Hanoi (VNA) – The EU-Vietnam Free TradeAgreement (EVFTA) is expected to create solid opportunities for Vietnam toexpand its export markets in the time ahead, especially in terms of the garmentand footwear industries.

After the deal takes effect, taxes on many items will decrease to zero percent.

Experts have said that Vietnam still holds an advantageousposition as its labour and production costs are lower than those in neighbouringcountries. On the other hand, Vietnam’s garment and leather products haveestablished their brands on the EU market.

The export turnover of Vietnamese textiles and footwear is expected to increaseremarkably as the tariff barriers are gradually removed.

According to Chairman of the Vietnam Textile& Apparel Association (VITAS) Vu Duc Giang, the textile and garmentexport turnover target of 35 billion USD in 2018 is quite feasible.

Free trade agreements that have played a big role in realising the target, especiallythose with EU as this is the second largest export market of Vietnam’s textileand garment industry after the US, Giang said, adding that the trade deal promisesto help Vietnam’s textile and footwear sectors grow strongly in the comingyears.

Giang, however, also mentioned some of the difficulties facing Vietnamesetextile firms as they have to import a great volume of materials from manycountries.

Each year, the textile and garment sector uses about 820,000 tonnes ofmaterials, with about 70 percent imported from China.

In order to enjoy the preferential tariffs from the EVFTA, enterprises mustcomply with regulations related to origin of goods if they do not want to paythe normal tariff.

Giang added that regulations on origin are the most important factor in theEVFTA. Accordingly, Vietnamese textile and garment exporters must ensure thattheir products are produced from domestic materials or that those imported fromthe EU and other countries signed bilateral trade agreements with the EU.  If Vietnam meets regulations on these issues,its textile and garment industry is likely to be stronger in the future.

Nguyen Duc Thuan, Chairman of the Vietnam Leather,Footwear, and Handbag Association (LEFASO), said that when the EVFTA comes into effect, the zero-percent tariffwill be applied to about 50 types of footwear products of Vietnam exported toEurope.

In the sector, Vietnam’s biggest competitor is China. Vietnam's footwearproducts will enjoy a tax difference of between 3.5 to 4.2 percent whenexported to the EU, creating a huge competitive advantage.

The EU also offers unilateral incentives for a large number of goodsoriginating from Vietnam under the Generalised System of Preferences (GSP), whichwill help Vietnam's footwear become more competitive than its rival Chinese productsin the EU market.

Many foreign footwear producers have shifted theirbusinesses from China to Vietnam to benefit from the EVFTA, Thuan noted.

He added that Vietnam is the second largest exporter of footwear in the world,after China, and its footwear export turnover has increased continuouslythrough years, hitting 14.6 billion USD in 2017, from only 8.4 billion USD in2013.

This year’s export turnover for the sector is forecastto reach 19.5 billion USD, up 10 percent against 2017.

However, Thuan also said that the sector is facingdifficulties in terms of sources of raw materials for production, adding that attentionshould be paid to modernising production lines, thus helping the sector improveits competitiveness in the regional and international markets. –VNA