Webinar #1: Exploring linkages between Circular Economy and Trade

The recording of the session, as well as the presentations and resources shared by the speakers, are available at this link.

 The first webinar hosted by the Viet Nam Circular Economy Hub took place on December 15th and was joined by over 80 experts from Viet Nam, Korea, Hong Kong, Indonesia, Lao PDR, Nepal, the UK, Belgium, and New Zealand. The webinar provided different viewpoints on how trade can be harnessed to accelerate a Circular Economy transition in Viet Nam in an inclusive way and leaves no one behind.

The session started with brief presentations delivered by four experts, followed by a vivid discussion session. Participants raised questions surrounding the application of Circular Economy in Viet Nam, mechanisms to ensure that the transition is truly inclusive, tools to monitor the legal and illegal import of waste, the role of the state to support SMEs in joining the global and green supply chains, barriers and opportunities stemming from the FTAs, human resources needed to drive circular markets, and negative externalities associated with e-commerce.

Dr. Jonathan Pincus opened the webinar by highlighting that Viet Nam is one of the most open economies in the world. Trade has been a key contributor to Viet Nam’s growth; however, he raised concern about the declining share of wages in GDP. For instance, manufactured goods are assembled using largely importing input and components, and the value-added of manufacturing in its GDP has slightly declined since 2000, while the shared of manufactured exports soared. He further mentioned that the new generation of trade agreements signed in 2019 (EU VTA, CPTPP, RCEP) are much wider, more intrusive, and restrictive, highlighting for instance, the fact that foreign business can now sue the Government of Viet Nam if it introduced regulations that result in business losses. Viet Nam spent relatively low amount of (0.5% of its GDP) on Research & Development over the period 2007-2017 (far less than China with 2% of Thailand with 1%). He concluded by stressing the need for Viet Nam to invest in new mechanisms to finance development, reduce the fragmentation of government agencies, and bolster innovation policy.

Dr. Jack Barrie analyzed the impacts of the EU Circular Transition for Viet Nam. The value of Viet Nam’s total imports of secondary goods grew from 315 million USD in 2000 to 7.1 billion USD in 2019 (mostly waste and scarp, including electric parts, metals, paper and cardboard), while its export value amounted for 1.5 billion USD of secondary goods and materials  (Circular Economy Earth). He emphasized that Viet Nam, as a highly export-dependent country, will be strongly impacted by the measures laid out in the EU Action Plan. It will have to increase environmental standards in sectors such as textiles or furniture; but also may receive secondary materials with lower value (downgraded, hard to recycle, still toxic), of the EU will retain its higher quality products to be pulled back into its secondary market. He further demonstrated that the EU action plan would displace the quality and quantity of jobs across value chains, with potential losses in non-EU countries. Dr Jack Barrie also conceptualized a potential ‘circularity divide’, whereby industrialized countries would develop and deploy advanced CE technologies allowing them to gain competitive advantage in supply chains resilience and productivity, whilst leaving Low- and Middle-Income countries trapped in an inefficient and linear economy.  To address this divide, he closed his presentation by suggesting critical strategies for Viet Nam: boosting domestic CE industrial capacity and stimulating the ability of Viet Nam to conduct the high-value repair, remanufacture, recycling activities nationally, in addition, to increasing high value-added production of CE related good and services (recycling infrastructure, repair technologies) that can be used nationally or exported to other markets; enhance Viet Nam’s trade competitiveness through physical infrastructure and digital systems  to align and harmonize with transparency standards across value chains; integrate into supply chains traceability and reconfiguration discussion to ensure that these are fair and inclusive to Viet Nam’s SMEs.

Dr. Le Thai Ha highlighted Viet Nam’s recent net-zero commitment as an opportunity for increased trade and cooperation in low-carbon business, taking the example of Lego which just signed an MoU to build a carbon-neutral factory in Binh Duong Province. Dr Ha further outlined challenges related to the recent trade agreements signed by Viet Nam such as availability of human resources, lack of public infrastructure, the role of the whole government systems in the transition, increased competition with international firms, and the enforcement challenges related to intellectual property and sustainable commitments. In closing, she emphasized the need to share information with the SMEs about the trade agreements so they can understand how these market opportunities will affect their business

Mr. Pham Hoang Hai shared that in 2021, VCCI conducted a survey with more than 1.000 enterprises of Fast Moving Consumer Goods (FMCG) sector, in Viet Nam, the results showed that 90% of enterprises carried out CE transition models, however, mostly (82%) transition is only at primary and intermediate level. Within the transition activities, packaging is the most effectiveness transition, while renewable energy and communication seem not have effectiveness as expected. There is 54% of enterprises faces with difficulties in CE transitions. The survey also showed bottlenecks for enterprise to change to CE models, including (i) low pressure from both customer and regulations, for business to change to CE models; (ii) incentive mechanism for CE transition is still limited, and (iii) lack of sharing information on CE showcase in Viet Nam. In conclusion, he highlighted recommendations for CE transition, including enhancement of corporation with MNCs, international partners, issuance of EPR regulations, development of norms to use resources (water, energy) and standards for recyclable materials, sharing information on CE models.

About the webinar series:

The series aims to generate knowledge and awareness about the Circular Economy transition in Viet Nam, provide a space for policymakers, businesses, development practitioners and civil society to share and exchange their vision, knowledge and good and facilitate connections, foster cross-sectoral partnerships, spur new initiatives, encourage collective action.