27/06/2016
For the past 10 years, “green growth” has become an economic development model in many countries and international organizations to protect the environment while ensuring global economic growth by minimizing the amount of industrial waste and greenhouse gasemissions, and using natural resources in a sustainable way. In September 2012, Việt Nam, a developing economy, approved a national strategy on green growth from 2011 to 2020, with a vision to 2050. Also, in March 2014, the Government gave a national action plan on green growth for its approval from 2014 to 2020. trade is a key aspect of global economic development. It has doubled the amount of traded products and services in the world Gross Domestic Product (GDP) over the last 30 years. The question seach economy must answer are how green growth affects its trading activities and what opportuni- ties domestic firms would receive. This article will clarify the relation- ship between green growth and trade,also analyzethe opportunities for trade green growth in Việt Nam.
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Green growth - the door to opportunities of trade, growth and sustainable development |
1. The relationship between trade and green growth
Commercial trade with appropriate adjustment can transform an economy into a green economy by increasing the trade of environmen- tally friendly products and services with low carbon footprints, and renewable energy. It can also make the use of natural resources more efficient and reduce the unemployment rate. Using green production methods saving natural resources and energy can help an economy become greener and improve its penetration and competitiveness in global markets.
Becoming a green economy will help a country enhance its trad- ing of environment-friendly goods and services, open new markets for those products and allow it to trade more products that are suitable for sustainable development. At the United Nations (UN) Conference organized in Rio de Janeiro 3 years ago on sustainable development, participants discussed the potential risks of protectionism in green eco- nomic development policies. They agreed that the resulting increased trade between developing nations could motivate them to implement green economic development poli- cies in sustainable ways. Therefore, green growth is a gate opening new opportunities for countries in terms of trading, growing and sustainable development.
2.Trading opportunities cre- ated by green growth
Trading opportunities created by green growth come to almost eachsector in the economy by creat- ing a green environment and devel- oping new markets for new green- economy sectors. Việt Nam’s green growth model focuses on 3 main targets: reducing greenhouse gas emissions from energy production, making industrial production more environmentally friendly, creating new green industries to enhance the development of green technolo- gies and efficient uses of natural resources, and making domestic consumption green to create sus- tainable lifestyles for local people. Main trading opportunities will fo- cus on energy, industry, agriculture, fishery, forestry and other sectors such as tourism, construction and transportation.
Energy sector: Việt Nam plans to make sure green and renewable sources of energy occupying 5% of total energy supplyby 2020, and cre- ate a market to import related ma- chines, equipment and technologies such as solar panels, wind turbines and water solar heaters. The coun- try will develop local producers to meet the demand of both domestic and overseas markets.
At the moment, Việt Nam’s de- mand for energy-saving technolo- gies and products is quite high. Theuse of natural resources for in- dustrial production is 1.5 - 1.7 times higher than Thailand and Malaysia, and the Government is aiming to reduce the annual ratio of energy consumption over GDP by 1 -1.5% by 2020.
Industry sector: Green industrial products that are friendly to the en- vironment and meet standards for sustainable development will have comparative advantages on the international market. In fact, the number of ISo 14001 certificates on environmental management increased 15 times between 1999 - 2009. The large-scale industrial products such as textile and gar- ment products, footwear and electronics will have more opportuni- ties in foreign markets if they meet the environmental requirements set by those markets. besides, there will be more market opportunities for products made from recycled and environmentally friendly materials for domestic consumption. Moreover, the markets for environmen- tally friendly products and services will open more as Việt Nam startsto produce high-value, green indus- trial and high-tech products ac- counting for up to 45% of the GDP. The country also aims to make 50% of domestic producers use green technology by 2020, saving 8 - 13% more natural resources. Futher- more, the environmentally friendly products and services occupy only about 10% of the GDP currently. Most of these are importedbecause domestic firms cannot meet domes- tic demand. Companies making en- vironmentally friendly products in- creased theirpresence in GDP from 0.51% (in 2005) to 0.57% (in 2014), but that only meets about 5% of domestic demand for urban waste water management, about 15% for solid waste management and 14 % for dangerous waste disposal.
Agriculture sector: Sustainable farming methods may help Việt Nam raise its agricultural produc- tivity, join the global value chain and meet the worldwide rising de- mand for sustainable organic prod- ucts. The global market value of or- ganic foods and drinks is expected to reach US $105 billion in 2015, an increase of 67% from the value in 2011, with 70% of products com- ing from developing countries. For example, sustainable tea production rose 20 times in the period of 2005 - 2009. Việt Nam exports many ag- ricultural products, some of which are among the world’s top 10 such as pepper, cashews, coffee, rubber and rice, with a total export value of US $23 billion in 2014. However, itsag- ricultural products have encoun- tered problems in overseas markets withproof of origin and sustainable production standards like Global GAP. In addition, the organic ag- ricultural products like vegetables, fruits and meat are still being pro- duced by small-scale farmers. Việt Nam should expand its presence in the global value chain and help domestic producers get access to foreign markets by meeting sustain- able production standards, helping local companies meet market re- quirements and expanding the scale of trade.
Fishery sector: Fishery products meeting sustainable production standards may help better manage- ment systems obtain comparative advantages and win the market shares from weaker ones valued at a total ofUS$50 billion/year on the global market. The fishery sector has only met some of the sustain- able production standards for rais- ing and processing fishery products for export such as HACCP, SA 8000, MSC and MSA, but the country has failed to meet those standards for fishing in distant waters.
Forestry sector: The market share of wood products and non-wood forestry products made with sus- tainable production methods could increase with global trading, as itsindustry is making US $20 bil- lion/year from certified products. The price for certified wood prod- ucts, especially those coming from tropical regions could increase by 15 - 25% depending on their status on the global market. besides, non- wood forestry products are suitable with niche-market trading strate- gies, especially those with long life cycles, high values, easy processing procedures and little investment needed for transportation and stor- age. Developing economies are of- fering packages to re-grow trees in exploited forest areas through a lotof international mechanism such as the Clean Development Mecha- nism (CDM) and Reducing Emis- sions from Deforestation and Forest Degradation (REDD+). Việt Nam is among the top 5 wood product ex- porters in the world, but less than 20% of its products are from sus- tainable sources. Wood materials used in production and for exporta- tion are mainly imported from cer- tified sustainable suppliers, but the country has not yet met the global requirements for sustainable wood products.
3.Recommendations
To acquire trading opportunities from the implementation of green growth policies, Việt Nam needs to improve market conditions and remove trade barriers. Some of the recommendations are follows.
First, the Government needs to make more efficient investments in green growthfocusing on economic and technical infrastructure, edu- cation programs and access to sus- tainable natural resourcessuch as producing electricity from renew- able energyto enable domestic pro- ducers and suppliers to find success in the green industry.
Second, Việt Nam needs to en- sure fair competitiveness on the domestic market for green growth products and services. The State will have to remove its assistance for un- sustainable development and trad- ing sectors such as agriculture and fishery, and apply pricing policies including social and environmen- tal costs in order to create sustain- able trading and assure competitive price of green products.
Third, the Government needs to complete its national regulations on green growth and enclose them with the legal framework and national sustainable development strategies. The State also needs to develop and implement specific policies focus- ing on making economic sectors greener. These policies could in- clude national sustainable produc- tion and consumption programs, and the use of sustainable natural resources and safe waste manage- ment.
Fourth, Việt Nam needs to im- prove its cooperation with other countries to trade greener products and reduce trade of “brown growth” products (which increase pollution). The legal systems set up by multi- lateral trade organizations provide transparency and predictions help- ing improve all aspects of green growth trading. The country needs to develop Wto’s new multilateral principles further, such as trading more environmentally friendly prod- ucts and services, and helping create an environment in countries abling to act together to solve global issues. Moreover, regional trade agreements may help the country promote its sustainable development and reform its policies on environment protec- tion, as well as improve cooperation between Government agencies. Mul- tilaterally environmental agreements also play an important role in creat- ing a green economy and sustainable trade.
Fifth, the State needs to improve its communication with the busi- ness sector, and help companies and Government officials improve their green growth competence. Coopera- tion on legal action and development of relevant competencies are among the most important methods to over- come the challenges related to green growth and help developing coun- tries implement necessary policies. Developing economies need cooper- ation and support from international organizations such as the United Nations (UN), Multilateral Environ- ment Agreement (MEA) and World trade organisation (Wto), as well as from the private sector and non- governmentalorganizations so that they can maintain their current sta- tus and deepen their participation in sustainable global trading. If those economies achieve the target, they will connect domestic producers and introduce them to the global market.
Trần Hoàn
Institution of Trading Research
Ministry of Industry and Trade
