Vietnam's Exports Facing Challenges from the Chemicals Strategy for Sustainability (CSS)
Chemicals are present in almost all consumer products, thus the scope of the CSS is extensive, encompassing products ranging from toys and childcare articles to food contact materials, cosmetics, furniture, electronics, and textiles. This requires industries/businesses producing and exporting related products to undergo a "green transition" in line with the CSS guidelines to maintain access to the EU market.
Furthermore, with the CSS action plan being very specific and covering multiple stages of the production and consumption process (from design, use, chemical labeling, and distribution), a comprehensive and holistic approach to green transition is required to meet its requirements. This necessitates significant effort and conversion costs for many Vietnamese manufacturing industries, particularly in the following aspects:
- Research and development: Creating eco-friendly products free of hazardous chemicals from the design stage (substituting hazardous chemicals with safer alternatives).
- Restructuring and technological transformation: Adapting production lines to meet requirements for product quality, packaging, chemical labeling, etc.
- Compliance with EU regulations: Ensuring the proper use and registration of chemicals in accordance with EU regulations.
To effectively implement these activities, Vietnamese producers and exporters need to understand each step/action of the EU in implementing the CSS by:
- Staying informed: Keeping abreast of EU policy changes related to chemicals (new issuances, amendments/supplements to relevant regulations).
- In-depth study of regulations: Thoroughly researching regulations (under consultation, in draft form, or already enacted) within the CSS framework to gain insights, direction, and/or identify specific requirements for their export products. This will enable timely and appropriate preparation and adjustments, avoiding premature actions (leading to unnecessary costs, waste, and impacting product competitiveness) while also preventing delays that could jeopardize market access when regulations officially take effect.
- Long-term green transition strategy: Integrating a green transition strategy into future production and export plans to stay ahead of the curve and exploit the market for green and sustainable products in the EU and other regions.
While the CSS with its specific action plans poses numerous transition challenges for Vietnamese businesses, in the long run, the green transition in accordance with the CSS is expected to bring certain benefits to Vietnam, specifically:
- Improved public health and environment: Minimizing the adverse effects of chemicals on human health and the environment, enhancing the quality of life and improving working conditions for laborers.
- Attracting investment: Driving investment attraction, especially foreign direct investment, through production transformation, establishment of new production lines, and opening up new market opportunities from this process.
In reality, most of the new policies/requirements are still in the proposal/draft stage and have not fundamentally altered the legal requirements that many Vietnamese exports must comply with. Therefore, manufacturers and exporters of products covered by the CSS still have time to prepare for the changes and, in the longer term, adapt to and capitalize on the opportunities arising from the green transition trend in the EU in particular and the global export market in general (not only the EU but also many major export markets for Vietnam such as the US, UK, Australia, and Canada are taking similar steps).
Source: Center for WTO and International Trade - VCCI