Green barriers can produce both positive and negative impact on international

trade. However, the number of these barriers keeps growing without any
monitoring system. This research will analyse the impacts of green trade barriers
on Vietnam and European Union trade relationship. The study presents an
important observation: the requirements to upgrade technology to meet exactly the
technical regulations and expenditure for conformity assessment actually increase
the production costs for small and medium companies in the short-term. However,
the proper adjustments to these requirements will bring about some long-term
benefits. Understanding the Good Agriculture Practice will help to improve the
quality of products as well as the productivity, and this will open an access to
developed markets to gain higher profits.

Keywords: green trade barrier, trade protectionism, environment protection,

Good Agricultural Practices (GAP), Vietnam exports to European Union, value
chain in Vietnam, Vietnam agricultural and fishery products.

Overview of Green Trade Barriers

Green trade barriers are introduced in order to attract public and corporate
awareness as well as to reduce environmental pollution. However, some developed
countries and other actors have applied these regulations to control import from the
developing countries, where environmental standards are lower. These barriers are
also considered as non-tariff ones and there is no international organization or a
common policy framework, which is powerful enough to enforce these barriers.
Although the 1992 Earth Summit, the 1994 WTO Agreements, the 1996 World
Food Summit and numerous multilateral environmental agreements have
comprised major international frameworks, they have not reached consistency or
coherence in balancing the objectives – environmental, economic, and social – of
the world's diverse nations. Moreover, the difficulty in monitoring environmental
problems also creates many challenges in applying green trade barriers. Despite the
growing debates and controversies, the trend for imposing green regulations as a
non-tariff barrier is upward.

The most advanced formation in terms of strict green barriers is the European
Union (EU). This green rampart has exerted a tremendous impact upon imports
from many countries all over the world including Vietnam. For example, only in
2002–2003, the EU rejected as many as 72 vessels of aquarium products from
Vietnam on account of incompatibility with the EU green regulations on imported
fish products. In spite of the public concern about these green barriers, there are
quite a few researches in this subject, especially on the impact of green barriers on
Vietnam agricultural and fishery trading with EU. This study is therefore an
attempt to fill this gap in research.

There is no clear and widely accepted definition of a green trade barrier. In

some contexts, the terms Trade-Related Environment Measures (TREMs) or
Environment-Related Trade Measures (ERTMs) are preferred. For example, in a
survey on the experience of TREMs and ERTMs in APEC, the Economic
Committee of APEC (1998) defines these two measures in the following way:

Trade-related environment measures have a relatively wide coverage. They

refer to environmental measures with significant trade effects, including laws,
regulations, and administrative measures as well as regional and multilateral
agreements that are formulated and implemented or signed by APEC member
economies. Environment-related trade measures refer to national trade laws,
regulations as well as administrative measures enacted to achieve a specific
environmental goal or for environmental purposes, including trade-related
measures adopted by individual economies pursuant to the multilateral
environmental agreements. Examples of ERTMs include bans, restrictions, or
permit requirements in respect of imports or exports.

Thus, while trade-related environment measures are multilateral and commonly

agreed by the concerned parties, the environment-related trade measures are
national. Both types can be materialized in policies either at internal or at bilateral
level, and those policies are enforced through multilateral Free Trade Agreements
(FTAs), and/or through Multilateral Environmental Agreements (MEAs) and
controlled by the WTO. However, it is difficult to distinguish between these two
types of measures. As explained in another study performed by APEC, ‘The
Impact of Environmental Regulation on Trade’ (2009) is aimed at protecting the
environment, but the lack of recognized definitions makes it difficult to
differentiate them since some countries may have different interpretations of these
measures.

WTO and its precedence – GATT – although having no official definition of

TREMs, have often used this term in the documents and agreements. Because of
this popularity and in order to stand at a neutral and objective point, in this study
we regard green trade barriers as trade-related measures including all restrictions
imposed by a country or a group of countries on imported goods from other
countries based on environmental concern. This concern involves the threat to the
environment of both implementing country and of the world as a whole. For
example, the EU required exporters to minimize the amount of packaging waste
and use recyclable materials in their products so that the consumption of these
products does not create more burdens of solving trash and land degradation on
EU, which affects their own environment. Besides, the EU also issues the
directives preventing illegal, unreported and unregulated (IUU) fishing to deal with
its threat to the survival of coastal communities all over the world.

Environment Protection or Trade Protectionism

While consensus on the necessity of environmental protection through the

enforcement of green barriers has been reached, the protection and protectionism,
in practice, are likely to be confused. Green rules can be abused and environmental
issues are used as an excuse for trade protectionism. There have been many
disputes on this issue in recent years. In such cases, some countries wanted to ban
the import on environmental grounds, while exporting countries invoked their
rights of non-discrimination in trade granted under the General Agreement on
Tariffs and Trade (GATT) and other agreements under the World Trade
Organization (WTO). A central issue in this conflict is the legitimacy of unilateral
action and national decision-making under WTO law, as opposed to multilateral
decision-making. Another line of conflict (often indistinguishable from the first)
runs between the governments of the large developed markets in the North, with
their strong environmentalist movements, and the smaller trading nations, in
particular in the developing world (Biermann 2001).

Regarding the former, one should remember that WTO is not an environment
agency and WTO jurisprudence has affirmed that WTO rules do not take
precedence over environmental concerns. Its main objective is to foster
international trade and open markets. However, WTO rules permit members to
take trade-restricting measures to protect their environment under specific
conditions as mentioned in Article XX of GATT:

Subject to the requirement that such measures are not applied in a manner
which would constitute a means of arbitrary or unjustifiable discrimination
between countries where the same conditions prevail, or a disguised restriction on
international trade, nothing in this Agreement shall be construed to prevent the
adoption or enforcement by any contracting party of measures: … (b) necessary to
protect human, animal or plant life or health; … (g) relating to the conservation of
exhaustible natural resources if such measures are made effective in conjunction
with restrictions on domestic production of consumption ...

This exception can be ambiguous in some cases. According to Fiona Macmillan

(2001), a measure will be ‘necessary’ to protect human, animal or plant life or
health under the Article XX (b) if there are no alternative measures that are more
consistent with GATT but WTO panel would be not suitably qualified to assess
those alternative measures and, then, how to evaluate which measure is the least
trade restrictive?

Besides, it is very difficult to interpret the expressions ‘arbitrary

discrimination’, ‘unjustifiable discrimination’ and ‘disguised restriction on
international trade’ due to the absence of any criteria for assessing arbitrariness,
unjustifiability and disguise. Many people also have been confused by the phrase
‘relating to’ in the Article XX (g). ‘Relating to’ means ‘primarily aimed at’ but
how about measures that have more than one significant aim, although one of
which is conservation, if the non-conservation aim was regarded as being of more
significance than the conservation aim?

Besides WTO Agreement, there are also two non-binding instruments, Agenda
21 and the Rio Declaration adopted at the 1992 United Nations Conference on
Environmental and Development (UNCED), which stand at the intersection of
trade, developmental and environmental issues. However, they face the same
problems of ambiguous information as Article XX. For example, Rio Principle 12,
the heart of the Rio Declaration provides:

States should cooperate to promote a supportive and open international

economic system that would lead to economic growth and sustainable development
in all countries, to better address the problems of environmental degradation. Trade
policy measures for environmental purposes should not constitute a means of
arbitrary or unjustifiable discrimination or disguised restriction on international
trade. Unilateral actions to deal with the environmental challenges outside the
jurisdiction of the importing country should be avoided.

What amounts to arbitrary or unjustifiable discrimination, disguised restriction

is still open to question. Moreover, the language of Principle 2 with the use of
‘should’, not ‘shall’ is quite discretionary. Despite this ambiguity, these words in
GATT Article XX preamble were still used by other agreements such as Article 36
of the Treaty Establishing the European Economic Community. One conclusion
may be drawn here is that the border line between protection and protectionism is
quite vague, which leads to the difficulty in monitoring them as well as settling
disputes. As Clinton Administration's environmental review of NAFTA correctly
points out ‘the choice of the appropriate level of protection is a social value
judgment. There is no requirement for a scientific basis for the level of protection
because it is not a scientific judgment’. When there is no concrete scientific
evidence on these problems, every country will have different points of view and
these controversial issues may lead to disputes and even trade wars, which can
dramatically affect both sides' interests.

The second conflict between the governments of the large developed markets in
the North and the smaller trading nations, in particular in the developing world in
the South, is even more complicated. As Fiona Macmillan (2001) states, all
developing countries are either strictly opposed or at least most reluctant to accept
MEAs due to the costs they would face in complying with these obligations. Their
fear is that these will be used to restrict developing countries' access to developed
countries' markets. Huang Qing (2007), a researcher from China, a developing
country, is even more frank in claiming that green barriers are a ‘disguised’ means
of protectionism behind their morality facade. He asserts ‘… the rapid expansion
of manufacturing industries in these countries [developing countries] rouses
worries from developed countries. In this context, the developed nations put in
place green and technological barriers one after another in a bid to hold an
advantageous position over the competition’. He goes on to elaborate that green
barriers weaken the competitive power of developing economies by adding
additional costs to their export goods. He concludes that the green barriers are
‘actually a new type of trade barrier’.

Meanwhile, the developed countries, as Frank Biermann (2001) explained,

reasoned that MEA has been widely applied by the vast majority of WTO
members. CITES, for example, has been ratified by 90 per cent of the WTO
members (152 members) and is thus almost universally recognized as the general
standard of behaviour in this issue area. Because of its wide application, one can
safely assume that many WTO members that are parties to these multilateral
environmental agreements do not view them as violating the spirit of GATT and
being applied in a manner that would constitute a means of arbitrary or
unjustifiable discrimination or a disguised restriction on international trade. This
disagreement in using green trade barriers may root from conflicts over standards.
People in high-income countries may have better awareness of environment
protection and require stricter compliance of products to environmental rules. In
addition, to non-transboundary environmental impacts, which do not cross borders,
every country has different optimal set of environmental standards. An optimal set
of standards in Europe, for example, might be entirely different from an optimal set
in North Africa or Central Asia due to budgets constraint and regulatory abilities.

However, as Neumayer (2001) said, the hostility towards practically any form
of greening of multilateral investment and trade regimes is rooted in a much deeper
frustration with the distribution of benefits in these multilateral regimes. In the
view of developing countries, the developed countries benefit much more from
these than they themselves do. In particular, they believe that the developed
countries have benefited quite substantially from the Uruguay Round of trade
negotiations on topics that they favour: intellectual property rights, investment,
services, telecommunications, restriction of production and export subsidies,
strengthening of anti-dumping measures, increased access to developing countries'
market, to mention just a few. The developing countries on the other hand, have
hardly benefited. Although WTO guaranteed them ‘special and differential’
treatment, they rightly complain that the special provisions of safeguarding their
interests have largely been ineffectual in reality; the transitional periods have been
too short for them to adjust to the requirements of the WTO agreements and that
the promised technical assistance has been too little and too unsystematic to
strengthen their capacity to comply with trade obligations. Thus, it seems fair to
say that developed countries have benefited much more from Uruguay Round than
the developing countries.

Given this imbalance, one can understand why developing countries are
desperate to seek access to developed countries' markets and show their great
suspicion and outright hostility to any restriction of this access – even if it comes in
the name of saving ‘our common environment’.
 Vietnam's Agricultural and Fishery Export to the EU

The EU green regulations on agricultural and fishery products

Mandatory regulations

Environmental regulations on agricultural and fishery products are mentioned in

European Union Environment Product Legislation. Their goal is to protect
community health and environment. They can be divided into two types: the
regulations directly affecting environment such as packaging waste, organic food
labelling, and the regulations having an indirect impact on environment but
relating to people's health and food sanitary such as allowed maximum of pesticide
residue in products.

The followings are some of popular regulations imposed on agricultural and

fishery products. They are arranged from the most influential regulation on
environment to the least one.

· Packaging waste: A Directive followed the packaging note in December 1994

(94/62/EC) requires the exporters to minimize the amount of packaging waste
(transport packaging, surrounding packaging and sales packaging) and give
preference to materials that are re-useable or recyclable.

· IUU Regulation: The European Community adopted a Regulation to prevent,

deter and eliminate illegal, unreported and unregulated (IUU) fishing on 1 January
2010. In order to ensure that no products derived from IUU fishing appear on the
Community market or on markets supplied from the Community, the Regulation
seeks to ensure full traceability of all marine fishery products traded with the
Community, by means of a catch certification scheme. The catch certification
scheme covers both processed and unprocessed marine products and will improve
cooperation between flag, market and processing states.

· Maximum pesticide residue levels: it is necessary to ensure that residues used

in production should create no risk to humans. Maximum residue levels (MRLs)
are therefore set by the European Commission to protect consumers from exposure
to unacceptable levels of pesticides residues in food and feed. These Regulations
directly concern public health. Yet, they also influence the environment because if
pesticides are overused on food and plants, land cannot absorb these substances,
which leads to degradation or contamination of water sources. Hence, pesticide
residues are always of environmentalists' concern.

· Veterinary and zoo technical checks on live animals and products: Products
from third countries are subject to checks to protect the health of citizens and
animals inside the European Community. Based on Council Directive 97/78/EC of
18 December 1997, a documentary check by the veterinary staff of the border
inspection post or by the competent authorities must be carried out for each
consignment of products coming from third the countries. The products then
undergo a physical check at the border inspection post situated at or in the
immediate vicinity of an entry point into the European Union (EU). This scheme is
to ensure the verification of compliance with feed and food law, animal health and
animal welfare rules.

· Authorized food additives: the Council Directive 89/107/EEC of 21 December

1988 draws up a list of substances whose use is authorized to the exclusion of all
others; a list of foodstuffs to which these substances may be added and the
conditions under which they may be added, and restrictions which may be imposed
in respect of technological purposes and rules concerning substances used as
solvents including purity criteria where necessary. Food additives, like pesticide
residue and veterinary checks, though belonging to food hygiene regulations, still
have an indirect impact on environment. Growing, producing and consuming
products with these overused substances can cause land erosion, water pollution,
affect natural biodiversity and cause other serious environmental problems. Thus,
to some extent, they can be regarded as environmental regulations on products.

If products from third countries do not meet the above-mentioned requirements,

the EU imposes different sanction measures in the form of financial tools and
administrative tools. The EU's generalized system of preferences (GSP) is a good
example of financial tool. According to 1154/98/EC, GSP has tax incentives
scheme to encourage trading environment-friendly products or the ones having
good social performance (good working conditions, no abuse of young labor). If
firms export such products to the EU countries, they can get 10–35 per cent tax off
on agricultural products and 15–35 per cent tax off on industrial products. By
contrast, depending on the degree of violation, the products violating the EU
environmental regulations can be levied higher tax or even removed from the list
of GSP's goods. In case of breaking the law of forest and sea protection, the EU
can even abolish all GSP priority. Examples of administrative tools are quota
cutting or ban on importing. For instance, when the EU imported shipment
inspection found violations that may result in severe consequences such as causing
widespread disease, these animals will be killed immediately at the port of
shipment. In case of more serious violations, the EU will return to total inspection
of import consignments from the violator.

Standards
 In addition to compulsory requirements, the EU also has many voluntary
environment standards like ISO 14000, EMAS and non-legislation requirements
like eco-labelling. Though they are voluntary, if not complying them the exporting
firms will face many difficulties in entering exporting markets. For the agricultural
and fishery products, organic food labelling, GAP and EMAS, ISO 14000 seem to
be the most popular requirements.

· Organic food labelling: Organic farming is an agricultural system that seeks to

provide the consumers with fresh, tasty and authentic food while respecting natural
life-cycle systems. To get organic products labels and logo, firms have to follow a
strict certification process. Conventional farmers must first undergo a conversion
period of a minimum of two years before they can begin producing agricultural
goods that can be marketed as organic. Both farmers and processors must always
follow the relevant rules contained in the EU Regulation. They are subject to
inspections by the EU inspection bodies or authorities to ensure their compliance
with organic legislation. After the two-year period successful operators are granted
organic certification and their goods can be labelled as organic.

· Good Agricultural Practices (GAP): GAP is also a kind of organic farming but
its benefits are more than that. It is a means to concretely contribute to
environmental, economic and social sustainability of on-farm production resulting
in safe and healthy food and non-food agricultural products. Every country has
developed its own GAP standards, for example, like USGAP of the USA,
EurepGAP of the EU, INDON GAP of Indonesia and VietGAP of Vietnam.
EUREPGAP is a global Scheme and Reference for Good Agricultural Practice that
bases on the following standards:
 - Food Safety: The standard is based on Food Safety criteria, derived from the
application of general HACCP principles.

- Environment Protection: The standard concerns the Environmental Protection

Good Agricultural Practices, which are designed to minimize negative impacts of
agricultural production on the environment.

- Occupational Health, Safety and Welfare: The standard establishes a global

level of occupational health and safety criteria on farms, as well as awareness and
responsibility regarding socially related issues; however, it is not a substitute for
in-depth audits on Corporate Social Responsibility.

- Animal Welfare (where applicable): The standard establishes a global level of

animal welfare criteria on farms.

· Eco-Management and Audit Scheme (EMAS): The EU Eco-Management and

Audit Scheme (EMAS) is a management tool for companies and other
organizations to evaluate, report and improve their environmental performance.
The scheme has been available for participation by companies since 1995 (Council
Regulation EEC No 1836/93 of 29 June 1993). To receive EMAS registration an
organization must proceed through the following steps:

- Conduct an environmental review considering all environmental aspects of the

organization's activities, products and services, methods to assess these, its legal
and regulatory framework and existing environmental management practices and
procedures.

- In the light of the results of the review, establish an effective environmental

management system aimed at achieving the organization's environmental policy
defined by the top management. The management system needs to set
responsibilities, objectives, means, operational procedures, training needs,
monitoring and communication systems.

- Carry out an environmental audit assessing in particular the management

system in place and conformity with the organization's policy and programme as
well as compliance with relevant environmental regulatory requirements.

- Provide a statement of its environmental performance, which lays down the

results achieved against the environmental objectives and the future steps to be
undertaken in order to continuously improve the organization's environmental
performance.

· ISO 14000: The International Standards Organization, have developed a series

of voluntary standards and guidelines in the field of environmental management.
Developed under ISO Technical Committee 207, the 14000 series of standards
address the following aspects of environmental management: Environmental
Management Systems (EN ISO 14001), Environmental Auditing and Related
Investigations, Environmental Labels and Declarations, Environmental
Performance Evaluation, Life Cycle Assessment and Terms and Definitions.

Impacts of the EU Green Trade Barriers on Vietnam Exporting

Negative impacts

Environmental regulations have created many challenges for the Vietnamese

firms because many companies do not have modern technologies that are friendly
to environment to meet the EU green requirements. According to a report made by
Tan Duc Thao Company in Vietnam Trade and Investment Forum (January, 2008),
among all factories in Vietnam, there are only ten per cent having environmental
friendly technology but 76 per cent still utilizing old technology of 1960s, 75 per
cent of this technology has run out of depreciation. During the period 2003–2005,
the Department of Science Technology and Environment inspected 2,893 factories
but 1,129 of which violated Environmental Protection Law.

Agriculture products fail seriously to meet maximum pesticide level of the EU.
The inspection of Plant Protection, Ministry of Agriculture and Rural Development
in 2006 showed that among 4,600 inspected farms, 59.8 per cent did not follow
chemicals using process, 20.7 per cent did not meet the required time isolating,
10.31 per cent used substances not listed in permitted chemicals, 0.18 per cent used
restraint drugs, 0.73 per cent used unknown origin drug. Of 373 tested vegetable
samples, there were 33 samples (13.46 per cent) having amount of chemicals
exceeding the permitted level. In 2008, 20 per cent of farms abused pesticide;
nearly 60 per cent did not follow the prescribed technique.

With respect to products-relating live animals, according to the Department of

Livestock Production (MARD), at present, there is only 45 per cent of slaughter
cattle and poultry houses that have permission but 65 per cent have no sanitation
facilities after slaughtering. The number of houses that use tap water accounts for
25 per cent. Meanwhile, under the supervision of the National Assembly Standing
Committee, up to 16,512 small slaughters do not comply with the requirements of
food hygiene. The Management Department of Agriculture, forestry and fishery
(NAFIQAD) performed tests of antibiotic residues in meat which revealed that
during first six months of the year, there was still nearly 4.9 per cent pork and 3.6
per cent chicken and ducks having antibiotic residues exceeding permitted level. In
2008, there were only 49 ISO 22000:2005 certificates on food safety management
issued to Vietnamese firms.
 Because of such poor technology and awareness, many of our export products
have been inspected or even rejected by importing markets. In July 2002, the EU
found imported fishery goods from Vietnam having the sign of violating veterinary
checks requirement and having the amount of antibiotics over the permitted level.
Thus, the EU inspected 100 per cent of our exporting products since September
2001. From September 2001 to February 2003, the EU destroyed and returned 76
fish vessels, which did not meet maximum antibiotics level. They also warned that
if this situation happened again, the imported products from Vietnam would be put
in the third group, which needs 100 per cent inspection. To cope with this situation,
the Vietnamese authority temporarily banned six fishery suppliers who did not
comply with the EU rules and warned that any firm having even a single vessel
violating the EU rules will be removed from the list of permitted exporting fishery
products companies to the EU.

In 2008, Vietnam food was notified 51 times by Rapid Alert System for Food
and Feed in the threat of violating food hygiene regulations. In 2007, this number
was only 42, including 31 cases of fishery products and 20 of agricultural products.
The RASFF does not always make the right decision based on scientific evidence.
In case of wrong conclusion, the cost will be great, especially for fishery products,
which are easily to be destroyed and have high cost of preservation. Moreover, if
information about the name of company is revealed, it will have serious impact on
firms' profit. In ‘Clean Production for better products’ (CP4BP) project report
(2008), at present the seafood companies have to pay USD 1,000 to get each
consignment examined before export, which is costly given the financial capacity
of most seafood companies. Moreover, the seafood exporters have suffered large
financial losses and have suffered reputation damage due to chemical and
antibiotic residue that was found in Vietnamese seafood by foreign importers.
 Many criteria tests are also very expensive and, therefore, make a significant
increase in the product cost. Take, for example, ISO 14001. It gets much time and
money to get this certificate. It takes at least eight months to meet compulsory
requirements. And the cost to implement it can reach hundreds of millions dong,
depending on production scale, method and labour costs. Given that almost all
Vietnamese firms are small and medium size, the cost can become a great burden
for them.

Likewise, it is very costly to get EUREP GAP or Global GAP: approximately

5000–7000 USD/per certificate. With this cost, the price will rise notably, which
makes export products unaffordable to domestic and ordinary importing markets.

Suppose that a farmer has a pond with its own water supply and drainage
channel. In order to meet the requirements of GAP, this farmer has to invest money
to renovate the pond to kill germs, remove the transmission medium, such as crabs,
water filtration and water treatment pond to ensure no pathogens. At the same time,
he also has to spend more money to buy a certified clean shrimp. Hence, there is a
significant growth in his expenses. According to NAFFIQAVED (2006), applying
GAP increases the cost by 2.352 dong/kg in Ben Tre. This cost is mainly for
analyzing chemicals residues and antibiotics level in and on shrimp products. To
farms having no separate water supply and drainage channels, the expense is even
higher, about 13.700 dong/kg as shown in the research made by NAFIQAVED
(2006) in Khanh Hoa. This rise in cost will simultaneously raise the price by 20 per
cent.

Many farmers, therefore, are afraid that the revenue may not cover the expenses
and they are under the threat of great lost. It also explains why among 7,000
farmers registering to apply GAP there is operating large business, the small and
medium enterprises just account for a very small rate. Although there are 1,198
farms having certificates of ecological shrimp growing with the total area of 4,000
ha, this number just accounts for 1.1 per cent of 369,094 shrimp growers in 2008.
The same refers to agricultural products. In Binh Thuan, the first province applying
EUREPGAP in growing dragon fruit, there is only 1.2 per cent of land certified
with EUREPGAP. This number is too small to guarantee for high valued contracts.
In Vietnam, there are only 3000 companies that have been issued international
certificates like ISO, HACCP, SA 8000. These companies accounted for only 1.5
per cent of all operating businesses. Even in Ho Chi Minh City, the biggest city in
Vietnam, this number was just three per cent. Although these certificates are not
mandatory requirements to enter the EU markets, without them, firms will face
many difficulties, especially in verifying their products quality. In this case, green
barriers are really a burden for small and medium enterprises, which have low
technology, lack of capital to apply international qualified management system.

Positive impacts

High cost, however, does not always have negative impact on enterprises. On
the other hand, if high cost adds more value to products, the producers can increase
the price. And in this case, their profit will rise dramatically.

The case of Good Agricultural Practices (GAP)

To enter the EU markets, it is necessary to produce agricultural and fishery

products following the GAP. This certificate is somehow a green ticket to enter the
developed markets where there are strict requirements of products quality and its
impact on environment. Realizing this trend, in December 2005, the Vietnamese
government, in an association with USAID and AUSAID signed a contract with
Southern Fruits Research Institute (SOFRI) to implement a project, which helps to
introduce European GAP (EUREPGAP) to dragon fruit growers in Binh Thuan and
Tien Giang. The aim of this project is to improve the quality of Vietnam dragon
fruits complying with EUREPGAP so that our fruits can be exported to European
and Southern American markets. Since these markets have very strict requirements
of environment protection, safe for producers as well as consumers. Despite many
challenges and difficulties, the initial results show potential success. The price of
dragon fruit exporting to the EU and USA has increased to 4–5 $/kg, while the
ordinary fruit is just sold at 2 $/kg, that is two-three times less. As Mr. Tran Ngoc
Hiep, the chairman of Binh Thuan Dragon Fruit Association as well as the Director
of Hoang Hau Company – the biggest dragon fruit exporting company in Vietnam
said, during seven months after receiving EUREP GAP, the number of his
company's consumers rocketed, especially in the European market. In the first six
months of 2008, the volume of export to the EU was 500 tons, equivalent to total
export in 2007. The price is obviously higher than uncertified dragon fruit.

Another case of the benefit of organic farming is about vegetables growers in

Soc Son. They made a comparison between the cost and revenue of the normal
farming and organic farming.

Table 1

Cost, revenue and profit from growing organic tomatoes and cabbages

Type Tomatoes Cabbages

Content Organic Ordinary Organic Ordinary

Revenue 40 million 20 million 4,000,000đ 3,500,000đ

dong/sao dong /sao*

Cost 922,000đ/field 945,000đ/field

 Profit 38,780,000đ 19,055,000đ

Quantity 400 kg 1.4 tons

* 1 sao = 360 m2

Source: http://www.kinhtenongthon.com.vn/printContent.aspx?ID=17204.

It is clear that organic farming creates higher profit but smaller quantity for
farmers. Because of terrible flood in November 2011, the yield of organic
vegetable was just 400 kg cabbage/field but the selling price was 10,000 dong/kg.
Meanwhile, farmers harvested 1.4 tons of inorganic cabbage but just sold at 2.500
dong/kg. For tea and other agricultural products, we also see the same pattern. As
Ms. Nguyen Thi Huong, the director of Van Tai Co, Ltd, which produces ‘clean’
exporting tea following GAP said about her company products of O Long and
Hong Tra Tea, although they are very expensive (from 400,000 dong to 1 million
dong) there is still an excess in demand while the conventional tea is just sold at
80,000–200,000 dong. Organic farming just utilizes natural resources such as using
remnants of plants, animal waste to make fertilizer, making pesticide from herbs
(wood vinegar, crushed leaves of Melia azedarach) so it lowers the cost. To some
products, the input cost of organic farming is even 30 per cent lower than normal
method. Ms. Nguyen Thi Thinh, a farmer in Vinh Phuc calculated that the cost of
organic fertilizer for her vegetable crop is 70,000 dong/sao (1 sao = 360 m 2),
equivalent to half of chemical fertilizers. Organic farming also helps to improve
the productivity. According to Mr. Nguyen Moi, a grape grower in Ninh Thuan
who has used organic farming for three seasons, thanks to this new kind method,
his crop productivity has gone up gradually from 5 tons/ha, 9.5 tons/ha to 18
tons/ha and the quality of the fruit is also better. In Binh Phuoc, it is also verified
that the productivity of organic vegetables is two times higher than ordinary
products.

In 2006, with the help of NORAD and Fishery Law Project, NAFIQAVED
introduced GAP to aquaculture industry, starting with shrimp farmers in Tra Vinh
and Binh Thuan. The initial result showed that the yield of households using GAP
is 20–30 per cent higher than the conventional farming. Nha Be agricultural
extension station, belonging to Ho Chi Minh extension center also applied GAP
into shrimp farming with semi-intensive model at four households during four
months from February 2009 to June 2009 within the area of three ha. The density
in pond was 15 units/m2, size 12 post, feeding with Tomboy industrial food. And
the result was that each household yields two tons/ha/crop, the survival rate was
60–70 per cent. Fishes, whose weight is 70–60 kg, were sold at 60,000–80,000
dong/kg and the average profit was about 50–60 million dong/ha/crop.

In addition to increase in profit, good agriculture practice also helps enterprises

expand their domestic as well as exporting markets. The food scares in developed
countries, combined with the increasing awareness of health, diet and nutrition, has
increased interest in organic food products. Sales of organic products are
increasing in almost all countries of the EU. Organic and other certified products,
as well as high quality specialties, are an especially good opportunity because
conventional products are mass commodities where traded quantities are large and
it is more difficult to compete. Take coffee as an example. Coffee is mainly
consumed in the developed countries of the northern hemisphere and much less in
the producing countries in the South. It is estimated that consumers in 11 major EU
member states together used approximately 27.4 million kilograms of certified
organic coffee every year and this number has risen constantly.
 All examples above are good illustrations for the profitability of GAP to
farmers and exporting companies. However, the benefit of GAP is more than that.
Organic farming helps not only to protect their industry from the unscrupulous
producers but also helps to strengthen vital skills among producers for whom
organics offer a chance to participate in competitive higher-value trade.
Traceability and production management are part of rigorous organic standards
that can help smaller producers to compete in agricultural trade. Moreover, if
domestic companies are compelled to apply green regulations like GAP, it will be
fair to make foreign producers follow these rules. In Vietnam, there is still lack of
environmental regulations imposed on import goods, leading to the import of
unsafe products for consumers and environment by many foreign companies. Thus,
it is necessary to have green regulations, which play the role of technical barriers to
protect our own be- nefit.

In addition, GAP and green regulations also help us reach the goals of
sustainable development. According to agriculture specialists, organic farming will
keep the soil fertile for crop rotation, make the water source less pollutant, protect
wild animals and biodiversity, save energy and scarce natural resources. Limited
using chemicals also make the products safer for consumers.

In general, GAP helps to enhance the competitiveness of company's products,

make the products reliable, create good image of a brand in customers' mind,
expand domestic and exporting markets, increase revenue, decrease cost to raise
profit and meet the goal of sustainable development.

From the case of GAP, we may draw a conclusion that if complying

environment regulations, our export products are not only eligible for entering
developed markets like the EU but also able to take the advantage of modern
production methods to increase profit and develop sustainably. Moreover, in the
age of globalization, there is a tough competition between companies of different
countries and the awareness of environment protection of people have improved
significantly, enterprises should advance their technology to comply new rules of
modern time instead of resisting them. If this situation happens, green regulation
will be no more barriers but a tool for companies to increase their profit.

Conclusion

Green trade barriers can induce higher costs for enterprises, including the costs
of complying the precise obligations and the conformity assessment. However, if
high cost adds more value to products, applying modern technology helps improve
quality of the products, obtaining ISO 14000 and other green certificate can attract
more consumers of high environment consciousness, the producers will have
power to increase the price and get more benefits. Thus, companies should be
proactive in applying advanced technology so as to meet green regulations and
improve their products competitiveness. Strengthening vertical and horizontal
integration is also another effective measure to share the cost burden and control
product quality. Government should also support enterprises by supplying them
with update market information, increasing trade promotion, building a common
standard system and creating a supporting mechanism. By doing so, our
agricultural products will be able to break through barriers, increase our export
products' competiveness in the world market, leading high profit in the future.