Vietnam’s timber products will find it easier to penetrate the EU market if the country becomes involved in the FLEGT-VPA. So, what is the FLEGT – VPA and how will it benefit businesses?

FLEGT-VPA is the Forest Law Enforcement, Governance and Trade - Voluntary Partnership Agreement, a legally binding bilateral trade agreement between the EU and a timber exporting country (the FLEGT partner country), under which the partner country agrees that its wood and timber products will only be exported to the EU after the legality of the products has been established.

 

It is expected that the EU will require an FLEGT license for timber products imported from Vietnam by March 2013.

According to the national forestry strategy for the 2006-2020 period, Vietnam aims to plant 4 million of hectares of natural forest to provide 45 million cubic metres of timber each year.

Under this strategy, Vietnam will strive to increase forest coverage to 42-43 percent by 2015 and ensure stable development by 2020, aiming for a production value of 3.5 to 4 percent per year. This will contribute 2-3 percent of the GDP and an export turnover of US$7.8 billion by 2020.

According to the Vietnam Wood Association, Vietnam must continue to import raw timber in the near future as the country has not yet set up zones for producing its own raw wood materials.

Vietnam’s wood processing industry currently imports timber from many nations so it is difficult to control the legality of these products. This makes Vietnam an exporter that is likely to be at risk amid fluctuations in the world market. Vietnamese wood products will face many challenges if drastic measures are not taken to adapt to these changes.

 

Ms Suzanne Morgan, a representative for European buyers, said that in the future, Europeans will seek environmentally friendly products from clear, sustainable sources. Therefore, Vietnamese businesses should ensure the proper invoices and documents stating the origin of the product to avoid risks when importing timber.

According to experts, timber export businesses should obey the regulations set by the FLEGT and the US Lacey Act to curb illegal timber imports. Exports should have correct documentation of their origin and timber products should be legally produced under the laws of Vietnam or have a certificate of forest management from a third party country.

Vietnam now has more than 3,400 timber businesses and 600 wood export workshops that recruit over 300,000 labourers.

The country's five biggest wood processing centres are in Ho Chi Minh City, Binh Duong, Dong Nai, Binh Dinh, and Quang Nam-Da Nang. These centres include a large number of private enterprises (81 percent) while 5 percent of their businesses are State-owned. Foreign-invested businesses, mostly on a medium and large scale, make up 14 percent and contribute 40 percent to the country’s total wood export turnover.

Experts say Vietnam should negotiate a FLEGT/VPA with the EU to maintain and expand its markets in the EU, US, and Japan, and to avoid a recession in this sector with more than 300,000 workers in over 3,000 businesses. The country should improve its image and build reliable trademarks for its wood processing industry and upgrade its institutions in the forestry sector. It should also focus on enforcing the laws, ensuring sustainable management, and implementing international initiatives on climate change and CO2 emissions.

Giuliana Torta, an EU expert in Belgium, said that it is voluntary for countries to commit to the FLEGT license. However, if Vietnam negotiates a FLEGT with the EU, EU-member countries must go along with the commitment. Once a country receives the license, its timber products are recognized as legal and sustainable by all 27 EU-member countries.

Vietnamese businesses can decide for themselves whether to obtain the FLEGT license or not. Those enterprises that do not have the license may face risks such as technical barriers and sanctions if they violate the rules, she added.

Dr. Ha Cong Huan, Deputy Director General of the Directorate of Forestry under the Ministry of Agriculture and Rural Development, said that Vietnam will negotiate with the EU on issues related to forest and timber products. The country is aiming to grant FLEGT licenses free of charge to local businesses by 2012. Vietnamese experts are trying to adapt quickly to demanding international markets, including the US and Japan.

Vietnam aims to develop a legal forest product assurance system in line with international regulations and conventions in order to respond to unexpected changes in the market, adapt to climate change, and promote sustainable forest management by following the EU’s FLEGT/VAP initiative, he said.

 

(VOV)