The EU’s ‘Green Wall’ Blocking Asian Textiles

In its pursuit of building a green economy, the EU has enacted a series of policies that pose challenges for Asia’s textile industry.

A Barrier to Textile Trade

The European Union has implemented numerous new trade policies and requirements for textile exports to Europe since 2021, aiming to foster a circular economy. Asia Times has referred to these regulations as a “green wall” obstructing Asian textile products, viewing them as a sign of trade protectionism.

Among these measures is the EU Strategy for Sustainable and Circular Textiles (EUSSCT), introduced in June 2022. This strategy could significantly impact textile producers in Asia, which supplies over 70% of the EU’s apparel imports.

The EUSSCT mandates that clothing businesses adhere to specific environmental protection standards. This initiative supports the EU’s goal of sustainable clothing consumption and establishes the bloc as a global leader in enforcing sustainable production practices among its trade partners.

The textile industry is crucial to Asia’s economy, generating around 60 million direct jobs, not to mention millions more in related sectors.

East Asia, in particular, plays a key role in the global textile supply chain, accounting for 55% of global textile exports in 2019. The region serves as the production hub for major European fast-fashion brands like Nike, Zara, C&A, and H&M. Countries such as China, Indonesia, Vietnam, and Cambodia have seen the fastest growth in their textile industries.

This rapid growth has been bolstered by agreements such as the European Free Trade Agreement (EFTA), the EU-Singapore Free Trade Agreement, and the EU-Vietnam Free Trade Agreement (EVFTA). However, EVFTA has also increased Vietnam’s dependence on the EU market.

Since the COVID-19 pandemic, East Asia’s textile industry has faced difficulties due to declining demand in major markets like the U.S. and EU.

Environmental Protection Opportunities

The EUSSCT will introduce new challenges, potentially raising production costs for East Asian apparel. Businesses in the sector must adapt to these regulations to maintain their export presence.

The EU aims for “complete circularity” by 2030, requiring textile producers to meet criteria for recyclability, traceability, and decarbonization.

To meet these demands, manufacturers will need to overhaul their business models, adopt new technologies, and revamp entire production processes to control carbon emissions.

Workers work at the Specter sportswear factory, a Danish-invested project – Photo: Royal Danish Consulate General in Ho Chi Minh City

Nevertheless, the EU’s strategy also presents opportunities for sustainable business and production, attracting foreign investment to Asia. Companies in the region are actively seeking ways to comply with these requirements.

For instance, Singapore-based Ramatex has developed non-shedding apparel to meet sustainability standards. Vietnam’s Spectre garment factory has switched to renewable energy, while South Korea’s Hansae Group and Hanoi Textile and Garment Corporation have partnered to produce recycled textiles for export to the EU.