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Mr Tran Ngoc Quan, Vietnam Trade Counsellor in Belgium and the EU

In the international context and changes in consumer trends, how do these affect the purchasing of European distribution channels? What do they do to diversify supply, Sir?

Monitoring consumption trends in Belgium and the EU shows that green, clean and sustainable goods are increasingly popular. Through agricultural fairs, we see that the value of green, clean and bio-based products is increasing for food products. Textiles, footwear, and many others are increasingly moving towards environmental standards. This consumer trend makes the EU turn it into legal documents. For example, programs in the European Green Deal, or circular economy, are being legislated into legal regulations. Along with that, environmental standards, social responsibility, and labour standards are issued increasingly strictly.

Since then, products produced in green, clean, environmentally friendly, and sustainable development increasingly have a position in the EU market. That change in consumption trends leads to certain changes in purchasing trends in Vietnam. Purchasing enterprises in Belgium are not only looking for exporters to import products but also aiming to partner with manufacturers and exporters to orient production jointly. They will go with that cycle from production, purchasing, and storage to ensure the product meets market and EU standards.

The European Commission (EC) has recently proposed applying a mandatory extended producer responsibility program (EPR) to textile and garment manufacturing enterprises. Accordingly, textile and garment manufacturing enterprises must ensure responsibility for the product's entire life cycle, supporting the sustainable management of textile waste throughout Europe. In your opinion, how does this affect Vietnamese exporters?

The proposal to apply a mandatory extended producer responsibility (EPR) program will put great pressure on the entire textile industry not only in Europe but also in countries exporting to Europe, requiring enterprises who are selling textile products in Europe to prepare for a circular cycle to ensure that the waste of the textile industry is reduced to the lowest possible level.

According to the assessment of the European Union, textiles are one of the four largest waste-generating sectors in the EU. Therefore, EPR will ensure enterprises reduce short-term fashion goods, encourage manufacturers to reduce waste and increase the circulation of textile products.

From the EPR regulations, European Union enterprises have gradually made certain changes. The first is to focus on the materials phase, creating recyclable, environmentally friendly materials. They may also ask suppliers to use sustainable and recycled materials and accept participation in the recycling of their products.

EPR regulations have a relatively large impact on Vietnamese enterprises because they must limit waste generation, so when applied in the short term, the number of orders will not be as large and massive as before. This means that each order value will adapt to each specific demand to reduce redundancy in product supply. In the long term, this regulation will limit access to the EU market under the Vietnamese brand. To sell textiles and garments under the Vietnamese brand, it is necessary to combine a system of purchasing, distributing, repairing, and warranty... this is a costly process, not only exporting and selling the product.

In the short term, this regulation affects each contract and order and, in the long term, affects the right to access the market under its brand. Besides, this requirement also creates certain constraints that require all enterprises to convert. This production conversion cost is relatively expensive and takes a long time. Therefore, Vietnamese enterprises must prepare in advance to access and maintain the market in the European Union.

In October, the EU will impose a carbon tax on some products exported to this market. How will this affect Vietnamese enterprises' market access and production chain in the European Union?

Carbon balance is a huge concern in the EU because many items greatly affect the environment. That's why the EU has introduced a carbon tax applicable to four main sectors; after that, it will evaluate its wider application to industries that directly use too much carbon output. In Vietnam, in the early stages of application, carbon tax regulations will directly affect iron and steel products. In the long term, many products will be affected if the products use inputs that create a lot of carbon.

Thank Sir!