The Vietnam-UK Free Trade Agreement (UKVFTA) has bolstered Vietnam footwear sector, enhancing export opportunities through improved tariff incentives. Leveraging the agreement, the industry has expanded its reach to the UK and other international markets, achieving substantial growth in the first eight months of 2024. During this period, Vietnamese footwear exports to the UK surged by 25%, contributing nearly 8% to the EU’s total export turnover.
Ms. Phan Thi Thanh Xuan, Deputy Director of the Vietnam Trade Promotion Agency, stated that the UKVFTA has provided the leather and footwear industry with competitive advantages, enabling accelerated exports. This has been echoed by leaders of the Vietnam Leather, Footwear, and Handbag Association (Lefaso), who highlighted a marked 16% overall industry growth, with exports to the US, EU, and China also rising significantly. By September, the industry’s export revenue reached $9 billion, a 16.54% increase over the same period last year.
Under the UKVFTA, Vietnamese products enjoy extensive tariff reductions, with import duties to the UK set to phase out by 99.2% over six years. This has allowed Vietnamese exports, particularly in footwear, textiles, agriculture, and aquatic products, to access the UK market with fewer financial barriers. The industry, comprising over 1,000 factories and employing approximately 1.5 million workers, contributes around 8% to Vietnam’s GDP.
The UK, previously a significant export destination, saw a decline in Vietnamese footwear imports during 2019-2020. However, post-Brexit and throughout the COVID-19 pandemic, exports continued to rise, underscoring the industry’s resilience. In 2023, despite declines in many markets, UK-bound footwear exports reached $765 million, placing footwear among the top three export categories to the UK, alongside electronics and machinery.
Ms. Xuan emphasized the UK’s strategic importance for Vietnamese footwear. With Vietnam ranked second globally in footwear exports and accounting for 8% of global market share, the UK’s competitive, high-standard market represents both an opportunity and a challenge. The UKVFTA now enables Vietnam to compete on equal tax terms, though Vietnamese firms still face design and cultural preferences advantages held by European competitors.
Vietnam’s entry into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has further intensified market competition. New UK market entrants from CPTPP countries, such as Australia and Mexico, require Vietnamese enterprises to enhance competitiveness through design innovation and local material sourcing.
In alignment with these goals, Lefaso has proposed a raw materials trading hub to support the industry’s compliance with origin regulations and sustainable standards. Ms. Xuan stressed that “greening” production is essential for long-term market presence, especially as green standards become critical for exports to the UK, EU, and US. Embracing sustainable practices and ensuring transparency in sourcing are expected to solidify Vietnam’s position in the global footwear supply chain.
MOST READ | Vietnam Fuels Halal Growth with Sustainable Strategy and Global Partnerships
