Tariffs on Vietnam's footwear exported to the EU will be cut from 13-14 percent to 3-4 percent this year, according to Chinhphu.vn.
This move is intended to bring the country's footwear exports in line with the EU's generalised system of preferences (GSP).
To capitalise on the new regulation, which gives developing countries unilateral tariff preferences for the 2014-16 period, the Ministry of Industry and Trade has directed local footwear producers to design long-term investment policies that will help boost domestic sources of materials and develop ancillary industries.
This will potentially raise the industry's competitiveness and reduce outsourcing for foreign footwear giants, it said.
Although footwear is the leather industry's key product, the ministry has also asked local producers to pay attention to diversifying production to include high-quality handbags and wallets as these are also among the industry's most profitable lines.
The footwear industry's export turnover was 10.3 billion USD in the past year, up 18 percent against the previous year.
The EU is Vietnam's largest footwear importer, and Vietnam is the second-largest footwear exporter to the EU after China, with an export turnover of 3.4 billion USD in 2013, accounting for 33 percent of Vietnam's total footwear export turnover.
Chairman of the Vietnam Footwear Association Nguyen Duc Thuan said the GSP will present a good opportunity for Vietnam's footwear exports to compete against the same products by EU producers.
In addition to the GSP regulations, Thuan noted that the footwear industry is also expecting some concessions and incentives from the EU-Vietnam Free Trade Agreement and the Trans-Pacific Partnership agreement as footwear is likely to be one of the major beneficiaries of these agreements. Under the EU-Vietnam FTA negotiation, at least 90 percent of Vietnamese goods exported to the EU will enjoy a tax exemption.
With these golden opportunities, the footwear industry is expected to gain at least 12 billion USD from exports this year, Thuan said.