Regulatory Measures Beyond Free Trade Agreements (FTAs) for Vietnamese Exports to the European Union

1. Introduction

The European Union–Viet Nam Free Trade Agreement (EVFTA) was signed on 30 June 2019 and officially entered into force on 1 August 2020 (Council Decision (EU) 2019/753 of 30 March 2020 on the conclusion of the Free Trade Agreement between the European Union and the Socialist Republic of Viet Nam, 2020). It marks a significant milestone in Viet Nam’s international economic integration. The EVFTA is considered the most comprehensive and ambitious trade agreement the European Union (EU) has ever signed with a developing country. The agreement not only eliminates tariffs on 99 per cent of goods traded between the two parties but also includes extensive commitments on intellectual property rights, investment liberalisation, sustainable development, labour rights and regulatory cooperation (European Commission (EC), 2020). Issues related to regulatory measures or requirements in the fisheries and labour sectors have posed major challenges during the negotiation and implementation phases of the EVFTA. Since 2017, Viet Nam has been subject to a ‘yellow card’ warning from the EC for failing to meet international standards in combating illegal, unreported and unregulated (IUU) fishing (EC, 2017). This warning has become a significant non-tariff barrier, seriously affecting Viet Nam’s seafood exports to the EU, its second-largest seafood export market. Regarding labour, the trade and sustainable development (TSD) chapter of the EVFTA clearly stipulates that both parties must implement the core labour standards of the International Labour Organization (ILO), including freedom of association, the right to collective bargaining and the elimination of forced labour and child labour (Council Decision (EU) 2019/753 of 30 March 2020 on the Conclusion of the Free Trade Agreement between the European Union and the Socialist Republic of Viet Nam, 2020).

To meet international standards, Viet Nam has undertaken substantial institutional reforms. Most notably, the 2019 Labor Code marked a turning point in the country’s labour legislation by, for the first time, allowing the establishment of independent worker representative organisations at the enterprise level (ILO, 2019). This provision addresses one of the EU’s major concerns about the previously monopolised trade union system and demonstrates Viet Nam’s clear commitment to integrating global labour standards. In exploring how Viet Nam has made policy changes to meet the EVFTA standards, this study focuses on two main objectives: (1) analysing policy adjustments in intellectual property, fisheries and labour; and (2) assessing remaining challenges and their implications for export performance and compliance capacity.

2. Intellectual property related policy changes

The amended Law of Viet Nam on Intellectual Property has been comprehensively updated to incorporate the provisions of Chapter 12 of the EVFTA into domestic legislation (Law of Viet Nam on Intellectual Property, Amending and Supplementing a Number of Articles of the Law on Intellectual Property (No. 07/2022/QH15), 2022). The law strengthens the recognition and protection mechanisms for geographical indications (GIs) from the EU, specifically by expanding the list of 169 officially protected EU GIs in Viet Nam. This includes prominent products such as Roquefort cheese and Bordeaux wine. In addition, the scope of copyright protection has been extended to include digital and electronic broadcasts, while new sanctions have been introduced to address violations occurring in the online environment – an emerging factor in the digital economy. The law also improves trademark procedures by raising the standards for assessing the likelihood of confusion and shortening the time required to process trademark applications. Furthermore, enforcement measures at the border have been enhanced, allowing customs authorities to temporarily detain goods suspected of infringing intellectual property rights at border checkpoints, to promptly prevent infringement. These amendments bring Viet Nam’s IP legal framework closer to EU standards, facilitating investment and better protecting Vietnamese brands in international markets

3. Labour regulation changes

The EVFTA requires member states to comply with and effectively implement the fundamental labour standards of the ILO, including freedom of association and the right to collective bargaining, the elimination of forced or compulsory labour, the abolition of child labour, and the elimination of discrimination in respect of employment and occupation. To fulfil the obligations regarding freedom of association and the right to collective bargaining, Viet Nam amended its Labor Code in 2019, with a key highlight being the provision allowing workers to establish or join grassroots-level representative organisations without being required to be affiliated with the Viet Nam General Confederation of Labour, as was previously mandated. This represents a significant change that brings Viet Nam closer to implementing ILO Convention No. 87, Freedom of Association and Protection of the Right to Organise Convention (1948) (ILO, 1948) and No. 98, the Right to Organise and Collective Bargaining Convention (1949) (ILO, 1949; Labor Code of Viet Nam, 2019).

At the same time, the new Labor Code of Viet Nam (Labor Code) also encourages and facilitates collective bargaining between employees and employers, contributing to more harmonious, stable, and effective labour relations. Specifically:

1. The term ‘grassroots-level collective labor representative organization’ has been revised to ‘grassroots-level employee representative organization’, and a definition of this organisation has been added (Article 3).

2. In addition to trade unions, employees are now entitled to establish, join and participate in employee organisations within enterprises (Articles 170, 172).

3. Two protections for employee representative organisations at the enterprise level have been introduced: protecting employees and leaders of employee representative organisations from employment-related discrimination by the employer, and protecting the employee representative organisation from interference or manipulation by the employer (Articles 175, 176, 177) (Labor Code of Viet Nam, 2019).

The recognition of employee organisations within enterprises marks an important step forward, expanding workers’ freedom of association and officially shifting ‘from a single-representative labour relations system to a multi-representative labour relations system’ in Viet Nam (Nguyen & Nguyen, 2023, p. 34). It also creates conditions for more effective and substantive protection of workers’ rights and interests within enterprises, especially for foreign workers in Viet Nam, as trade unions previously only recognised the rights to establish, join and operate unions for Vietnamese workers.

In addition, the Labor Code strengthens regulations on collective bargaining (Articles 65–73), ensuring a transparent and fair process in labour relations. Article 65 of the 2019 Labor Code officially introduces the concept of collective bargaining. On this basis, the new Code further defines the nature of bargaining, emphasises the element of ‘voluntariness’, and adds the ‘right of grassroots-level employee representative organizations to conduct collective bargaining within enterprises’ (Article 66). This is considered one of the most important provisions of the 2019 Labor Code regarding collective bargaining, as it establishes a model of collective bargaining involving multiple employee representative organisations. Furthermore, to comply with the commitment to eliminate forced labour, the 2019 Labor Code introduced provisions that strictly prohibit all forms of forced or compulsory labour, in line with ILO Convention No. 29 on Forced Labour (ILO, 1930) and Convention No. 105 on the Abolition of Forced Labour (ILO, 1957). Accordingly, any acts of coercing employees to work through detention, unlawful wage deductions or the use of violence are strictly prohibited and may be subject to criminal prosecution. At the same time, Viet Nam has also introduced policies to protect workers from exploitative labour practices in high-risk industries such as fisheries, textiles and garments, and construction.

4. Public procurement and food safety regulation changes

In the area of public procurement, Decree No. 95/2020/ND-CP: Guidelines for implementing procurement bidding under the Comprehensive and Progressive Trans-Pacific Partnership Agreement (2020), established a legal framework to implement Chapter 9 of the EVFTA on transparency and competition in public procurement. This decree clearly stipulates the principle of non-discrimination and allows EU contractors to participate in tenders organised by central ministries, the Viet Nam Electricity Group and 34 central-level public hospitals. Additionally, mechanisms for explaining reasons for bid rejection and publishing bidding information help enhance transparency, contribute to reforming public expenditure management, improve contractor quality, and foster a more transparent and efficient procurement environment.

In the field of food safety, sanitary and phytosanitary (SPS) measures, and technical barriers to trade (TBT), Decree No. 13/2022/ND-CP (2022) amends and supplements several articles of Decree No. 132/2008/ND-CP dated 31 December 2008, and Decree No. 74/2018/ND-CP dated 15 May 2018, which detail the implementation of certain provisions of the Law on Product and Goods Quality. These changes ensure both biosafety and product quality standards while helping to avoid the creation of unnecessary technical barriers to bilateral trade. At the same time, Viet Nam issued Circular No. 20/2021/TT-BNNPTNT of the Ministry of Agriculture and Rural Development of Viet Nam of 18 December 2021 providing for professional phytosanitary dossiers (2021) to stipulate phytosanitary requirements for plants. This regulation allows the application of risk assessment mechanisms and reduced inspection frequency for countries with effective control systems, thereby saving costs and time for businesses. These changes not only ensure compliance with the legal requirements of the EVFTA but also support Vietnamese businesses in fully leveraging the benefits brought by the agreement, thereby enhancing their competitiveness in the international market.

5. Efforts to lift the ‘yellow card’ for Vietnamese seafood products

From 13 May to 19 May 2017, a delegation from the Directorate-General for Maritime Affairs and Fisheries (DG MARE) of the EC visited Viet Nam to assess the country’s compliance with EU regulations on IUU fishing. At the end of the mission, the DG MARE delegation issued five key recommendations that Viet Nam needed to address by 30 September 2017, to avoid the risk of receiving a ‘yellow card’ from the EU. These included:

1. completing the fisheries management legal framework

2. managing the fishing fleet in accordance with available marine resources

3. strengthening the monitoring, control, and surveillance systems at sea and ports

4. implementing verification and certification of seafood traceability

5. preventing and ending illegal fishing by Vietnamese vessels in foreign waters (Viet Nam News, 2019).

However, Viet Nam’s fisheries sector is characterised by small-scale, multi-species operations, low educational levels among fishers, and outdated equipment, making comprehensive reform difficult. According to EU assessments, several issues are still unresolved, particularly the recurring violations of foreign waters by Vietnamese fishing vessels. This remains a major reason behind the EC’s decision, as the EU’s IUU regulations require exporting countries to ensure legal fishing practices, full traceability and no negative impact on marine ecosystems. In addition, Viet Nam’s control system has been deemed insufficient, lacking robust enforcement mechanisms to deter illegal fishing. The traceability process for seafood origin remains opaque, making it difficult for the EU to verify whether Vietnamese seafood products meet regulatory standards. Furthermore, current penalties are not strong enough to serve as effective deterrents, allowing continued illegal fishing activities without meaningful consequences. Although Viet Nam has made considerable efforts to comply with EC standards, the EU still considers the institutional framework incomplete.

Consequently, in October 2017, the EU officially issued a ‘yellow card’ warning against Vietnamese seafood exports due to insufficient efforts in combating IUU fishing. This decision meant that 100 per cent of Viet Nam’s seafood exports to the EU would be subject to rigorous inspection, rather than random checks, thereby significantly increasing transportation, storage and certification costs and creating major challenges for exporters. This has translated into longer border clearance times, higher compliance costs, and reduced-price competitiveness for Vietnamese seafood products in the EU market. The EU also outlined nine specific recommendations that Viet Nam must fulfil to have the yellow card lifted:

1. revise the legal framework to ensure compliance with international and regional regulations on fisheries conservation and management

2. ensure effective implementation and enforcement of the revised national fisheries laws

3. strengthen enforcement of international regulations through a comprehensive penalty system that is strictly monitored and applied

4. address deficiencies in the monitoring, control and surveillance (MCS) system for fishing vessels, ensuring alignment with international and regional requirements, as well as the catch certification system

5. improve the management and registration system for fishing licences

6. balance fishing capacity with fleet management policies to ensure sustainable resource use

7. enhance seafood traceability and take all necessary measures, in line with international law, to prevent the trade and import of illegally caught seafood

8. strengthen cooperation with other countries, particularly coastal states where Vietnamese-flagged vessels may operate, in accordance with international obligations

9. ensure compliance with reporting and record-keeping obligations under Regional Fisheries Management Organizations (RFMOs).

To date, after five inspections by the EC, Viet Nam has still not been able to have the IUU yellow card lifted (first inspection May 2018, second inspection November 2019, third inspection October 2022, fourth inspection October 2023 and fifth inspection March 2026). Following the fourth inspection, the EC continued to acknowledge and highly appreciate Viet Nam’s efforts in combating IUU fishing. However, the country still has many existing shortcomings that have been slow to be addressed; particularly, the actual implementation at the local level remains inadequate, preventing the removal of the yellow card. If this situation persists, the risk of being escalated to a red card warning is very high. In the worst-case scenario, if a red card is applied, all exports of wild-caught seafood from Viet Nam to the EU will be banned, causing severe consequences for the domestic seafood industry. The fifth EC inspection was conducted in March 2026 after several delays. Viet Nam is still in a crucial phase of the process to remove the IUU yellow card. To avoid the risk of an escalation to a red card warning, the Vietnamese Government has been and continues to implement more decisive measures. Viet Nam has implemented a series of measures to address shortcomings in fisheries management and combat IUU fishing. These efforts have focused on four key areas: (i) improving the legal framework, (ii) managing the fishing fleet and monitoring fishing activities, (iii) controlling and certifying the origin of seafood, and (iv) enhancing law enforcement and international cooperation.

6. Other challenges

6.1. The Carbon Border Adjustment Mechanism

The Carbon Border Adjustment Mechanism (CBAM) is a new policy tool introduced by the European Union to prevent ‘carbon leakage’, a phenomenon where companies relocate production to countries with looser environmental standards to avoid the EU’s strict emissions reduction regulations. In essence, CBAM requires importers to purchase carbon emission certificates equivalent to the amount of greenhouse gases emitted during the production of their goods, similar to the obligations faced by EU-based manufacturers under the EU Emissions Trading System (EU ETS) (Regulation (EU) 2023/956 of the European Parliament and of the Council of 10 May 2023 establishing a carbon border adjustment mechanism, 2023). CBAM was officially approved by the European Parliament and the Council of the European Union on 10 May 2023, and will be implemented in two phases: a transitional phase (from October 2023 to the end of 2025) and a full implementation phase starting in 2026. During the initial phase, importers must report the emissions associated with their imported goods but are not yet required to purchase emission certificates. From 2026 onward, financial obligations will apply through the purchase and submission of CBAM certificates (Commission Implementing Regulation (EU) 2025/2548 of 10 December 2025 laying down rules for the application of Regulation (EU) 2023/956 of the European Parliament and of the Council as regards the calculation and publication of the price of CBAM certificates, 2025). Currently, CBAM applies to a limited set of carbon-intensive sectors, namely cement, electricity, fertilisers, aluminium, iron, steel and hydrogen. These sectors account for a relatively small share of Viet Nam’s exports to the EU, estimated at around 6.5 per cent. Among them, iron, steel and aluminium are expected to face the most direct exposure to CBAM requirements. In contrast, Viet Nam’s major export sectors to the EU, such as electronics, textiles, footwear and seafood, are not currently covered by CBAM. Therefore, the direct impact of CBAM on Viet Nam’s overall export structure remains limited at this stage. However, this list may be expanded in the future, particularly to sectors like textiles, footwear and seafood, which are among Viet Nam’s key exports, if these industries are deemed at risk of carbon leakage or non-compliance with the EU’s sustainability standards. Given this scope, the implications of CBAM for Viet Nam should be assessed with a focus on the directly affected sectors, particularly iron, steel and aluminium, where compliance costs and carbon intensity are likely to play a more significant role. In these sectors, emerging compliance requirements, such as emissions reporting and certification, are expected to increase production costs and may affect export margins. This poses a significant challenge for Viet Nam, especially as major export sectors like textiles, footwear and seafood still rely heavily on fossil fuels in their production processes. Although not yet subject to CBAM’s full scope, Vietnamese enterprises, especially those in the textile supply chain, are facing growing pressure to disclose their carbon emissions and to implement Monitoring, Reporting, and Verification (MRV) systems to meet CBAM’s technical requirements. Without adequate preparation, Vietnamese goods may lose competitiveness in the EU market, which increasingly favours products with low carbon footprints.

6.2. Business and human rights

In addition to environmental standards, the EU increasingly emphasises the role of human rights in trade and investment activities. This perspective is clearly reflected in the integration of human rights and labour standards into next-generation trade agreements such as the EVFTA. Besides referencing the core conventions of the ILO, the EU also promotes compliance with the United Nations Guiding Principles on Business and Human Rights (UNGPs), which serve as a foundation for evaluating corporate responsibility in respecting human rights within global supply chains (Faracik, 2017). In 2022, the EU introduced a draft Corporate Sustainability Due Diligence Directive (CSDDD), under which large companies based in or operating within the EU would be obligated to conduct supply chain due diligence to identify, prevent and address risks related to human rights and the environment. Although this directive is still under negotiation, once adopted, it will have significant implications for Vietnamese exporters who are part of EU companies’ supply chains. Risks such as forced labour, child labour, unsafe working conditions, or gender discrimination could all become grounds for EU partners to refuse business if Viet Nam fails to meet transparency and accountability requirements (EC, n.d.). The implementation of policies like the CSDDD and the proposed regulation on banning products made with forced labour may cause a significant impact on trade relations between Viet Nam and the EU. Specifically, Vietnamese businesses exporting to the EU will have to ensure there are no violations of labour rights, no use of forced or child labour, and must transparently disclose human rights risks within their supply chains. This requires Vietnamese companies, especially in the textile and agricultural sectors, to establish internal control systems and comprehensive traceability mechanisms to avoid being excluded from European supply chains (European Coalition for Corporate Justice, 2022).^[1] In practice, this implies additional auditing, reporting, and due diligence costs, particularly for small- and medium-sized enterprises (SMEs) with limited resources.

In the context of the EVFTA’s requirements to respect international labour and human rights standards, Viet Nam has ratified three core ILO conventions (Conventions 98, 105, and 87), revised its 2019 Labor Code to align with international standards, and allowed the formation of independent labour representative organisations separate from the Viet Nam General Confederation of Labour. However, the process of domestic legal implementation still faces many challenges: mechanisms for monitoring the enforcement of labour rights remain weak, the labour inspection system lacks sufficient resources, and businesses, particularly small and medium enterprises, lack awareness and capacity to implement human rights due diligence in their operations. Furthermore, these regulations may be enforced through specific complaint, adjudication and liability mechanisms, thereby increasing legal risks and compliance costs for Vietnamese enterprises if they fail to adapt in time. Nevertheless, this also presents an opportunity for Viet Nam to raise its production and corporate governance standards, thereby strengthening its position in the international market.

7. Discussion and conclusion

Over nearly six years of EVFTA implementation, Viet Nam has made notable progress in aligning its legal framework with international standards. From a regulatory perspective, a series of important legal documents have been enacted or amended, clearly demonstrating Viet Nam’s political will and proactive approach in making policy changes to meet with international obligations – an effort of strategic significance for the country’s deep economic integration. In the field of labour, the 2019 Labor Code marked a breakthrough reform, as it was the first time Vietnamese law allowed workers to establish independent representative organisations at the enterprise level, not affiliated with the Viet Nam General Confederation of Labor. Along with the ratification of key ILO conventions (C98, C105 and C87), Viet Nam not only fulfilled the legal conditions under the TSD chapter of the EVFTA, but also gradually improved its national image in the eyes of Western trade partners – where business ethics and labour rights are pivotal in import decisions. Additionally, the revision of the 2022 Intellectual Property Law to expand the protection of EU GIs and strengthen border enforcement demonstrates Viet Nam’s comprehensive commitment to intellectual property rights, an area of particular concern to the EU. As a result, 39 Vietnamese GIs have been officially recognised and protected by the EU, contributing to the enhancement of the national brand’s value. Moreover, through national action programs, systems for seafood traceability, vessel monitoring and labour information transparency have been gradually established. The ongoing bilateral dialogue mechanism between Viet Nam and the EU on areas such as sustainable development, labour rights and the environment also serves as a crucial foundation for monitoring progress and adjusting policies accordingly. Despite these institutional advances, significant implementation gaps remain, with direct implications for compliance costs and market access.

Firstly, there is a gap between legal regulations and actual enforcement capacity. Many localities, especially at a district and commune level, still lack sufficient human resources, professional expertise and monitoring mechanisms. Although legal frameworks have been introduced, their implementation remains uneven. Certain provisions overlap or lack detailed guidance, causing confusion among enforcement officials and businesses. Many progressive regulations under the 2019 Labor Code and the 2017 Fisheries Law have not been effectively enforced at the grassroots level, due to a shortage of supervisors, limited technical capacity or weak coordination between responsible agencies. This enforcement gap directly relates to the need for strengthening institutional capacity and improving implementation mechanisms, particularly in areas such as fisheries management, vessel monitoring (VMS), traceability and sanctioning of violations following the EC’s recommendations.

Secondly, there is rising pressure on businesses that they must overcome. Environmental and human rights requirements under the EVFTA are becoming stricter due to new EU regulatory measures, such as the CBAM and CSDDD. These policies require Vietnamese enterprises, especially in key export sectors like textiles, agriculture and seafood, to provide transparent information on greenhouse gas emissions, raw material origins, labour conditions and human rights compliance. This presents a major challenge for SMEs, which often lack the financial, technical and informational capacity to adapt. This challenge highlights the need for targeted support policies to enhance the compliance capacity of firms, particularly in meeting emerging ESG (Environmental, Social and Governance) and transparency requirements.

Thirdly, the risk of non-tariff barriers is rising. The lack of significant progress in lifting the IUU yellow card since 2017 has placed Viet Nam’s seafood sector, one of its top export industries to the EU, at a serious disadvantage. In addition, the EU’s increasing use of trade-related regulatory measures based on environmental and human rights criteria (e.g. CBAM, Forced Labour Ban, CSDDD) increases the risk of Vietnamese goods being excluded from EU supply chains unless Viet Nam strengthens its compliance capacity. Furthermore, Viet Nam’s management system remains fragmented. The implementation of the EVFTA involves multiple ministries and agencies (e.g. Ministry of Industry and Trade, Ministry of Labor – Invalids and Social Affairs, Ministry of Agriculture and Rural Development, Ministry of Justice, Ministry of Finance), yet there is no unified coordination body to oversee, monitor and evaluate the overall implementation of the agreement. This has led to overlapping responsibilities, inconsistent implementation guidance and difficulties in reporting progress to the EU. These institutional and regulatory coordination challenges underscore the importance of establishing a centralised coordination mechanism for EVFTA implementation.

To successfully overcome the challenges mentioned above, it is essential to develop systematic and long-term solutions to ensure that Viet Nam not only effectively fulfils its commitments under the EVFTA but also strengthens its overall capacity for international integration. Based on the challenges identified above, the following recommendations are proposed. First and foremost, it is critical to improve institutional effectiveness and law enforcement. The government should invest significantly in training human resources responsible for implementing the EVFTA, especially at the local level, where access to and application of new legal documents remain limited. Additionally, the development of a dedicated EVFTA online portal would provide updated information on regulations and implementation procedures, making it easier for businesses to look up benefits and technical requirements. Furthermore, a more robust mechanism for independent feedback and evaluation should be established to ensure timely monitoring and adjustment of implementation efforts based on real-world conditions.

At the same time, specific support measures are needed to help businesses, particularly SMEs, overcome technical and administrative barriers when entering the EU market. Establishing ‘EVFTA Hubs’ in key economic regions could serve as advisory and technical support centres, offering training on rules of origin certification, ESG reporting preparation and compliance with CBAM and new labour standards. The government should also design financial support packages and tax incentives for businesses that invest in green technologies, clean production or traceability systems, factors that are becoming mandatory for exports to the EU and participation in global supply chains.

Moreover, Viet Nam must proactively align with emerging international standards, especially in the fields of environmental protection and human rights, two pillars of the EU’s new legal frameworks, such as CBAM and CSDDD. In the initial phase, Viet Nam could pilot a MRV system for greenhouse gas emissions in high-risk sectors such as textiles, footwear and seafood. Assisting businesses in building product-level carbon footprint profiles would also increase market access and reduce the risk of being subjected to carbon-related trade measures starting in 2026. At the same time, the creation of a public–private alliance to build a network of independent ESG and human rights auditors in the supply chain would support the goal of achieving the ‘responsible business’ standard as recommended by the Organisation for Economic Co-operation and Development and EU.

Finally, to ensure the long-term sustainability of EVFTA implementation, Viet Nam should strengthen bilateral dialogue and international cooperation, not only at the governmental level but also through industry associations such as the Viet Nam Association of Seafood Exporters and Producers (VASEP) and the Viet Nam Textile and Apparel Association (VITAS). These organisations play a crucial intermediary role between businesses and state authorities, helping to quickly relay obstacles and promote policy adjustments that reflect on-the-ground realities. In this context, rather than requesting a relaxation of EU standards, Viet Nam should engage in dialogue to seek clearer guidance, technical cooperation and feasible transition arrangements that support effective compliance. Future research could incorporate sector-level data and firm-level evidence to better quantify the trade effects of these regulatory changes.

Acknowledgments

The authors wish to thank anonymous referees for their helpful comments and suggestions. This research was financially supported by the Ministry of Science and Technology of Viet Nam under project code KX.06.04/21-30. The authors are solely responsible for the views expressed herein.