Workers at Huu Nghi Da Nang Joint Stock Co in central Da Nang City make shoes for export. From 2014 onward, more Vietnamese products, including footwear, may gain further benefits under the EU's new GSP regulations. — VNA/VNS Le Lam

HA NOI (Biz Hub) — Market shares of Viet Nam's major exports to the European Union (EU) are expected to surge as exporters will enjoy preferential treatment under the bloc's Generalised System of Preferences (GSP).

Tran Ngoc Quan, deputy director of the European Market Department under the Ministry of Industry and Trade, stated this at a conference on "The EU's New GSP Regulation – New Opportunities for Exports to the EU", held in Ha Noi yesterday.

From 2014 onward, more Vietnamese products, including footwear, may gain further benefits under the new GSP regulations, Quan noted.

The EU published its amended GSP regulations in October 2012, and they came into effect at the beginning of this year. The regulations are aimed at facilitating market access for goods originating from developing countries, including Viet Nam.

Viet Nam will remain among the list of countries eligible to enjoy preferential treatment under the EU's GSP, with a number of favourable tariffs.

Quan estimated that the export market share of coffee, tea and spices will increase from the current 12 per cent to 22 per cent because of the new GSP. Exports of seafood will increase from 9.9 per cent to 19 per cent, while the exports of shoes will rise to 34 per cent.

GSP rules will improve Viet Nam's access to the EU market, speed industrialisation, create jobs and increase incomes, as well as contribute to economic growth, said Ministry of Foreign Affairs official Nguyen Ngoc Son.

"However, besides the advantages, the new GSP regulations may give rise to a number of challenges. Businesses need to have a long-term vision and strategy for sustainable development, quality improvement and compliance with the EU's requirements and standards on issues, such as labeling and non-toxic products," he added.

The ambassador and head of the EU delegation to Viet Nam, Franz Jessen, added that the strong growth of exports from Viet Nam to the EU was partly due to the benefits that Viet Nam's products are entitled to under the GSP.

He stated that since early this year some export products, including footwear, have benefited from more favourable tariffs under the new GSP.

He said it was therefore crucial for Viet Nam's government and exporters to understand and exploit the opportunities offered under the EU's new GSP.

Claudio Dordi, the EU-MUTRAP team leader, agreed. He noted that the favourable tariffs offered to Viet Nam will create competitive advantages for Vietnamese garments and textiles enterprises.

However, he remarked that the advantages under the new GSP will not be sustainable, as the GSP will not be in force forever.

Truong Dinh Tuyen, former minister of Industry and Trade, noted that the GSP will not pressure businesses to restructure and change their growth models, thus not providing a balance to exports.

Tuyen added that imports will also be higher, in parallel with exports, due to competitive pressure on labour productivity, quality and prices.

He remarked that the country should accelerate its economic restructuring process, while taking advantage of the GSP to improve competitiveness.

"This will be the basic road to improve and sustain export capacity," he added.

A representative from the Garment 10 Company said one of its difficulties in taking advantage of GSP was the origin of input materials. For Free on Board (FOB) contracts, importers often stipulated the material to be used themselves, most of which had to be imported from China. This was the reason why the company had not been able to avail themselves of preferential treatment under the GSP for FOB shipments.

He noted that it would be better if Viet Nam could take advantage of investment flows to directly produce materials in the country. — VNS