Controlling the risk of importing wood from China

Rotary veneer/sliced veneer and wood products are the main groups of products that Vietnam has imported from China recently. Illustration: N.Thanh

Importing plywood increased sharply

According to the update on the trade of wood and wood products between Vietnam and China from 2018 to the end of September 2021 by a research group of the Timber Associations and Forest Trends Organization, Vietnam's wood items imported from China are more diverse than the products that Vietnam exports to this country. In which, it is worth noting that the three items with the fastest increase in import volume are plywood, rotary veneer/sliced veneer and fiberboard. For example, the amount of imported plywood increased from nearly 409,000 m3 in 2018 to nearly 558,000 m3 in 2020. The import volume in the first nine months of 2021 is higher than that of 2018. For fiberboard products, the import volume in the first nine months of 2021 reached nearly 344,000 m3, an increase of 4.2 times compared to the amount imported in 2018.

Mr. To Xuan Phuc, an expert from Forest Trends Organization, said that rotary veneer/sliced veneer from China was mainly made from wood species such as birch, okoume and bintangor.

These types of products were imported into Vietnam and used as a surface layer for different kinds of veneers, then put into plywood production for export to markets such as Korea and India or processed to create products such as cabinets, tables and chairs exported to the US and EU markets and to manufacture products for the domestic market.

“The key products that Vietnam imports from China are also a group of products with potential risks in terms of legality and origin,” said Mr. To Xuan Phuc.

Mr. Do Xuan Lap, Chairman of the Vietnam Timber and Forest Products Association, added that plywood imported from China increased dramatically in the past two years. This product was imported to Vietnam in the form of a part of the kitchen cabinet, HS code in the import declarations was 4412, not 9403400, which was kitchen cabinet furniture.

“The wood product line imported from China in the form of plywood with HS code 4412 is currently a product subject to anti-dumping duties by the US against China. Importing is an objective and normal need of enterprises, but if the import causes a foundation to avoid origin, it will have a great impact on the sustainable development of the Vietnamese wood industry in the future when wood exports to the US account for nearly two-thirds of the country's timber exports,” said Mr. Do Xuan Lap.

The Customs fight against fraud

From the side of Customs, Ms. Nguyen Pham Nhu Ha, Deputy Head of the Division of Supervision and Management of Goods Origin and Intellectual Property (Bureau of Customs Supervision and Administration, General Department of Customs), said that Customs was aware of the potential risks from increasing wood import turnover from China and increasing wood exports to the US since 2018.

When the US-China trade war started, the General Department of Vietnam Customs did not evaluate only wood products but also other items. but wood was a very worrying item. Recently, they witnessed many anti-dumping investigations against wood products. This situation was shown specifically on items including wood materials, including rotary veneer/sliced veneer.

“There are two main forms of fraud that Chinese-invested enterprises are taking advantage of to get Vietnamese origin and export to some major markets, namely the US. The first is to import rotary veneer wood, sliced veneer wood, then take the origin of Vietnam to export, enterprises hardly process on the stage from raw materials to finished products. That does not meet the origin standards of Vietnam. The second common trick is that many enterprises buy raw materials from suppliers who are Chinese-invested enterprises but only buy a few products of each enterprise, and then reassemble them. The form of round-trip trading makes it very time-consuming for Customs authorities to investigate and collect information,” Mrs. Ha said.

Ms. Ha added that Customs has taken many measures such as issuing inspection and examination plans. Wood was one of the items included in the thematic inspection. The inspection process discovered two localities with the most fraud, namely Binh Duong and Dong Nai.

“During the implementation process, the Customs office also has implemented close coordination with the Vietnam Timber and Forest Products Association, the Ministry of Agriculture and Rural Development, the Ministry of Industry and Trade, and the Vietnam Chamber of Commerce and Industry (VCCI). Customs authorities have built cooperative relationships with enterprises and associations. With the Vietnam Timber and Forest Products Association, since the problem of commercial fraud with wood products emerged in 2018, the Association has been very active in providing information related to fraud, violation, from which we can offer management measures corresponding to goods and enterprises. It is hoped that in the future, Customs will continue to receive close cooperation from relevant enterprises and associations,” said Ms. Ha.

Commenting on reducing the risk of trade fraud in wood products imported from China, which plays an important role in maintaining and developing Vietnam's export wood industry, Mr. To Xuan Phuc also said that the Vietnamese authorities were actively coordinating with timber associations and related parties in identifying risks and providing sanctions for violating companies. These measures and sanctions should be prioritized and strengthened in order to limit risks in the flow of imported timber. This requires close attention from management and law enforcement agencies, especially border control agencies.

Mr. Do Xuan Lap said: “Commercial fraud in imported goods is a huge problem. The wood industry is facing great risks. Management agencies, including Customs, the ministries of industry and trade, and agriculture, have been taking active measures to reduce risks. However, the management agencies and the Vietnam Timber and Forest Products Association still should have closer cooperation in the future.”