HANOI (AFP) — Vietnam's footwear makers said Tuesday an EU plan to scrap their preferential market access would cost them over 100 million dollars and harm workers already suffering from double-digit inflation.
Industry group the Vietnam Leather and Footwear Association (Lefaso) asked the European Union to reconsider a plan announced last week to end the granting of lower than usual tariffs for Vietnamese-made products.
The sector would suffer "a huge impact" if Vietnam was removed from the list of benefiting countries under the EU's Generalised System of Preferences (GSP), said Lefaso deputy chairwoman Nguyen Thi Tong.
"Since the start of the year, footwear enterprises in Vietnam have already suffered the pressure of high prices for input materials," she told AFP. "The lives of workers have also become difficult due to high inflation."
Vietnam has been battered by galloping inflation this year -- driven by rising global energy and food costs -- with consumer prices surging 25 percent year-on-year in May, a trend that has driven a spate of labour strikes.
The European Union's GSP gives preferential market access -- through lower tariffs or duty-free access -- to some developing countries and economies in transition in a bid to aid development and fight poverty.
Vietnam's footwear exports have benefited, but EU officials now argue Vietnam no longer qualifies because of the relative strength of its footwear industry, one of the top foreign export sectors in the low-wage country.
Last year Vietnam earned almost four billion dollars from exports of footwear, said Lefaso, mostly shoes made in factories around southern Ho Chi Minh City by female workers who earn around 60-70 dollars per month.
Lefaso said Vietnamese footwear exporters will now have to spend over 100 million dollars on additional duties and that this "will influence enterprises, the sector's development growth and the economy."
Several EU importers would probably shift sourcing to Indonesia and Bangladesh, the association said in a press release this week.
Lefaso, however, also warned its 189 members to prepare for the change, urging them to cut costs and seek new markets to stay competitive.
Last Friday an EU official in Brussels, speaking on condition of anonymity, said EU ambassadors had agreed to end the GSP system for Vietnam-made footwear but added that the decision still had to be endorsed by ministers.
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