tariffs.

Therefore, Nam has urged the Ministry of Industry and Trade and the General Department of Customs to set up strict regulations to prevent the trade frauds in order to protect the Vietnamese goods.

In related news, Cong Thuong newspaper has quoted its sources as saying that the fourth round of the Vietnam – EU FTA is expected to take place in July 2013 in Belgium, with a hope to have the agreement to be signed by 2014.

Compiled by C. V

eu, gsp, export