Although supply chain due diligence regulations are relatively complex, the participation of Vietnamese suppliers in meeting these requirements is considered fairly favorable for at least the following reasons:

- First, many Vietnamese suppliers have already become familiar with standards and requirements relating to human rights and environmental protection that are similar to those stipulated under the SCDDA and CSDDD.

In practice, many European partners, particularly multinational corporations, have long implemented voluntary due diligence obligations in line with OECD Guidelines by imposing their own Codes of Conduct on suppliers. Vietnamese enterprises, especially those engaged in processing or manufacturing under contract, are required to commit to complying with such standards in order to secure orders.

Since the due-diligence-related standards in the SCDDA and CSDDD essentially codify key elements found in these voluntary corporate Codes of Conduct, many Vietnamese enterprises are already familiar with, and to some extent prepared for, the basic human rights and environmental requirements set out in the two legal instruments.

- Second, Vietnamese suppliers have been complying with domestic laws whose substantive requirements are largely aligned with due diligence standards under the SCDDA and CSDDD.

Through participation in international agreements, especially high-standard new-generation FTAs, and multiple international conventions on labour and the environment, Vietnam’s domestic legal framework in these areas has been developed based on international norms and incorporates relevant treaty commitments. As a result, Vietnam’s domestic legal standards in related fields are broadly consistent with the supply chain due diligence expectations of the SCDDA and CSDDD.

Except for a few specific cases, most suppliers participating in export-oriented supply chains to Europe operate within the formal sector, many of which are medium-sized or large enterprises (including a significant number of FDI firms). These enterprises are assumed to comply with domestic legal regulations and are subject to close inspection and supervision. Accordingly, for most of these enterprises, the due diligence standards set out in the SCDDA and CSDDD do not create any significant additional compliance burden.

- Third, for the majority of Vietnamese suppliers, fulfilling cooperation obligations in the due diligence process under the SCDDA and CSDDD is neither excessively costly nor overly challenging.

As noted earlier, suppliers engaged in export-oriented production for the EU are largely formal-sector enterprises. Vietnamese laws on taxation, labor, and environmental protection require regular reporting, training, and other procedures similar to coordination measures prescribed in due diligence regulations. Therefore, for these enterprises, cooperating with EU/German companies subject to the laws (providing information, supporting the implementation of mitigation measures, etc.) does not pose major difficulties.

Source: Compiled by the TTWTO-VCCI Research Group

• Scope of Vietnamese suppliers potentially affected from the supply chain due diligence requirements of European markets
• Responsibility to comply with human rights and environmental standards of Vietnamese suppliers in the supply chain due diligence process
• Responsibility to implement certain measures of Vietnamese suppliers in the supply chain due diligence process
• Supply chain due diligence and textile and footwear supply chains in EU
• Actors in textile, garment and footwear supply chains potentially affected by due diligence requirements