What are the foundations for producing and exporting more environmental products?

Vietnam’s new environmental protection law and regulations are an important step to promote sustainable green growth and the development of renewable energy.

There has been a deliberate effort to build exporters’ capacity so they can conform to regional and international standards. As of 2019, Vietnam had 12,888 national standards in force, with roughly 60% of them harmonized with international, regional, or foreign standards (WTO 2021).Manufacturers and importers are required to fulfill conformity assessments before selling their products freely on the market.

As of 2020, more than 1,300 laboratories, including seven foreign laboratories, were accredited to provide conformity assessment services. Laboratories in ASEAN countries for electrical and electronic laboratories are recognized under the ASEAN Sectoral Mutual Recognition Arrangement for Electrical and Electronic Equipment Framework. Also, Vietnam accredited 72 certification bodies and 84 verification and inspection organizations. There are five product certification bodies under the Directorate for Standards, Metrology, and Quality (STAMEQ), the national standardization body. The Vietnam Certification Centre helps enterprises comply with certification for meeting national, foreign, regional, and international standards. And four quality assurance and testing centers (QUATEST 1, 2, 3, and 4) conduct testing of imports and exports for compliance with standards and technical regulations.

A series of domestic reforms have aided in the development of local and export production capacity in environmental products.The taxation (albeit low) of fossil fuels such as petroleum products, coal, plastic bags, and various pesticide products is encouraging the shift toward renewable energy. An additional pricing instrument has been the feed-in tariff (FIT) system, which has been used to enhance private investment in solar and wind energy.

In addition, Vietnam’s new environmental protection law and regulations are an important step to promote sustainable green growth and the development of renewable energy. Vietnam issued a mandate to design a domestic emission trading market and measurement, reporting, and verification (MRV) system. Under the new environmental protection law that enters into effect on January 1, 2022, businesses will be required to employ technology to control pollution. They are subject to recycling or monetary compensation obligations for certain products and packaging. Domestic or imported goods or packaging should be recyclable or have recyclable value, as instructed by regulators.

"These regulations are designed to support Vietnam’s carbon emission reduction ambitions and to encourage renewable energy projects in Vietnam." Although they do not directly impact trade in environmental goods and services, they create strong incentives for business groups to trade and use environmental goods and services", WB said.

Vietnam’s adherence to a series of regional and bilateral trade agreements could also act as a catalyst: Under the Trade and Sustainable Development Chapter of the EU-Vietnam FTA, which entered into force on August 1, 2020, the EU and Vietnam are committed to encouraging a high level of environmental protection while at the same time not lowering the level of environmental protection or derogating environmental laws to attract trade and investment. Particularly with respect to climate change, both parties recognize their commitments to the Paris Accord, the United Nations Framework Convention on Climate Change (UNFCC), and the Kyoto Protocol to the United Nations Framework Convention on Climate Change. In line with the Paris Accord, the two parties agreed to improve their capacity in the transition to low greenhouse gas emissions and climate-resilient economies. In line with the UNFCC, the EU and Vietnam agreed to share information and domestic practices in designing and operating a pricing carbon mechanism, promoting domestic and international carbon markets, and enhancing energy efficiency, low-emission technology, and renewable energy. The EVFTA also includes a dispute settlement mechanism tailored to this chapter.

In the meantime, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) includes environmental commitments by all members in their trading practices. Chapter 20 of the agreement states that Vietnam and member countries are committed to pursuing high levels of environmental protection, enforcing environmental laws effectively, not derogating from environmental laws to encourage trade or investment, and promoting transparency and public participation.

"Vietnam should take measures to control ozone depleting substances, aligning with members’ obligations under existing multilateral agreements such as the Montreal Protocol. There are also provisions that recognize the importance of trade in environmental goods and services and that identify potential barriers to trade in environmental goods and services. Finally, the CPTPP includes a binding and enforceable dispute resolution process to address conflicting issues related to the environment chapter, which encourages member countries to enforce and comply with chapter 20", WB stressed.