EU market green standards: Motivation or pressure for Vietnamese goods?

The EU market is increasingly setting stronger green standards for exported goods, which will have a major impact on Vietnam's export activities.

Big market for Vietnamese goods

According to the latest statistics of Ministry of Industry and Trade, in the first 11 months of 2024, the export turnover of goods to the EU market is estimated at 47.3 billion USD, an increase of 18.1% over the same period last year (the same period in 2023 decreased by 8%).

Notably, after 4 years of implementation, the Vietnam - European Union Free Trade Agreement (EVFTA) is a major driving force for Vietnam's exports. If in 2019, Vietnam's exports to the EU reached 35 billion Euros, by 2023 this figure had reached 48 billion Euros. Many industries recorded strong growth such as electronics, textiles, footwear, agriculture and fisheries...

The EU market sets many green standards for goods (Photo: VNA)

The EU is a large market for Vietnam's export goods and each change in the policy of this market will have a major impact on export goods. For example, according to the Department of European and American Markets - Ministry of Industry and Trade, Vietnam's export of goods to the EU is currently facing new challenges from the EU's "green policies" with strict regulations on imported goods and consumption towards sustainable development and circular economy. In particular, the Circular Economy Plan is part of the European Green Deal. The European Green Deal is a goal and strategy of the EU to help the bloc reduce net emissions to zero as soon as possible by 2050.

To implement this strategy and goal, the EU will issue a series of regulations, including the Circular Economy Action Plan (CEAP). This plan will directly impact 7 main export sectors of Vietnam, namely: electronics; information technology; battery group; packaging group; plastic group; textiles and footwear.

In particular, the ISPR (regulations related to eco-design, sustainable products) has been effective since July 2024. ISPR affects a number of key export sectors of Vietnam, including textiles and footwear, plastic products and packaging. ISPR has regulations related to preventing and restricting the destruction of textile products, requiring products to have a DPP digital passport.

Green trends, circular economy and sustainable development are considered to be unchangeable factors in EU policy, which are also things that export enterprises are forced to meet to keep up with market demands. Talking to reporters of Industry and Trade Newspaper, Dr. Le Quoc Phuong - Former Deputy Director of the Center for Industry and Trade Information - Ministry of Industry and Trade said that green barriers for imported goods are an unchangeable trend. The reason for this situation is that climate change has been and is becoming increasingly severe. The EU has become the leading market in the world, using the power of importers to apply green criteria and standards to imported goods. Therefore, businesses must consider it natural, necessary and forced to meet because this is an unchangeable trend.

On the business side, Mr. Vuong Duc Anh - Chief of Office of the Board of Directors of Vietnam Textile and Garment Group (Vinatex) said that the EU market has legalized all regulations related to sustainable development and they tend to require regulations related to sustainable development not on a voluntary basis but as mandatory requirements.

For example, Adidas and Nike both set a goal of using 50% recycled materials by 2025 or 2030. They both have a very specific sustainable development program and Vietnamese textile and garment enterprises that make products according to their requirements must also make changes in terms of raw materials. For example, enterprises in the yarn industry of Vinatex, 20% of yarn products are in the direction of recycled and circular yarn. Enterprises must buy organic cotton or buy natural and recyclable raw materials.

Not just a challenge

Green growth is a mandatory requirement for export enterprises in the coming period. At the same time, this is a very costly activity. However, Dr. Le Quoc Phuong said that enterprises need to see green transformation not only as a challenge and difficulty but also as a great opportunity for enterprises to invest, transform production and business activities, invest in production processes, change equipment and input materials. The change will stimulate innovation and in the long term promote better transformation.

Specifically, with green conversion, businesses will have to spend initial costs such as using energy-saving equipment and using recycled materials. But in the long run, it will reduce costs for businesses such as reducing energy costs and reducing prices. If businesses achieve green conversion sooner, they will increase their competitiveness with competitors. Therefore, green conversion will be a great opportunity for businesses.

Speaking to reporters from the Industry and Trade Newspaper, Ms. Nguyen Thi Hoang Thuy - Director, Head of the Vietnam Trade Office in the Swedish market, concurrently in charge of Northern Europe, shared that European green standards pose challenges for Vietnamese businesses, but also create new development opportunities. Therefore, businesses need to be aware of the changes that the agreement will bring and be ready to adapt to the challenges to maintain competitiveness in the EU market.

In addition to meeting market demands, one of the important solutions is that businesses must increase the added value of exported products. Instead of focusing on raw processing, businesses need to invest in deep processing technology and develop differentiated products. For example, in the wood industry, instead of exporting raw materials or unfinished products, businesses should focus on producing high-end furniture with unique designs, or smart furniture associated with technology, meeting the tastes of EU consumers. For agricultural and aquatic products, processing into value-added products such as canned food, processed food, or organic products will also help increase export value.

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