Electrical, electronic, and information technology products are among the seven product groups that Vietnam exports and are affected by the European Green Deal.
Impact on the costs of Vietnamese businesses
According to Ms. Nguyen Minh Thao, Head of the Business Environment and Competitiveness Department at the Central Institute for Economic Management Research ( Ministry of Planning and Investment ), seven groups of Vietnamese export products are projected to be impacted by the European Green Deal (EGD), including: electrical and electronic products, information technology, machinery and equipment, and related components; agricultural products (especially coffee, cashews, pepper, cocoa, and meat); seafood; wood and wood products; various types of food, especially organic food; textiles and footwear; various chemicals, fertilizers, batteries, and accumulators; iron, steel, aluminum, and cement; and packaging for various products, especially food and chemical packaging.
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| Textiles and footwear are among Vietnam's export product groups affected by the European Green Deal. Photo: ST |
The European Green Deal is a comprehensive and long-term program of the European Union (EU) aimed at addressing the urgent global climate issue by 2050, adopted on January 15, 2020. Accordingly, from January 2020 to October 2023, the EU introduced 58 green actions and policies, or those planned to directly affect foreign goods exported to the EU.
According to Ms. Nguyen Minh Thao, several policies in the European Green Deal impact Vietnam's exports to the EU, including: the Carbon Border Adjustment Mechanism (CBAM); the farm-to-table strategy; the circular economy action plan; and the Biodiversity Strategy to 2030.
In this context, CBAM is a mechanism introduced by the EU to control the amount of greenhouse gases emitted from goods imported into the EU. CBAM sets a limit on the carbon footprint that products must meet in order to be allowed to import into the EU, putting pressure on businesses outside the EU to reduce imports and exports in their production process or pay carbon taxes on their products.
Specifically, according to Ms. Nguyen Minh Thao, all businesses importing products and those manufacturing imported products outside the EU are affected by CBAM, especially companies in the construction and machinery sectors, automotive manufacturers, railway and equipment manufacturers, as well as chemicals and agriculture .
CBAM is also implemented in stages. Initially, this mechanism will only apply to energy-intensive goods with a high carbon leakage risk, such as fertilizers, cement, electricity, hydrogen, iron, steel, aluminum, and basic goods produced from these materials. In addition to direct emissions, the calculation of related emissions for products within the CBAM framework must also include "indirect emissions." Furthermore, CBAM will be expanded to all sectors within the EU's emissions trading framework by 2030. The amount of free CO2 credits granted will gradually decrease by the end of 2034; instead, businesses will have to pay to purchase credits if their products emit more.
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| Electrical and electronic products, information technology, machinery and equipment, and related components are among the product groups affected by the European Green Deal. Photo: ST |
New opportunities arise from challenges.
According to Ms. Nguyen Minh Thao, the EU was the first continent to implement the European Green Deal, committing to carbon neutrality by 2050. Along with the EU, several other countries are also beginning to follow this example. For instance, South Korea, China, and the United States… accordingly, green production is becoming a mandatory choice, a market imperative that businesses must implement.
Vietnam is the 11th largest exporter of goods to the EU, so many Vietnamese goods exported to the EU will be affected by the EU's green policies. In particular, the short-term application of CBAM by the EU will impact four Vietnamese export items: steel, aluminum, cement, and fertilizers. Between 2017 and 2021, Vietnam's total steel exports to the EU market were approximately US$1.1 billion per year, and aluminum exports US$48 million per year. In 2022, the EU's iron and steel imports from Vietnam reached US$2.1 billion, with aluminum accounting for approximately US$65.18 million.
Agricultural products, food, and textiles are Vietnamese product groups with high export potential and value in the EU market, and are also areas heavily influenced by EU green policies. EU green policies for these product groups are considered complex and challenging for three reasons: Firstly , they encompass all agricultural, food, and textile products (not just specific types within these groups); secondly , they are codified as minimum, mandatory legal requirements (rather than recommendations); and thirdly , they include standards, measures, and regulations affecting multiple stages in the production chain (from design to raw materials, from production and cultivation to transportation, from use to repair, from disposal to recycling, etc.) and not just the final product.
Despite the challenges, according to economic experts, the European Green Deal also creates opportunities for Vietnamese goods and businesses. Specifically, to meet European standards, businesses are required to use clean technologies, which will open up opportunities to expand markets for Vietnamese goods and businesses. This increases opportunities for Vietnamese businesses to apply technology to production, thereby enhancing the competitiveness of Vietnamese businesses and goods in the international market.
Source: https://congthuong.vn/diem-danh-nhung-nhom-san-pham-xuat-khau-chiu-tac-dong-cua-thoa-thuan-xanh-chau-au-364761.html
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