Complying with new or upgraded standards of green policies often requires manufacturers, exporters to bear compliance fees that they would not have to pay if these (new) standards do not arise. Therefore, it is obvious that green policies may increase production costs and negatively affect the cost of producing, exporting relevant goods and businesses’ competitiveness.

Fees for complying with green policies, thus, are undesirable challenges to the majority of businesses, especially those with small capital scale, limited technology, managerial, competitive capacities which are vulnerable to any additional compliance.

However, in practice, compliance fees for EU green policies are not always over the capacity of enterprises including those with modest capital scale, because:

- Some green standards do not require high compliance costs but the change in the attitudes, awareness, implementation measures in related work instead (i.e requirements for filing and presenting documents, labeling methods, label position, information provided to consumers, etc.);

- Most green standards have step-by-step application roadmap, and in the very first steps, the compliance fees are normally not enormous (for example, in the first stage of the roadmap, businesses shall have to comply the reporting requirements for free, or just implement small changes, etc.);

- In some sectors, many new green standards are rules codified from voluntary regulations already required by EU and/or international customers for manufacturers, exporters for a quite a long time (popular in sectors as textile, footwear, wood products, etc.), and thus, they pose new challenges or too big requirements for businesses’ actions as well as cost;

- In the short term, the application scope of specific green standards that have already entered into force for exported products is quite narrow. The majority of other exported products are in the form “to be considered to expand if appropriate” (i.e. CBAM), are being drafted or consulted and not yet approved (for example a series of drafts in “Farm to Fork” Strategy), or are even in the plan, not yet drafted (for example specific regulations relating to eco-labelling, microplastic fibers in textile goods). For these cases, preparation and change for being greener may be gradually implemented with the appropriate roadmap and costs subject to businesses’ arrangement but not necessarily to transform the whole package immediately;

- For businesses who are subject to pay for meeting, complying with already-effective green standards for their exported products, it is a fact that these standards have been applicable generally to all products imported to the EU. Thus, in comparison with foreign manufacturers, exporters; businesses’ competitiveness may remain unchanged since all must pay a certain compliance fee.

Therefore, depending on circumstances and their financial capacity, businesses can build specific “green” plans effectively with appropriate cost and roadmap. Importantly, businesses need to be aware of and have appropriate preparation to implement green transition, to meet requirements and trends of not only European Green Deal but also those of other markets that are also considering implementing the same specific steps.

Source: Report "EU Green Deal and Vietnam's Exports - The case of the agricultural, food and textile industries" – Center for WTO and International Trade

• Ways of European Green Deal’s impacts on Vietnam’s exports
• EU Green Deal and Vietnam's export: Impacted sectors
• EU Green Deal and Vietnam's export: Challenges of awareness change and enhancement
• EU Green Deal and Vietnam's export: Challenge in capability of response, compliance