The interruption of the global supply chain by the COVID-19 pandemic has caused alarm in the Vietnamese leather and footwear industry since it is heavily dependent on raw material imports.
To develop sustainably and make the most of tariff incentives and opportunities brought by the EVFTA and Comprehensive and Progressive Agreement for Trans-Pacific Partnership, leather and footwear businesses need to develop domestic sources or diversify foreign sources.
Many businesses have started to look for raw materials in other markets such as India, Europe, Singapore, and Japan.
Preferential tariffs under the EU-Vietnam Free Trade Agreement boosted Vietnam’s footwear exports to the bloc’s 27 member countries by 19.2 per cent year-on-year in the first quarter of 2021.
As per The Star report, the country’s overall exports, mainly of aquatic products, textile-garment, footwear, and farm produce, were worth nearly $4.8 billion.
The importing markets were mostly countries with ports and distribution and transhipmentcentres such as Belgium, Germany, Netherlands, and France.
The EVFTA, which took effect in August last year, has opened up great export opportunities to a market with a GDP of $15 trillion for Vietnamese companies.
To enjoy the tariff preferences, leather goods and footwear need to comply with the rules of origin and get a EUR.1 Certificate of Origin.
Some 32 – 34 per cent of exports benefited by getting the certificate, indicating that Vietnamese businesses and goods are increasingly capitalizing on concessionary tariffs in FTA partner markets, the Ministry of Industry and Trade said.
It said that between August 1 last year, when the EVFTA took effect, and April 4, authorized agencies in Vietnam issued 127, 300 certificates of origin to enable exports worth nearly $4.8 billion.