EU's amended tax system to open door wider to Vietnam exports

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Exports of footwear to the EU will attract lower import duties starting January 1 next year when the bloc makes changes to its Generalized System of Preferences.

Vietnam is expected to take advantage to increase exports to the EU, its biggest market, starting in the new year when a revised tariff preferences scheme will take effect.

Following changes to the bloc's Generalized System of Preferences (GSP) for developing countries most in need, tariffs on all imports from Vietnam will be lower or waived. The current GSP, in effect since 2009, limits the number of items given import tax breaks.

At the same time the number of countries to benefit will be reduced to 89 from the current 176, comprising 49 least developed and 40 low and lower-middle income nations. Vietnam, with an average income of US$1,555 last year, falls in the latter category.

Analysts said the change means many export items from Vietnam, especially footwear and bags, would benefit.

Several EU member countries imposed anti-dumping charges of around 10 percent on the two items a few years a go to protect local struggling industries, they said.

Dau Tu newspaper quoted Deputy Minister of Foreign Affairs Bui Thanh Son as saying Vietnamese firms have a big opportunity to boost exports to the EU if they can make full use of the new scheme.

The bloc will cut to zero import tariffs on about 40 percent of exports items from Vietnam, he said.

In the first six months of the year the country's exports to the EU topped US$11.6 billion.

Truong Dinh Tuyen, a former trade minister, warned that exporters should target multiple markets in the EU since they would lose the tax preference for an item if the ratio of their shipments to total shipments of that item to one market exceeds a particular limit.

EU countries currently set a limit of 17.5 percent on all items, except for garments which have a cap of 14.5 percent.

But Tran Ngoc Quan, deputy chief of the EU Market Department, said the new GSP raises the cap on a number of items.

Coffee for instance will have a cap of 21.68 percent and footwear, 34 percent.

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