Flexible take advantage of EVFTA – GSP: The key to breakthrough EU exports

After nearly three months of implementing the EVFTA Agreement, the number of C/Os issued and export turnover to the EU has increased dramatically. To achieve a higher number, enterprises need to understand the preferential tariff regimes to flexibly take advantage of, especially while waiting for the preferential schedule in EVFTA, do not forget about GSP.

Issued nearly 24,000 C/Os with a turnover of 963 million USD to the EU

According to the latest statistics of the Import-Export Department (Ministry of Industry and Trade), as of October, authorities organizations have issued about 23,800 sets of Certificate of Origin (C/O) format EUR.1 with a turnover of approximately 963 million USD to 28 EU countries. Moreover, enterprises export goods to the EU self-certified origin for over 660 shipments with a value of about 2 million USD.

Statistics show that items have been granted C/O form EUR.1, including footwear, seafood, plastic products, coffee, textiles, bags, suitcases, and vegetables…

Typically, footwear with C/O value after two months (August & September) reached nearly 391 million USD; seafood got more than 183 million USD; plastic and plastic products reached more than 49 million USD; textile products reached more than 27 million USD with the main exporting countries still focusing on traditional markets such as Netherlands, Germany, UK, France, Italy, Spain, and Belgium.

Ms. Nguyen Cam Trang, Deputy Director of the Import-Export Department (Ministry of Industry and Trade), compared other FTAs of Vietnam that have just come into effect, such as the CPTPP, the FTA between ASEAN and Hongkong, the FTA between Vietnam and Cuba, etc., the number of C/O form EUR.1 in total export turnover in August 2020 reached 8.64% and increased to 14.65% by the end of September 2020.

"It can be seen that the biggest benefit EVFTA brings to Vietnam's exports is the high level of commitment to cut tariffs, with 99% of import tax lines between the two sides being eliminated within 7-10 years. The number of issuance of C/O form EUR.1 after nearly three months of implementing the EVFTA Agreement has shown the level of interest, initiative, and flexibility to seize opportunities and meet relatively well C/O conditions to take advantage of tariff preferences of our country's enterprise", Deputy Minister of Industry and Trade – Tran Quoc Khanh, emphasized at the Conference "Evaluation the implementation of the rules of origin of goods in the EVFTA Agreement."

While waiting for the promotion roadmap in EVFTA, do not forget GSP.

As discussed with reporters, Ms. Phan Thi Thanh Xuan – Vice President of the Vietnam Leather, Footwear and Handbag Association, said that over the past time, the leather and footwear businesses have actively sought information about incentives and conditions for enjoying incentives in the EVFTA. After a month of implementing this agreement, by September 2020, many leather and footwear enterprises have achieved better export growth. Currently, the leather and footwear industry is implementing production and business plans to be able to apply orders for EU partners in the last months of 2020 and the first months of 2021.

In accord with economic experts, up to now, Vietnamese enterprises have not intensely exploited the EU market; capitalizing on opportunities in EVFTA is only the beginning. To be more effective, businesses must fully and "root" meet the EU's regulations on non-tariff barriers.

The Import-Export Department claimed that the EU still offers a universal preferential tariff regime (GSP) for Vietnam; however, this is a unilateral preference that depends on the EU, while the EVFTA is a bilateral preference between Vietnam and the EU. GSP's rules of origin and EVFTA's rules of origin are almost the same for products such as seafood, textiles, leather, footwear, etc. However, there are still some good if following the EVFTA and roadmap. It takes three years for the tax to return to 0%. In that context, businesses can still apply the rules of origin of goods under GSP through specific and detailed exchanges with partners to know which products use the administration of C/O form to which capitalize on the most effective tariff preferences.

In addition, Representative Import-Export Department said, because the rules of origin in the EVFTA Agreement require large participation of raw materials in the FTA, enterprises need to improve production capacity, deep processing, research for raw materials in the region or develop domestic sources of raw materials; actively learn, participate in intensive training activities to be able to clearly, and properly understand the regulations on rules of origin, confidently apply them.

At the same time, businesses need to have a complete document storage system to prove the origin of goods when there is a request for post-inspection, ensure the effectiveness of origin verification, and assist C/O being accepted by EU customs, and goods are entitled to EVFTA tariff preferences.

In particular, Experts and representatives of associations and industries claimed that in the long run, our country needs to develop supporting initiatives to solve the origin of exports thoroughly. Regarding this story, at the regular press conference that took place on October 17, Mr. Nguyen Huu Thanh – Deputy Director of the Department of Industry (Ministry of Industry and Trade), informed that, over the past time, the Ministry of Industry and Trade had made efforts to promote supporting industrial production to enhance the autonomy of domestic manufacturing industries, limiting the impact of disruptions.

"The Ministry of Industry and Trade has submitted to the Government for promulgation Resolution 115 on solutions to promote the development of supporting industries and a resolution on orientations for building national industrial development policies to 2030, with a vision to 2045. At the same time, it is expected that from now to the end of the year, a resolution will be issued on solutions to develop Vietnam's mechanical industry, etc. These are the legal foundations for developing the supporting industry in the coming time in the near future", Mr. Thanh shared.