Businesses develop sustainably to meet international standards. Illustration photo: ST

According to the Trade Promotion Agency (Ministry of Industry and Trade), Europe is an important import market for deforestation-related products, including 50% of the world's coffee and 60% of the world's cocoa. Therefore, the deforestation-free regulation aims to reduce the impact of products purchased by EU citizens on forests and forest areas around the world.

The proposed EUDR targets commodities with a high impact on deforestation and certain products derived from them, such as coffee, cocoa, soy, palm oil, cattle, wood and wood products. Accordingly, operating companies are obliged to conduct due diligence to ensure that only products not produced on deforested land are allowed on the EU market and must demonstrate that the goods were not produced on any land that was deforested or degraded after 31 December 2020.

In addition, the Carbon Border Adjustment Mechanism (CBAM) is also an important new regulation of the European Union (EU) to address climate change and ensure a level playing field for industries. CBAM is being piloted by the EU for a transitional period from 1 October 2023 and fully implemented from 2026.

The EU is working on a plan to achieve its ambitious goal of becoming a carbon neutral continent by 2050. However, the EU is concerned that EU businesses could move carbon-intensive production activities abroad to take advantage of lax standards, a so-called “carbon leakage” by shifting emissions outside Europe and seriously undermining the EU’s and the world’s climate neutrality ambitions.

CBAM imposes a carbon price on high-emission imports (including cement, aluminum, steel, fertilizers, hydrogen and electricity). The regulation aims to prevent “carbon leakage” and maintain the competitiveness of EU industries that are subject to carbon charges under the Emissions Trading System (ETS).

Therefore, the Trade Promotion Agency recommends that enterprises exporting goods subject to CBAM need to carefully assess the potential financial impacts of this regulation.

The Trade Promotion Agency said that on August 16, 2024, this unit will organize a training program to improve green export development capacity. The program will introduce an overview of EUDR and CBAM; at the same time, assess the impact of these regulations on exports; opportunities and challenges for Vietnamese enterprises; the implementation of EUDR and CBAM in other countries as well as share experiences and provide guidance on applying EUDR to Vietnamese enterprises by industry...

In addition, businesses have the opportunity to learn more about the EU market and other markets in the context of applying EUDR and CBAM, and lessons learned from green export failures and successes of domestic and foreign businesses.