Vietnamese wood exports have favorable conditions to enter EU when FLEGT license officially issued

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The VPA/FLEGT Agreement not only increases the export value of wood products to the EU market, but also helps to improve the reputation of Vietnamese timber in many other markets. Photo: N. Thanh

Issuing the first license by the end of 2021

In October 2010, the EU adopted the EU Timber Regulation to prevent the trade in illegally harvested timber and products made from this timber. The EU Timber Regulation also requires importers and traders who import timber or timber products to enter the EU's first border gate to minimize the risk of illegal timber trade.

Currently, timber and wood products from Vietnam exported to the EU must comply with the EU Timber Regulation. This will continue until Vietnam's FLEGT licensing mechanism is in place. The EU Timber Regulation recognizes the legality of verified FLEGT timber and timber products through the control systems of several partner countries agreed in the VPA/FLEGT Agreement. Therefore, licensed timber and timber products are not subject to due diligence under the EU Timber Regulation. The VPA/FLEGT Agreement tookeffect on June 1, 2019. Currently, the Vietnamese side is working hard to prepare internal laws to quickly issue FLEGT licenses.

Speakingat the training session introducing the VPA/FLEGT Agreement for press agencies on July 16, in Hai Phong, Ms. Nguyen Tuong Van, Standing Chief of Standing Office of Steering Committee on FLEGT and Lacey (VNFOREST, the Ministry of Agriculture and Rural Development) the most important thing in the implementation of this agreement is the internalization of regulations. Vietnam proposes not to apply the agreement directly, but through the additional issuance of a Decree stipulating the "Vietnam Timber Legality Assurance System (VNTLAS)", focusing on contents such as: Controlling imported timber, organizational/business classification system, export verification, assessment of VNTLAS availability, and FLEGT licensing for the EU market.

Answering a question from Customs Newspaper on the expected time when Vietnam will issue the first FLEGT license, Ms. Van said: “At present, the Decree has been completed and is waiting for the Government's approval. If this goes well, the Decree is expected to be signed for promulgation around September 9, 2020. After the Decree comes into effect, the management of imported timber must always be applied in accordance with the provisions of the Decree, while six months later, it can classify enterprises. By early 2021, Vietnam could operate a legal timber assurance system. By experience, it is expected until the end of 2021 and early 2022 the first FLEGT license will begranted.”

Giving "favorable conditions" to enter the EU market

According to VNFOREST, the EU is an important export market for Vietnam's wood products, besides other markets such as the US, China, Japan and South Korea. In 2019, Vietnam's export turnover of wood products to the EU reached over $1.03 billion, up 15.8% compared to 2018, accounting for 9.2% of the export market share. The EU is an important market of Vietnam because the main products for consumers EU are interior and exterior wooden products of high value.

Recognizing the opportunities for wood processing and exporting enterprises from the VPA/FLEGT Agreement, Mr. Ngo Sy Hoai, Vice Chairman and General Secretary of Vietnam Timber and Forest Products Association said, in recent years, wood export to the EU market reach about $1-1.2 billion/year. This is a very important market because it includes a coalition of countries with high requirements. Vietnam mainly exports to the EU refined wooden furniture with high added value. With the VPA/FLEGT Agreement, exporting wood products to the EU cannot increase sharply, it is expected that the value will increase.

“It is notable that, in addition to affecting the export of wood products into the EU market, the signing and implementation of the VPA/FLEGT Agreement will help Vietnam's wood industry improve its reputation and gain trust in othermarkets like America andJapan," Mr. Hoai said.

In the perspective of the enterprise's preparation to take advantage of opportunities offered by the VPA/FLEGT Agreement, according to Mr. Hoai, the large enterprises that have processed and exported timber to the EU have basically met the requirements in the agreement. This agreement is essentially a synthesis and systematization of everything Vietnam's timber industry has done.

“I want to reaffirm that if we dowell with this agreement, the subjects who are most affected and also the beneficiaries the most over 3,000 processing and exporting enterprises of wood; 324 trade villages in the field of wood processing and 1.4 millionplanting forest households,” said the leader of Vietnam Association of Wood and Forest Products.