The EU, a developed market, has historically maintained high standards across most sectors. Consequently, compared to many other markets, the EU has consistently presented significant challenges for businesses striving to meet TBT and SPS requirements for market access.

With the Circular Economy Action Plan (CEAP), the EU is implementing a series of legislative amendments that elevate and expand technical regulations and standards (TBT) for listed products. These encompass product characteristics, packaging processes, labeling methods, and post-consumer waste management. This necessitates that relevant Vietnamese exports comply with these new or higher standards, with the expectation of even more stringent requirements in the future.

Several major challenges confront Vietnamese manufacturers and exporters as the EU rolls out CEAP:

Challenges in raising awareness about CEAP

CEAP comprises a comprehensive package of policy measures across seven key product value chains. Many of its regulations and policies apply to all related products, regardless of EU origin or import status. Consequently, CEAP and its implementing legislation are expected to significantly impact Vietnamese exports to the bloc.

However, Vietnamese businesses have primarily focused on certain EU green policies like the Carbon Border Adjustment Mechanism (CBAM) and the European Union Deforestation Regulation (EUDR), without systematically and accurately understanding other policies within the European Green Deal, including CEAP. This lack of awareness prevents businesses from grasping the new and upcoming requirements for relevant goods under CEAP, potentially leading to lost export opportunities due to non-compliance.

Therefore, the first challenge for Vietnamese manufacturers and exporters is to improve their understanding of the EU's CEAP. To address this, they are recommended to:

• Thoroughly research CEAP's content and its 35 specific actions to understand the trends and policy objectives of each action.

• Continuously monitor the implementation progress of each action, including the scope, application methods, and actual timelines of related regulations, to make necessary adjustments.

• Proactively contact relevant government agencies, organizations, and associations for support in understanding CEAP regulations.

Challenges in response/compliance capacity

As a package of measures upgrading and introducing new regulations across targeted product value chains, CEAP requires many Vietnamese exports to meet new or increasingly stringent requirements.

The challenges in meeting these new green standards vary depending on the specific standard, sector, and current capabilities of Vietnamese manufacturers and exporters. Overall, however, the new/upgraded standards and regulations under CEAP require businesses to overcome challenges related to:

• Technological Capacity: Many green product standards necessitate technological upgrades in production processes to meet new or higher existing requirements. In some cases, technologies must be adaptable to evolving standards over time (e.g., progressively stricter regulations phasing out certain hazardous chemicals or microplastics).

• Capacity for Sustainable Product Design and Control: CEAP introduces requirements for improved product durability, repairability, waste collection and treatment, and increased use of secondary raw materials (mandatory recycled content). This requires businesses to adjust and redesign their production processes from design to disposal to ensure compliance.

• Workforce Capacity: Implementing new/upgraded EU standards demands a more skilled workforce to operate new technologies, design sustainable products (with high durability/repairability, recyclable/reusable waste), etc. This puts pressure on businesses to train and retrain their workforce.

In reality, few Vietnamese businesses, including foreign-invested enterprises, possess the resources (both financial and human) to immediately transition and meet all these capacity requirements. To overcome these inevitable challenges, manufacturers and exporters of relevant products to the EU market are advised to:

• Monitor and regularly update themselves on the CEAP action plan implementation roadmap for a clear understanding of green standard trends. Thoroughly research the requirements, scope, and implementation timelines of relevant green standards and regulations to prepare appropriately, efficiently, and cost-effectively.

• In the long term, develop a roadmap aligned with their capabilities to progressively green their production processes. This will ensure compatibility with evolving export market trends and minimize adjustments needed to meet new standards as they are implemented.

Source: Center for WTO and International Trade - VCCI 

• Several CEAP implementation policies affect Vietnam's exports.
• Long-Term Opportunities for Vietnamese Exports from CEAP