The Vietnam – UK Free Trade Agreement has been creating many favorable opportunities for the Vietnamese footwear industry to take advantage of better tariff incentives and expand export markets.

Sharing about taking advantage of the system of free trade agreements, including UKVFTA to boost exports to the UK, Ms. Phan Thi Thanh Xuan, Deputy Director of the Vietnam Trade Promotion Agency, said:The leather and footwear industry is taking better advantage of commitments in the UKVFTA to accelerate exports, said the Chairman and General Secretary of the Vietnam Leather, Footwear and Handbag Association (Lefaso).

In the first 8 months of 2024, footwear exports to the UK grew by 25%, accounting for nearly 8% of the EU's total export turnover. Along with export recovery in other major markets such as: The United States was 5,58 billion USD, up 17,1%; the EU (27 countries) was 3,63 billion USD, up 14,3%; China was 1,32 billion USD, up 5,5% over the same period last year, the whole industry's export grew over 16% over the same period.

Accumulated to the end of September, footwear exports reached 9 billion USD, up 16,54% over the same period. 

With the UKVFTA, many types of Vietnamese goods will enjoy many positive incentives. Accordingly, import tariffs on the UK will be eliminated by up to 99,2% within 6 years, creating great advantages for exported goods such as footwear, textiles, agricultural and aquatic products, etc.
Vietnam's leather and footwear industry currently has more than 1.000 shoe factories and creates jobs for about 1,5 million workers, contributing about 8% of the country's GDP.

According to Lefaso, before leaving the EU, the UK was the main export market for the leather and footwear industry. However, in the period 2019-2020, exports decreased slightly, but since then, exports have increased quite impressively.

During the difficult period of the Covid epidemic, the supply chain was also severely affected, but footwear exports to the UK still increased by 6%. In particular, in 2023, when exports to most markets declined, especially in the EU, the export turnover to the UK still increased quite well, reaching about 765 million USD.

At this level of performance, footwear is the third largest export item to the UK and accounting for nearly 13% of export volume, just after Phones of all kinds and components, reaching more than 1,31 billion USD, machinery, equipment, tools and other spare parts, reaching 1,03 billion USD.

Ms. Xuan emphasized that the UK is currently a very important market for the leather and footwear industry. With UKVFTA, Vietnam is gaining a competitive advantage over its competitors exporting to the UK. 

Footwear is currently in the top 10 items with large export turnover to the UK. 

Ministry of Industry and Trade said that thanks to double-digit export growth for many consecutive years, Vietnam is now ranked 2nd in the world. world Regarding footwear exports, Vietnam's exports currently account for 8% of global exports, while China accounts for nearly 40%.

The UK is a highly competitive but potential footwear export market, with high import standards and many exporters targeting the market.

Before the UKVFTA, Vietnamese footwear exports to the UK were subject to the second highest tariff (2%) among the 6,7 countries exporting the most footwear to the UK. However, with the UKVFTA, Vietnam is able to compete equally in terms of tax, but it is difficult to compare the tax benefits of Chinese goods, or the design capabilities, models and cultural and taste similarities like the Netherlands, Italy, Belgium, Germany, etc.

Notably, after joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the UK also committed to opening its market to many products from other CPTPP member countries.

Among them, Australia, New Zealand, Malaysia and Mexico have many products of the same type as Vietnamese products. The level of competition is also fiercer, forcing domestic enterprises to improve their competitiveness, invest heavily in design, and be self-sufficient in input materials, etc.

In 2024, the footwear industry aims to export about 27 billion USD. To achieve this goal, businesses focus on diversifying markets, focusing on maintaining traditional markets such as the US, EU, UK, etc., with the characteristics of large purchasing power and market capacity.

To better exploit current FTAs and make good use of tariff incentives, proactively sourcing input materials with origin according to commitments is the goal this industry is aiming for.

In an effort to meet the rules of origin, Lefaso has submitted a proposal to the Ministry of Industry and Trade to build a trading center for raw materials for the industry. fashion Vietnam.

On the other hand, proactive supply helps footwear enterprises to be transparent about the origin of raw materials, both meeting the rules of origin in free trade agreements and implementing green and sustainable standards of importers.

“Greening” is becoming an inevitable requirement for all stages of production with leather and footwear products exported to the UK and many other markets, such as the EU and the US. When businesses consider greening as an opportunity to access a more transparent production chain, thereby having a conversion roadmap suitable to the production scale and financial conditions of the business, it means they will have a firm foothold in the global supply chain,” Ms. Xuan emphasized.

Source: Vietnam.vn
 

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