The revised EU Generalized System of Preferences (GSP) scheme offers lower tariffs, helping goods from developing countries, including Viet Nam, gain easier access to the EU market. These issues were discussed at a recent seminar on the EU’s new GSP rules and opportunities for Viet Nam, held in HCM City.
Viet Nam is on the list of GSP countries which have seen the number of tax lines enjoying the EU’s generalized scheme of tariff preferences increasing.
The new GSP rules will enter into effect on January 1 next year.
Trade and investment between Viet Nam and the EU has grown considerably, with two-way trade turnover increasing by 15-20% annually and the EU is now one of Viet Nam’s top trade partners.
From 1995-2012, bilateral trade grew nearly 20 times, from US$1.5 billion to US$29 billion.
In 2012 alone, the EU for the first time surpassed the US to become the biggest market for Viet Nam’s key export items such as footwear, garments and textiles, seafood, wooden furniture, electronics and consumer goods.
The high level of supplementary assistance and less direct competition mark a prominent point in Viet Nam-EU bilateral trade. Viet Nam is shifting its export structure by increasing the proportion of high-quality products and fine arts and handicrafts, while reducing average quality products and crude farm produce.
Franz Jessen, EU Ambassador and Head of the EU Delegation to Viet Nam attributed the sharp increase in Vietnamese exports to the EU, in part, to benefits from the GSP.
Around 49% of Viet Nam’s footwear exports have benefited from preferential tariffs under the GSP treatment.
Next year’s new GSP rules will give a further boost to Viet Nam’s exports of its traditional goods to the EU market.
Viet Nnam has taken advantage of preferences from the current GSP rules, but the country should effectively exploit many areas by seizing opportunities from the new scheme, Jessen says.
Analyzing the challenges for Viet Nam, Tran Ngoc Quan, Deputy Head of the European Market Department under the Ministry of Industry and Trade (MoIT), said the 15-17% rise in the EU graduation criteria in its new GSP scheme will remove many countries, including Viet Nam, from the list of nations enjoying the EU’s new GSP rules.
Consequently, the market share of imports from Viet Nam is likely to greatly increase and reach the mark at which the country will no longer enjoyed tariff preferences.
In the face of these challenges, businesses need to promote consultations with MoIT and monitor the negotiation process on Viet Nam-EU trade, in order to adopt a flexible market strategy and encourage the EU to continue granting preferences from its new GSP scheme.
Former Industry and Trade Minister, Truong Dinh Tuyen said the countries applying GSP for Viet Nam include the EU, Japan, Canada, Switzerland and the Customs Union of Russia, Kazakhstan and Belarus.
GSP brings benefits such as low import tariffs, increased production capability, job creation and assured growth.
Thanks to GSP, Viet Nam has improved the competitiveness of its products in the export markets in which the EU market accounts for 15%, and Japan 10% of Viet Nam’s total export turnover.
However, certain GSP limitations require Vietnamese businesses to fully grasp criteria such as the rule of origin, graduation criteria and conditions for competition, Tuyen said.
Participants at the seminar said that, in the context of Viet Nam’s deeper integration into the world economy, capitalizing on advantages from the participation in agreements and regulations will help speed up the economic restructuring process and shift the growth model towards enhancing competitive capacity.
It is essential to make the best of the EU’s GSP rules based on the three basic conditions: where goods fully meet rule of origin; goods are transported directly from beneficiary countries to the EU and evidence on the origin of products must be included, they noted./.