On September 1, 2020, the Government of Vietnam issued Decree 102/2020/ND-CP enacting Vietnam’s Timber Legality Assurance System (VNTLAS) as part of its commitments under the Forest Law Enforcement Governance and Trade (FLEGT) Voluntary Partnership Agreement (VPA), a bilateral trade agreement with the European Union, but which covers all timber imported and exported from Vietnam. One of the main objectives of the Decree is to develop mechanisms to ensure the legality of Vietnam’s imported timber, based on criteria which classify risks by country of origin and timber species. The Decree entered into force on October 30, 2020 but implementation was delayed until the Vietnamese Ministry of Agriculture and Rural Development (MARD) published a list of “positive” geographical regions on November 27, 2020, or those source countries deemed low-risk which, by default, also indicates that any countries not on this list are considered high-risk. While the VNTLAS is now being implemented, some early challenges should be expected given that this is a new system.
The FLEGT VPA and the VNTLAS prescribe risk classification criteria which rate the timber’s country of origin according to, among other things, the existence of a mandatory national framework on due diligence, a World Bank Worldwide Governance Indicator of zero or higher, or mandatory certification systems for national timber. Concerns have been raised about the results of this risk classification, and specifically the inclusion of some countries on the list of positive geographies released in November 2020. The timber legality risk dashboard available on this site does not use the same risk criteria as the one outlined in the VNTLAS and FLEGT VPA. In October 2020, the U.S. initiated an investigation under Section 301 of the Trade Act of 1974 to address environmental concerns related to Vietnam’s import and use of illegal timber. On October 1, 2021, the U.S. and Vietnam announced an Agreement which sets out several commitments to keep illegal timber out of the supply chain, including revisiting the risk classification.
The VNTLAS is yet to be formally recognized as meeting the standards set by the European Union Timber Regulation (EUTR) and Vietnam is not currently issuing FLEGT licenses. Vietnam will begin issuing FLEGT licenses when the timber legality assurance system has been successfully tested, and when Vietnam and the EU are satisfied that it functions as described in the VPA. In Europe, a FLEGT licence denotes complete compliance with the EUTR for European importers; however, a FLEGT licence may not in and of itself guarantee compliance with timber import regulations in other jurisdictions, such as the U.S. Lacey Act in the United States.
- Vietnam has started implementing mandatory measures blocking illegal timber imports as part of efforts to develop a Timber Legality Assurance System under the auspices of the Vietnam-EU FLEGT VPA. Some early challenges should be expected given that this is a new system.
- Vietnamese domestic and plantation-grown raw materials (primarily acacia, rubberwood and eucalyptus) are generally considered lower-risk.
- Vietnam imports between 4 and 5 million cubic meters of raw materials annually from both higher- and lower-risk sources with higher-risk imports from the Congo Basin rapidly increasing.
- Higher-risk tropical species tend to be manufactured into wood products primarily for the Vietnamese domestic market with some exports to China.
- Independent NGO reports have documented incidents of illegal timber entering Vietnamese supply chains, particularly through imported raw materials from the Mekong sub-region up until 2018, but increasingly from Africa as imports from Cambodia have dropped in the last two years. If the VNTLAS system is robustly implemented, illegal imports may be expected to drop although it will likely be several months before the effectiveness of implementation can be first assessed.
Read more by downloading the Vietnam Timber Legality Risk Dashboard here.
HCM City (VNS/VNA) – Contrary to full orders at the beginning of the year, Vietnamese wood and wooden furniture enterprises are currently facing many difficulties due to the cancellation of orders by customers because of inflation in countries such as the US and the EU and the sharp increase in input material costs.
In fact, Vietnam’s wood industry is seeing declining sales overseas.
The export value in July was estimated at 1.41 billion USD, down 5.5% against June and down 1.6% year-on-year, according to a report of the General Department of Forestry under the Ministry of Agriculture and Rural Development (MARD).
VIETNAM, August 27 – HÀ NỘI — The US Department of Commerce (DOC) has not yet issued the final determination on the imposition of anti-dumping and countervailing duties on certain hardwood plywood products and veneered panels exported from Việt Nam.
The Việt Nam Timber and Forest Products Association (VIFOREST) has confirmed that the DOC on April 15 extended the deadline to issue a final determination to October 17.
The DOC initiated the anti-dumping and anti-subsidy investigation on hardwood plywood from Việt Nam on June 17, 2020, to enforce the trade remedies measures on Chinese hardwood plywood.
The US is currently applying anti-dumping of 183.36 per cent and anti-subsidy duties from 22.98 per cent to 194.9 per cent on hardwood plywood products from China.
On July 25, DOC announced its preliminary determination that hardwood plywood exported from Việt Nam, which was assembled in Việt Nam using hardwood plywood imports sourced from China, were products of China and were subject to the anti-dumping duty and countervailing duty orders on hardwood plywood from China.
Vietnamese Authorities are considering a management and conservation plan for two of their most valuable native tree species. The plans, which have been proposed by the Center for Nature Conservation and Development (CCD) Viet Nam, are for the two species of rosewood (Dalbergia cochinchinensis and Dalbergia oliveri). They are among the most sought-after trees in international trade for high-end furniture and decorative products. The wood has a high commercial value and is well-known for durability, corrosion and termite resistance and has been extensively used in construction and furniture making. As a result, both tree species have been the most heavily exploited and traded species in Viet Nam and many other countries. The wild populations are now small and fragmented and without proper conservation and restoration measures, are at high risk of extinction in many parts of the country.
Despite new regulations to clean up Vietnam’s timber sector, importers continue to bring large volumes of tropical hardwood into the country from deforestation hotspots in Africa and Asia for use in products sold domestically.
In 2018, Vietnam signed a Voluntary Partnership Agreement with the EU to eliminate illegal timber from the country’s supply chains and boost access to the strictly regulated European markets.
Cambodia and Vietnam have expressed their commitment to strengthen forest sector cooperation, mainly combating the cross-border trade of timber and wild animals.
United States Trade Representative Katherine Tai announced an agreement with the Socialist Republic of Vietnam that addresses U.S. concerns in the Vietnam Timber Section 301 investigation. This is the first 301 investigation to address environmental concerns. The Agreement secures commitments that will help keep illegally harvested or traded timber out of the supply chain and protect the environment and natural resources.
While many products exported to the UK enjoyed strong increases thanks to the UK-Vietnam Free Trade Agreement (UKVFTA), Vietnam’s timber industry is facing difficulties in expanding in this market, requiring manufacturers and exporters to change their business strategies.