Slide opportunities and challenges for vietnamese plastic exporters with the agreement of evfta

European Union–Vietnam Free Trade Agreement (EVFTA) Overview The situation of Vietnam’s plastic industry in the context of implementing EVFTA Opportunities and Challenges, Recommendation, and Comparison Opportunities and Challenges Recommendation Comparison with Vietnams Competitors

for Vietnamese Plastic Exporters

with the agreement of EVFTA

Group 12

May 2023

OPPORTUNITIES AND CHALLENGES

Nguyen Kieu Trang - 2112150171

Opportunities and Challenges, Recommendation, and Comparison

Opportunities and Challenges Recommendation

Comparison with Vietnam's Competitors

The situation of Vietnam’s plastic industry inthe context of implementing EVFTA

1 EVFTA

EU–Vietnam Free Trade Agreement (EVFTA)

The EVFTA is a new-generation FTA that was negotiated between Vietnam and the

27 member states of the European Union

With its extensive commitments, profound liberalization, and stringent standards,

EVFTA is expected to make a substantial impact on the Vietnamese economic system and the business activities of

Vietnamese enterprises.

The Vietnam Plastics Association (VPA)

categorizes plastic products produced in

Vietnam into four main product groups

Overview of the

plastic industry

in Vietnam

EU MARKET

The EU is the largest market for plastic

exports from Vietnam, accounting for 15%

of Vietnam's total plastic export turnover

Main plastic products exported from

Vietnam to the EU in 2019

Source: ITC Trademap

Overview of the

plastic industry

in Vietnam

GROWTH RATE

In early 2020, the COVID-19 pandemic had a

significant impact on the global market,

including Vietnam's export industry

However, Vietnam's plastic industry

experienced less impact from the pandemic

Vietnam plastic industry growth

rate from 2010-2020

16% - 18%

ranked 3rd Only after telecommunications and textiles

First 10 months of 2020

3.7%

Compared to the 2019

EVFTA'S COMMITMENTS

RELATED TO THE PLASTIC

Commitments on tariffs measures Commitments on non-tariffs measures

Commitments on tariffs measures

IMPORT DUTIES OF THE EU FOR VIETNAM'S PLASTIC

Regarding the EU's import duties on

Vietnam's plastic products, the

EVFTA has committed to

eliminating tariffs immediately

upon the agreement'simplementation, starting from

RESTRICTIONS ON IMPORT AND EXPORT MEASURES

Apart from the cases specified in the commitments, Vietnam or the EU

cannot prohibit or restrict the import or export of plastic products

Vietnam will continue to prohibit or restrict the quantity of import and

export of used household plastic products.

Commitments on non-tariffs measures

TECHNICAL BARRIERS TO TRADE (TBT)

EU/Vietnam must consider different governance methods and assess

regulatory impacts before issuing regulations

International standards like ISO, IEC, ITU, Codex should be referenced when

appropriate

Notification of proposed regulations to the other party's government at least

60 days in advance for comments

Inclusion of all relevant parties in the consultation process and consideration

of comments

Regarding technical regulations & standard, the EVFTA introduces specific

requirements that differ from those of the WTO

These technical regulation requirements include:

Commitments on non-tariffs measures

TECHNICAL BARRIERS TO TRADE (TBT)

Regular review of standards to align with corresponding international

Regarding technical regulations & standard, the EVFTA introduces specific

requirements that differ from those of the WTO

These technical standard requirements include:

Commitments on non-tariffs measures

TECHNICAL BARRIERS TO TRADE (TBT)

Overall, it can be seen that the TBT provisions in the EVFTA do not bring

significant changes to the existing mechanisms for issuing and implementing

TBT measures of each Agreement party

Before EVFTA came into effect After EVFTA came into effect

Assessing the impact

b The Situation of Vietnam’s Plastic Industry in the context

of implementing EVFTA

Plastic Export situation of Vietnam

Growth rate: 6.5%/year.

Vietnam's plastic export turnover to the EU

increased from 561.2 million USD (2017) to

636.3 million USD (2019).

From 2017 to 2019, the plastic export situation

of Vietnam to the EU showed some signs of

growth:

By the end of 2019, the EU market ranked

third in the list of “Importing markets for plastic

products exported by Vietnam”, with 13.1% of

the total share value, just behind the US and

Japan.

Source: Vietnam Plastic Association

Figure: Exported value of Vietnam's plastic industry to the

EU (2017-2019)

Plastic Export situation of Vietnam

The EU market's characteristics always have two opposing trends:

The demand for plastic bags and packaging is rising with economic development and higher incomes.

Environmental concerns raise the demand for high-quality products.

Tariff - GSP 3%.

This period of growth (from 2017 to 2019) indicated that the EU was a potential and

growing market for Vietnam's plastic export enterprises even before EVFTA.

REASONS?

Plastic Export situation of Vietnam

In the EU (27) market, the countries in which Vietnam has the largest export value include:

Germany The Netherlands

France Belgium Poland

In particular, the value of plastic exports to Germany and the Netherlands has always reached more than 100 million USD for 3 consecutive years from 2017 to 2019

Plastic Export situation of Vietnam

Similar to Vietnam's plastic export situation to the world, in comparison to plastic finishedgoods, Vietnam’s plastic materials exported to the EU only accounted for a small part ofVietnam's total plastic exports in 2019 with 13%

Table: The structure of Vietnam’s Plastic Products Exported to EU in 2020

Source: ITC Trademap statistics

Source: ITC Trademap statistics

Plastic Export situation of Vietnam

The turnover of Vietnam’s export plastic to

the EU market, by the first half of 2020,

reached 227.8 million USD, down 9.9%

compared to the same period in 2019

Vietnam's plastic export situation to the EU

market in the first half of 2020 showed signs of

decline due to Covid-19 pandemic.

However, from April 2020, the situation has

changed with some signs of growth due to the

reopening of many European countries

Source: General Department of Vietnam Customs

Figure: Export turnover of Vietnam's plastic products to the

EU market in 2019-2020 (thousand dollar)

Plastic Export situation of Vietnam

After the EVFTA came into effect in August 2020, it has brought many growth anddevelopment opportunities for Vietnam in the EU market This is a favorable condition thathelps Vietnam have more advantages to compete with other big exporters to the EU marketsuch as China

GSP 3% EVFTA 0%

Plastic Export situation of Vietnam

In 2021, the export of plastic products to EU

markets slightly decreased due to the impact

of Covid-19 pandemic

However, in September 2021, the export of

plastic products to this market increased

sharply again then peaked at 439.5 million

dollars, accounting for 11.3% of the total

export turnover of plastic products in Vietnam,

up 33.6% over the same period in 2020

(Vietnam Plastic Association, 2021)

Figure: Export turnover of Vietnam's plastic products to the

EU market in 2020-2021 (million dollar)

Source: General Department of Vietnam Customs

Plastic Export situation of Vietnam

Export turnover to most EU member markets achieved high growth in 1 year after EVFTA

came into effect The main export markets for Vietnam's plastic products include:

The Netherlands

Germany France Poland Belgium Leading the market is the Netherlands, with a turnover of 154.3 million USD, accounting

for 29.7% of the total export value of plastic products to the EU

Plastic Export situation of Vietnam

2022

Vietnam’s plastic exported value to

the EU continued increasing from

883.8 thousand dollars in 2021 to

more than 1.3 billion dollars in

2022

Vietnam's market share in

European countries within EVFTA

also increased from 1.32% to 1.66%.

Figure: Vietnam's plastic export value to the EU market

from 2020 to 2022 (thousand dollar)

Source: ITC Trademap

The benefits of the EVFTA are significant given the challenges coming from all directions

2022

EFFECT

ASSESSMENT Unlike neighboring countries such as Thailand and COMPETITIVE ADVANTAGE

China, Vietnam is exempt from the 4-30%

anti-dumping taxes imposed on the EU market

With a significant dependence on imported

production materials, the EU recognizes the

unique position of Vietnamese business

Opportunies and Challenges

a Opportunities

and Challenges

EVFTA: bilateral agreement

Taxed at 0% (from Aug 1, 2020)

Only a few countries enjoy 0% tariff

After EVFTA

Specific regulation and requirement of EU importers.

Specific products that meet the taste of European consumers.

CHALLENGES

1 Rules of Origin

3 Risk of Trade remedies, Competition, and Cost

2 Import regulations and

Customer taste

Tax reduction will probably result in the rise of non-tariff barriers.

Competition with European exporters in the domestic market.

High cost due to change of raw material, and the EU's regulations.

Requirement: Raw material mostly from the

EU or Vietnam.

Current situation: Import raw material from

China and some Asian countries.

b Recommendation

Optimizing Advantages Mitigating Drawbacks

Managing the EU market

Raising the competitiveness

of Vietnam's plastic industry

Invest in brand building and product advertising.

Improve technical measures.

Enhance the labor force.

Establish ventures with foreign businesses.

RECOMMENDATION

Improving the effectiveness

in implementing the EVFTA

Promoting the development

of technology

The government should supply firms

with relevant information.

Promote investment in research and

c Comparison with Vietnam's Competitors

No Country Value 2019 (million €) Value 2020 (million €) Value 2021 (million €) Value 2022 (million €)

1 China 363,467 385,132 473,811 626,432

2 UnitedStates 235,186 203,034 233,526 358,660

3 Russia 144,942 94,771 163,646 203,408

In comparison with India, Vietnam did not

see as a significant growth in the export

value to the EU market

In 2020: Vietnam surpassed India.

HOWEVER

In 2021 and 2022: India had further

widened the gap between the Import

Value for plastic products in the two

countries from approximately 7.6 billion

to 16 billion €

Comparison with Vietnam's Competitors

REASONS FOR THE RAPID GROWTH OF INDIA

PLI Scheme: foreign companies to use domestic workforce FDI: FDI Policy reforms, Reduction in Compliance Burden and Corporate Tax

Rates, PLI of various industries, improving liquidity of NBFCs and Banks, PhasedManufacturing Programme (PMP)

Sourcing diversification from China: one of the top four destinations for

relocations of American companies

Launch of MADE IN INDIA: encourages domestic manufacturing and

consumption, also one of the first initiatives that introduce India’smanufacturing domain to the world

The factors leading to this rapid growth in Vietnam’s nearest competitors can beattributed mainly to:

Comparison with Vietnam's Competitors

LESSONS FOR VIETNAM

Advantage of a large labor work force, increasing development in

technology and growing entrepreneurship as well as being rather

attractive to foreign investment

Accelerating migration of factories from China to Vietnam: manage

EU market, raising Vietnam's competitiveness

Developing MADE IN VIETNAM brand

Considering these measures, it can be noted that there are initiatives that Vietnam can take into consideration:

5 Questions

What is the picture about?

(5)

What is the picture about?

(2)

(5)

In 2021, which EU country (27) has the highest value of

plastic imports from our country?

Q U E S T I O N 2

In 2021, which EU country (27) has the highest value of

plastic imports from our country?

Q U E S T I O N 2

What is the picture about?

(5)

What is the picture about?

(4) (5)

Where does Vietnam rank in the list of countries exporting

plastic products to the EU in 2022 (ranked by export

value)?

Q U E S T I O N 4

Where does Vietnam rank in the list of countries exporting

plastic products to the EU in 2022 (ranked by export

value)?

Q U E S T I O N 4

What is the picture about?

(5)

What is the picture about?

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