Plastic production and processing is one of the economic sectors expected to benefit greatly from the Vietnam – EU Free Trade Agreement (EVFTA) with opportunities opening up for both export, import and investment attraction. private.
Benefit from both exports and imports
Currently, Vietnamese 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 the negative impact of Covid-19, in 2021, Vietnam’s export turnover of plastic products still reached 4.93 billion USD, an increase of 34%. .9% compared to 2020. In particular, the EU is one of the markets with a continuously increasing number of import orders from Vietnamese plastic suppliers. In 2021, plastic exports to the EU reached 557.68 million USD, an increase of 21.73%.
According to experts from the Center for WTO and Integration – VCCI, Vietnam’s plastic industry has many advantages when exporting to the EU. It has good competitiveness in some product lines such as packaging and household appliances, and many businesses have invested in technology to produce products that meet the high requirements of demanding markets such as EU. In addition, compared to many competitors, Vietnamese plastics has a number of advantages such as having more competitive prices due to abundant cheap human resources, enjoying the EU’s GSP preferential tariffs, and the ability to access with cheap sources of recycled materials (because Vietnam’s recycled plastic import management policy is still relatively open).
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 insignificant plastic to the EU. Thus, EVFTA will help Vietnamese plastic products have a significant competitive advantage when accessing the EU market with a 0% tax rate, while very few other competitors enjoy this tax rate.
Not only exporting, with EVFTA, Vietnam’s plastic industry also benefits from imports from the EU market. Vietnam exports mainly finished plastic products to the EU and imports mainly raw materials and semi-finished plastic products from the EU to serve the production and export of plastic products and other products (electronics, textiles, garments, Footwear…).
Meanwhile, the EU’s plastic industry is very developed, both in plastic raw materials and finished products, reflected in the EU’s fairly uniform export structure.
Challenges for the plastic industry
Along with opportunities, EVFTA also creates challenges for Vietnam’s plastic industry. To enjoy EVFTA tariff incentives, Vietnamese plastic products must meet the Agreement’s rules of origin. Rules of origin for plastic products in EVFTA are Group conversion (with 20% flexibility) or non-originating materials whose value does not exceed 50%. To meet this rule, plastic businesses are only allowed to use a portion of raw materials from outside the EU/Vietnam. However, currently Vietnam’s plastic raw materials are still mainly imported from China and some other Asian countries, so meeting these rules of origin will be a challenge for Vietnamese businesses. .
In addition, EU import regulations and consumer tastes are also things to note for Vietnamese export businesses. Because in addition to the EU’s official import regulations, businesses must also meet the specific regulations and requirements of EU importers, such as some importers will require plastic export businesses to have additional requirements. Has ISO TC6 certification. Or will EU consumers only choose plastic products made from the materials and sizes they prefer…
For example, for the Northern European market, Ms. Nguyen Thi Hoang Thuy – Vietnam Commercial Counselor in Sweden (also responsible for Denmark, Finland, Iceland, Norway, Lativa) – said that the main challenge for Vietnamese plastic is an issue of sustainable development and environmental protection. Northern European countries are famous for consuming sustainable products and protecting the environment, especially Sweden – with a large annual import volume. Consumers here are willing to pay high prices for environmentally friendly and sustainable products. Meanwhile, Vietnam does not have enough resources or experience to manage these issues.
In addition, Vietnamese plastic manufacturing enterprises also need to pay attention to the risk of increased trade defense measures; competition; increased costs for businesses from commitments on sustainable development in EVFTA…
The EU is a difficult market and there are many competitors because this is a potential market for all exporting countries. Therefore, according to experts, to penetrate and dominate this market, plastic businesses must improve their competitiveness, focusing on investing in machinery, equipment and technological innovation; Brand building, product promotion…