Garment industry news

How can textile and garment enterprises adapt to new EU regulations?

How can textile and garment enterprises adapt to new EU regulations?

The European Union (EU) is implementing a number of new regulations for textile products. As a result, Vietnamese textile and garment enterprises need to develop plans in collaboration with partners and distribution systems in order to meet the standards set by the EU market.

The EU: A demanding and rewarding market

The EU is a demanding market with stringent requirements for quality, labor skills, and environmental issues. The Vietnam – EU Free Trade Agreement (EVFTA) will gradually reduce tariffs to 0% within 7 years of its implementation, giving Vietnamese textile and garment products a competitive advantage over their rivals.

The EU has launched a campaign to reset the trend in the garment industry, targeting all stakeholders, including designers, brands, retailers, end consumers, and garment manufacturers both inside and outside the EU. The goal of the campaign is that by 2030, textile products placed on the EU market will be durable, recyclable, and made primarily from recycled fibers that are free of hazardous substances. Manufacturers will be held accountable for their products throughout the value chain, even after they become waste. The circular textile ecosystem will also flourish, driven by innovative fiber recycling capabilities, while textile incineration and landfilling will be minimized.

Vietnamese textiles, garments, and footwear are among the products and goods with relatively high export growth to the EU market thanks to tax incentives from the EVFTA Agreement. As a result, textile, garment, and footwear businesses must pay close attention to market changes.

The Vietnam Trade Office in Belgium and the EU has informed that the EU has proposed a new strategy for the textile and garment industry by introducing new legal measures to increase circularity, including new directives related to product durability and the right to repair.

In addition, the EU is considering introducing extended producer responsibility (EPR) for garments. This would hold businesses accountable for how their products are handled, recycled, or repaired. In the EU, textiles are destined for recycling, not landfilling. In April 2023, the Ministerial Conference of EU countries approved regulations on ecodesign. Currently, the EU Textile and Apparel Association and textile businesses are implementing a number of activities related to ecodesign.

On the other hand, garments in particular and the textile industry in general in the EU are greatly affected by in-depth appraisal activities, including assessments of environmental factors, labor, and human rights.

The Imperative of Business Transformation

In order to succeed, Vietnamese textile and garment enterprises must research and innovate in accordance with the aforementioned trends and regulations. They must also take shortcuts and stay ahead of the curve.

However, many domestic businesses are concerned about the EU’s moves with textiles and garments. This is because even EU importers are unsure of how these regulations will be implemented. Because an EU importer has many suppliers, they have not yet determined how they will control the manufacturers.

The Vietnamese textile and garment industry is a highly open industry, with 85% of production capacity dedicated to export. The industry is heavily impacted by fluctuations in the global market. As a result, businesses require accurate information on market trends, trade policies, competitors, and, most importantly, new policies in large markets like the EU in order to respond promptly. Vietnam Trade Offices abroad must also update and provide new information to the association for timely dissemination to businesses.

EU regulations are at the recommended level, but Vietnamese businesses must act quickly to catch up. Otherwise, when the recommendation becomes mandatory, it will be very complicated, and there is a risk that businesses will not only face shortages, but also lose orders.

Currently, the Vietnam Trade Office is planning to collaborate with the Vietnam Textile and Apparel Association and the EU Textile and Apparel Association to develop specific instructions and cooperation plans between the two sides in order to respond to the new regulations.

In order to assist businesses in overcoming challenges and seizing rare opportunities, Vietnam Trade Offices abroad must continue to delve deeper, research, and master the needs, tastes, and requirements of the market, as well as evaluate the host country’s policies. This will enable them to promptly advise the Ministry on market development strategies and trade connections.

Foreign Trade Offices need to coordinate with the Import-Export Department to focus on researching and analyzing policies, and promptly proposing and recommending solutions to remove technical and non-tariff barriers for exported goods. At the same time, they need to coordinate with relevant units to promptly guide and orient the market for export and import products, especially in key markets. Additionally, they need to create conditions for localities, associations, and businesses to build and adjust appropriate production and business strategies and plans. They should also coordinate with relevant agencies to provide guidance and support to businesses in their participation in the global supply chain.

Along with that, the Trade Promotion Department will strengthen coordination with foreign market departments and Vietnamese trade offices abroad to regularly update and promptly provide information and forecast market trends. They will also effectively organize consulting work.

Enterprises need to strictly and fully comply with the State’s regulations and policies, as well as instructions from ministries and branches in organizing production, business, and import-export activities. This will ensure traceability of origin and compliance with the regulations, requirements, and conditions of foreign markets.

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