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Vietnamese companies urged to willingly adopt the rules of Free Trade Agreement

21/12/2020

    The European Union-Viet Nam Free Trade Agreement (EVFTA) is a new generation bilateral trade agreement between Việt Nam and 28 member states of the European Union (EU). The trade deal was approved by Việt Nam’s Parliament on June 8th, 2020 and came into effect on August 1st, 2020. The EU is one of Việt Nam’s top export markets, where total export and import values in 2019 were US$ 41.48 billion and US$ 14.91 billion, respectively. Thus, the EVFTA is expected to boost the two-way trade, provide optional consuming markets for companies of both sides and set up new supply chains to increase the added values for products. As a new-generation FTA, the EVFTA contains new subjects regarding intellectual property, labour protection and environmental issue besides common matters of merchandises and services. The document consists of 17 chapters and environmental issues are written in Chapter 17 on sustainable development. The environmental adherences and obligations ruled by the EVFTA are meant to make the stakeholders enhance their interaction in trading and environmental policies, thus assuring trade and investment activities subject to the EVFTA will not have negative impact on the environment and relevant activities.

The signing of the EU - EVFTA on June 30th, 2019 in Hà Nội City

Major environmental obligations subject to the EVFTA

    The environmental commitments, obligations and arrangements subject to the Sustainable Development Program involve in the following actions and fields: the Consensus on obligations to implement the Multilateral Environmental Agreements (MEAs) such as the Convention on Biological Diversity (CBD), the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) and the United Nations’ Framework Convention on Climate Change (UNFCCC). Under the EVFTA, Việt Nam and the EU are obliged to maintain both environmental protection and legal enforcement at a highly intensive level of efforts when increasing investment and trade. Either side has their own standards of environmental protection but they should meet the requirements under the MEAs. At the same time, under the EVFTA, companies from both Việt Nam and the EU must comply with the rules on corporate social responsibility (CSR) developed by the international community and the Organisation for Economic Co-operation and Development (OECD); enhance their efforts in the preservation and management of natural resources; fight illegal logging and fishing…

    In the EU, imported goods are subject to highly strict regulations on environmental quality control. Under the EU rules on technical standards, the imports must be marked with CE’ symbol if they meet the test on environmental safety requirements so that they become tradable in the European market. That proves the EU is becoming more alert on companies’ CSR policies and their environmental standards in production.

    Thus, the EU and Việt Nam both recognize the sustainable balance between economic development, social development and environmental protection. Environmental obligations ruled by the EVFTA require strict compliance from the Vietnamese Government, businesses and people. Therefore, Vietnamese producers must follow and meeting high environmental standards in addition to assuring the quality of goods and services exported to the European market.

Difficulties and challenges

    As a developing economy, Việt Nam is still struggling and the resources for environmental protection activities remain limited. Thus, the pressure  and risk are quite high for Việt Nam when it comes to complying and implementing environmental obligations under the FTAs. The following are the obstacles:

    The legal framework on environmental protection is still incomplete. Though policies, regulations have been issued but the enforcement has remained stagnant. And when it comes to practice, there is overlap among policies and agencies, making it harder for Việt Nam to comply with international rules.

    The implementation of environmental regulations has remained less inefficient than expected. Though rules have been made to enhance the administration of environmental activities, there are still serious violations.

    Low public awareness of environmental protection remains and this is the major cause for the growing number of violations. A number of Vietnamese companies and people blame economic poverty for environmental destruction while some Government officials have not fulfilled their duty to protect the environment.

    The quality of some international trade officials is below the bar. The FTAs and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) are new to Việt Nam but its government officials have not experienced with related issues so it would be difficult for Việt Nam to deal with disputes brought by the trade agreements.

    Financial resources for environmental protection are limited. Lack of financial support will lead to sufficient investment for the environmental sector. Suffering this, Việt Nam will be tackled to comply and follow the high standards and obligations ruled by the likes of EVFTA and CPTPP.

    While the environmental protection standards are not accomplished and the control system has not been fully developed, removing technical barriers for the import of merchandise, equipment and technology would put Việt Nam at the risk of becoming the world’s junkyard and consuming market for low-quality products and services.

   For the private sector, especially small- and medium-sized enterprises, spending on new production technology and waste treatment system to meet international standards will be very challenging in case they want to raise their shares in overseas markets.

Issues for the Government and business community

For the Government and its agencies

    Việt Nam needs to be prepared to comply with the EVFTA’s environmental obligations in the near future. The Government has to develop an action plan to resolve the problems mentioned above and focus on the following issues:

Firstly, environmental regulations and standards must be improved and completed to make sure Việt Nam meets the obligations and commitments ruled by the MEAs and international laws.

Secondly, more investment is required for environmental pollution control while the Government needs to enhance the administration on how people, organisations and businesses comply with environmental rules. Stricter measures and penalties are also imposed on the sectors and businesses that have high risk of environmental pollution and violate the laws.

Thirdly, Government officials should be sent to training programmes to improve their knowledge about trade and environmental disputes. Support should be made for environmentally-friendly economic activities, in which the private sector is encouraged to enhance its participation.

Fourthly, people and companies should raise their awareness about the obligations and commitments in MEAs and FTAs such as the EVFTA, to which Việt Nam is a member. Especially local enterprises are expected to join training programmes to understand how environmental violations are treated so that they further improve their international integration.

Fifthly, the Government, Ministries, sectors and local authorities should be held involving in a integrative system to resolve environmental issues under the EVFTA. The integrative system must be strong enough to support Việt Nam deal with environmental disputes in global trade.

Sixthly, local companies must be updated with any changes of the Vietnamese and international rules. Government agencies should work with Vietnamese firms to study potential impact of the changes so those changes would have minimum effects on domestic business operation.

Seventhly, the Government should give local companies updates of environmental technologies so they can adopt the right solutions to meet the standards demanded by the State and increase the performance in both business operation and environmental protection.

For companies

    Vietnamese enterprises must focus on the following issues to maintain their positions and status on both domestic and international markets, as well as expand their market network:

    Local firms are asked to follow the Vietnamese and international laws on environmental protection and apply internationally-recognised environmental standards in production.

    Domestic businesses should acquire sufficient understanding of the environmental requirements in the countries where they will send the exports. They should get rule updates from overseas partners, including environmental policies.

    Vietnamese companies must adopt advanced management models for production and environmental protection, invest in modern, less-polluting technologies to make more competitive, environmentally-friendly products and meet the requirements of export markets.

    Local firms are encouraged to develop their own environmental standards, which are in line with international rules, for their products - expecially the ones sold to overseas markets.

    They are also urged to acquire the biological stamp and strive to create environmentally-friendly outputs to expand the influence in other markets.

   In addition, local companies must be proactive to adopt internationally-known environmental mechanisms such as corporate social responsibility (CSR) and expanded producer responsibility (EPR).

Hoàng Xuân Huy

Department of International Co-operation (MONRE)

(Nguồn: Bài đăng trên Tạp chí Môi trường số Chuyên đề Tiếng Anh III/2020)

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