VPA / FLEGT comes into force: Timber to the EU is unlikely to be an immediate breakthrough

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	VPA/FLEGT: A breakthrough in timber exports to the EU?
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In the next few years, the export of timber and timber products to the EU may reach over $US 1 billion. Photo: N.Thanh

No change in the short term

According to the General Department of Forestry (Ministry of Agriculture and Rural Development): timber, timber products and forest products are an important export product of Vietnam and have continuously grown over the last decade. Export turnover of these products increased from $US 3.4 billion in 2010 to over $US 9.3 billion in 2018, ranking second in Asia and 5th in the world. The EU is one of the five largest timber and timber product export markets of Vietnam.

Evaluating the VPA/ FLEGT Agreement, Mr. Bruno Angelet, head of EU Delegation in Hanoi gave evidence: Indonesia was the first country to sign VPA/ FLEGT Agreement with EU in 2016 and Ghana was the second country. Indonesia's export of timber to the EU in the period of 2017 - 2019 has grown strongly and stably. Vietnam is the third country in the world to ratify the VPA/ FLEGT Agreement. While Indonesia only produces timber from domestic materials, Vietnam is currently an importer of raw timber from 40 other countries. Therefore, Vietnam is in a more favorable and promising position than Indonesia. "In addition, Vietnam and the EU have signed a bilateral trade agreement on economics, while Indonesia has not. This is also a great advantage to Vietnam in exporting timber and timber products to the EU”, he stressed.

In response to the Customs Newspaper's report on promoting the export of timber and timber products thanks to the VPA/ FLEGT agreement, Deputy Minister of Agriculture and Rural Development Ha Cong Tuan analyzed: 10 years ago the EU did not have 28 countries as it has today, at the time, the EU accounted for nearly 20% of the total of $US 3.4 billion of Vietnam's timber and timber products exports. In 2018, Vietnam exported timber and timber products worth over $US 9.3 billion, the EU accounted for only about 15% but the absolute value increased. "I believe that VPA/ FLEGT will promote trade in timber and timber products between the two sides. In particular, the Vietnamese wooden furniture brand will have a better reputation not only in the EU market but also globally", he said.

When the VPA / FLEGT Agreement comes into force on June 1, 2019, it is unclear where Vietnamese timber and timber products will initially expand into the EU. Talking to Customs News on this issue, Nguyen Ton Quyen - Vice President and General Secretary of Vietnam Timber and Forest Product Association assessed: This is impossible, because there is so much in preparation. It is expected that by the end of 2020, early 2021, the FLEGT license for export wood from Vietnam to EU may be granted. Thus, from 2021, the export of wood products into the EU market may have a breakthrough thanks to the VPA/ FLEGT Agreement.

Double in the next few years

In the near future, it is impossible to see the significant change in the export of timber and timber products to the EU. However, Nguyen Ton Quyen further analyzed: the EU is an extremely important market for Vietnamese timber. In the long term, the signing of the VPA/ FLEGT Agreement will help export timber products directly into 28 European countries without having to go through an intermediate country. "It is predicted that in the next few years, timber export turnover to the EU may double, from the current $US 700 million to over $US 1 billion. Importantly, the VP / FLEGT Agreement will help Vietnam institutions improve on forest management, solve illegal timber exploitation and trade and contribute to sustainable development of the wood processing industry,” Mr. Quyen said.

Regarding the agreement, Nguyen Quoc Tri-Director General of the Forestry Department added: The main content of the VPA/ FLEGT agreement is that Vietnam commit to building and operating a timber legality assurance system in accordance with Vietnam's supply chain characteristics and EU regulations to verify and trace timber in the entire supply chain as a basis to issue Vietnamese authorities FLEGT licenses for the export of timber and timber products to the EU.

Vietnam's timber and timber products shipments with FLEGT licenses will not have to carry out further explanation of timber origin when exported to the EU. This means that the FLEGT license will replace a lot of paperwork that Vietnam timber and timber product exporters are now required to submit to EU importers to prove their legal origin. The commitments of the VPA/ FLEGT Agreement and the provisions of the Law on Forestry in 2017 prohibits illegal import, export, exploitation, processing and trade of timber.

Changing the market, exporting wood is facing big challenge

In order to implement the agreement, Vietnam is making efforts to finalize legal documents to incorporate the commitments of the VPA/ FLEGT Agreement, including the development of a decree on timber legality assurance systems. "Under the plan, this Decree will be submitted to the Government for publication by the end of 2019. The parties also agreed to establish a Vietnam-EU Joint Implementation Committee (JIC) to monitor and evaluate the full implementation of the Agreement's commitments, a process that may last for several years”, Tri said.