After the EU-Vietnam Free Trade Agreement (EVFTA) took effect from August 1, 2020, Vietnam's steel exports to this market recorded impressive growth, from 694 million USD in 2020 to 2.47 billion USD in 2023 (an increase of 3.6 times) (General Statistics Office data). With this result, the EU is currently Vietnam's largest steel import region, therefore this is the commodity sector predicted to be most affected when the EU's CBAM mechanism is implemented.

In reality, the competitiveness of Vietnam's steel industry is still relatively low due to having to import most production materials. Moreover, the majority of current steel billet production facilities have small capacity, outdated equipment, consume a lot of energy and have a high potential for causing environmental pollution. Therefore, Vietnam's steel export production enterprises are predicted to encounter many difficulties in tracking/reporting emission amounts, at the same time having to invest a lot of costs to reduce carbon emissions in the production process.

Vietnam's aluminum exports to the EU also had spectacular growth, from 52.7 million USD in 2020 to 260.8 million USD in 2022 (an increase of nearly 5 times after only 3 years) (ITC Trademap data). Thanks to this, the EU is currently Vietnam's 4th largest aluminum import partner (after only the United States, ASEAN, Japan). Along with steel, aluminum is a commodity sector facing many challenges when the EU deploys the CBAM mechanism.

Source: Center for WTO and International Trade - VCCI 

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