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Ways of European Green Deal’s impacts on Vietnam’s exports

21/12/2023    83

European Union (EU27) is Vietnam’s third largest export market with continuous turnover growth over the years and is the partner with high trade surplus for Vietnam. Given the fact that EU – Vietnam Free Trade Agreement (EVFTA) entered into force on 1st August 2020, prospects of goods exporting to the EU market shall be even brighter.

In 2022, Vietnam’s export turnover to this Union reached USD 46.8 billion, 16.7% increase; a surplus of about USD 31.4 billion, 35% increase compared to 2021 numbers. Key exporting product groups comprise telephones, computers, electronic products, footwear and bags, machinery and appliances, textiles and clothing, coffee, steel, seafood, cashew nuts, wood and wooden products, plastics, fruits and vegetable, etc.

Given the EU market’s size and nature, maintaining the stability and sustainability of export activity to the EU is quite important to the future development of many Vietnam’s manufacturing and exporting industries, followed by income prospects of millions of laborers engaging in production and exporting chains of related products.

European Green Deal, coupled with specific policies, actions, plans in many sectors has been leading to considerable changes in requirements, regulations, conditions, procedures applied by the EU for many overseas goods imported to this union. Thus, Vietnam’s exporting goods to the EU market face challenges and opportunities from the increasing trend of the EU’s green standards enhancement.

Review of policies, plans that have been being implemented within European Green Deal framework shows that this is to have impacts on Vietnam’s exports in following main ways:

  • The increase in “green, sustainable” standards for exported goods

Review shows that the substantial part of EGD’s implementation policies, plans, actions have impacts on Vietnam’s exports to this market through the increase in “green, sustainable” standards for goods in many different ways, for instance:

- New additions of Technical Barriers to Trade (TBT) measures and/or food safety/sanitary and animal phytosanitary (SPS) linked to the “green, sustainable” objectives (for example: new regulations on eco-design, organic labelling, product passport, etc.)

- Amendment, revisions of current effective TBT, SPS measures towards the increase in “green, sustainable” requirements (for example: revisions relating to minimum/maximum chemical amount, antibiotic content in goods, broadening lists of banned/restricted pesticides, etc.)

- Extension of “green, sustainable” TPB, SPS scope applicable to various goods, products (for instance: eco-labels not only apply to energy products group but also all kinds of products)

- Shifting optional (encouraging) standards, obligations to mandatory ones (for example: some action recommendations of circular economy, responsible food business, animal welfare, etc.)

  • Increase in manufacturers’ financial responsibility for contribution to “green, sustainable” targets

Despite their unpopularity, some policies, actions under European Green Deal still require Vietnam’s manufacturers, exporters to be subject to additional payment (directly or indirectly in different methods) when exporting goods to the EU, for instance:

- Payments under Extended Producer Responsibility (EPR): Producers of processed and manufactured products (except for some kinds of products) are supposed to pay imported countries a fixed amount of fees for treatment of waste from use of products exported by them;

- Payments for purchase of CBAM certificate for each ton of CO2 released as per carbon border adjustment mechanism.

  • Increase in declaration, information provision about “green, sustainable” aspects of products

Some new requirements under EGD’s policies, plans shall force Vietnam’s manufacturers, exporters to perform declaration, information, document provisions to prove the green responsibility, for example:

- Declaration of CO2 emissions of imported goods under Carbon Border Adjustment Mechanism - CBAM

- Requirements of documents, evidence to prove the goods not being grown, raised or of origin from EU Deforestation-Free Products Regulation (EUDR)

- Procedures of proving, confirmation/acknowledgement for organic products as per Regulation on organic production and organic labelling, etc.

Besides methods of impact on Vietnam’s exported goods as per the statistic from obvious measures which was or will be tentatively applied by EU as mentioned above, it could not be ruled out the possibility that in future, given legislative policies, measures to be built, drafted and approved by EU authorities and its Member States to implement EGD’s objectives, Vietnam’s exports shall be likely to be impacted in other ways.

Source: Report "EU Green Deal and Vietnam's Exports - The case of the agricultural, food and textile industries" – Center for WTO and International Trade

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