EVFTA - Opportunities and challenges for Vietnam's plastic industry

1. Benefit both export and import

Currently, Vietnam's plastic products are present in nearly 160 markets around the world. According to the Vietnam Import-Export Report 2021 of the Ministry of Industry and Trade, despite being negatively affected by Covid-19, in 2021, Vietnam's export turnover of plastic products will still reach US$4.93 billion, up 34 .9% compared to 2020. In which, the EU is one of the markets with a continuous increase in import orders from Vietnamese plastic suppliers. In 2021, plastic exports to the EU reached 557.68 million USD, up 21.73%.

According to an expert of the Center for WTO and Integration - VCCI, Vietnam's plastic industry has many advantages when exporting to the EU. It has good competitiveness in a number of product lines such as packaging, household appliances and many businesses have invested in technology to produce products that meet the high requirements of fastidious markets such as EU. In addition, compared to many competitors, Vietnamese plastics have a number of advantages such as having more competitive prices due to abundant cheap human resources, enjoying the EU's GSP preferential tariffs, the ability to access with cheap recycled materials (due to the relatively open import management policy of Vietnam's recycled plastic).

Notably, with the EVFTA Agreement taking effect from August 1, 2020, all Vietnamese plastic products exported to the EU enjoy 0% tax. Currently in the ASEAN region only Singapore has an FTA with the EU, but this country exports negligible plastic to the EU. Thus, the EVFTA will help Vietnamese plastic products have a significant competitive advantage when accessing the EU market with a tax rate of 0%, while very few other competitors enjoy this tax rate.

Not only exports, with EVFTA, Vietnam's plastic industry also benefits from imports from the EU market. Vietnam exports mainly plastic finished products to the EU and imports mainly plastic materials and semi-finished products from the EU to serve the production and export of plastic products and other products (electronics, textiles, Footwear…).

Meanwhile, the EU's plastic industry is very developed, both in raw materials and finished products, shown in the EU's export structure quite evenly.

2. Challenges for the plastic industry

Along with opportunities, EVFTA also creates challenges for Vietnam's plastic industry. In order to enjoy the EVFTA tariff preferences, Vietnam's plastic products must meet the Agreement's rules of origin. The rule of origin for plastic products in the EVFTA is either Group conversion (with 20% flexibility) or non-originating materials with a value not exceeding 50%. To meet this rule, plastic enterprises are only allowed to use a part of raw materials outside the EU/Vietnam. However, currently, Vietnam's plastic raw materials are still mainly imported from China and some other Asian countries, so meeting this rule of origin will be a challenge for Vietnamese businesses. .

In addition, EU import regulations and consumer tastes are also considerations for Vietnamese exporters. Because in addition to the EU's official import regulations, businesses also have to meet the specific regulations and requirements of EU importers, as some importers will require more plastic exporters to ISO TC6 certified. Or EU consumers will only choose plastic products made from materials and sizes that they prefer...

For example, for the Nordic market, Ms. Nguyen Thi Hoang Thuy - Vietnam Trade Counselor in Sweden (concurrently Denmark, Finland, Iceland, Norway, Lativa) - said that the main challenge for Vietnamese plastic is a matter of sustainable development and environmental protection. Nordic countries are famous for consuming sustainable and environmentally friendly products, especially Sweden - with a large amount of annual imports. Consumers here are willing to pay high prices for environmentally friendly and sustainable products. Meanwhile, Vietnam does not have enough resources and experience to manage these issues.

In addition, Vietnamese plastic manufacturers also need to pay attention to the increased risk of trade remedies; competition; increasing costs for businesses from commitments on sustainable development in EVFTA...

The EU is a difficult market and there are already many competitors because it is a potential market for all exporting countries. Therefore, according to experts, in order to penetrate and dominate this market, plastic enterprises must improve their competitiveness, focus on investing in machinery, equipment and technological innovation; Brand building, product promotion...

(Source: moit.gov.vn)