Wood product exporters face a tougher paperwork regime with new regulations from the US having taken effect and similar requirements on the way from the EU.
2010 was a year of challenges for Vietnam’s wood product exports yet positive results were still recorded. Although problems with raw material shortages and the US and European Union (EU) requiring certification of origin, the export of wood products into these markets performed strongly.
Many Vietnamese exporters had previously considered the Lacey Act, a new timber origin tracking system implemented in April, to simply be a trade barrier implemented by the US to cut wood product exports from Vietnam.
According to the Vietnam Timber and Forestry Product Association (Vietforest), this year the industry will secure $3.2-3.3 billion from exports, some $200-300 million higher than the annual target. Mr Nguyen Ton Quyen, Deputy Chairman of Vietforest, attributed the increase to a rebound in all import markets, but especially in the EU and the US.
The growth rate of Vietnamese wood product exports to the US was estimated at 15 per cent in 2010 and for the EU roughly 8 per cent, he said. Vietfores forecasts export turnover to reach $4.1-4.2 billion in 2011, up some 30 per cent over 2010.
A representative from the Export-Import Department at the Ministry of Industry and Trade (MoIT) said that the industry imports up to 80 per cent of its timber sources from a number of countries. Meanwhile, the US and the EU, as the two largest importers, require or will require Vietnamese exporters to clarify the origin path of forestry products, at all stages from exploitation to product completion, under the Lacey Act in the US, which took effect last year, and the EU’s Forest Law Enforcement, Government and Trade (FLEGT), which will take effect in 2013.
Companies exporting wood products to Europe must provide documentation proving that the timber was legally logged and stating the timber’s scientific name, the quantity being exported, the import value and the country of origin, or otherwise carry a FLEGT certificate.
Mr Quyen said that under the new regulations it will take exporters more time to source legal timber while import prices have risen steeply this year. The wood industry this year needs some 6.4 million cubic metres of timber, while domestic production can only supply 1.6 million cubic metres, according to Vietforest figures. The country, he said, therefore has to import roughly 4-5 million cubic metres of timber to meet the export targets of over $3 billion set for this year.
A recent press release from the European Commission for Environment said that operators selling timber and timber products for the first time in the EU market - whether coming from the EU or imported - must know where their timber originates from. They will have to take steps to ensure it has been harvested according to relevant laws in the country of harvest.
Traders along the supply chain within the EU need to keep records of who their timber or timber product was bought from and to whom it was sold. Mr Janez Potocnik, the European Commissioner for Environment, said: “With this regulation, the EU is making an important contribution to the fight against illegal logging, which not only plunders natural resources but also affects those who depend on forests for their livelihood.”
Many enterprises in the industry consider the new laws to be an obstacle to their business activities. Stricter provisions on timber products in importing countries are making it harder for Vietnamese wood product manufacturers to export, according to a representative from the Ho Chi Minh City Certification Services Company.
Meanwhile, Mr Huynh Van Hanh, Vice Chairman of the Handicraft and Wood Industry Association of Ho Chi Minh City (Hawa), has a different take on the regulations. “It’s not technical barriers made by EU and the US,” he said. “It’s challenging State authorities and domestic exporters in regards to legal forest exploitation and the management and transparency of Vietnam’s policies.”
Mr Vu Huy Hai, General Director of the Vinacam Company said that there were obvious benefits in joining international organisations, such as better knowledge about the market. “One of the problems is a lot of companies don’t know about the regulations,” he said. “And many that operate according to substandard models and import wood from countries that don’t comply with regulations.”
Best measures
The first round of talks between the EU and senior Vietnamese officials for a bilateral FLEGT Voluntary Partnership Agreement (VPA) was held in November 2010, according to Mr Tran Kim Long, Deputy Head of the International Co-operation Department at the Ministry of Agriculture and Rural Development (MARD). The VPA will be part of an EU action plan with exporting countries like Vietnam to eliminate illegal timber from trade with the EU. These agreements will allow for the identification of legal timber through the issuance of FLEGT licences.
Mr Long told VET that the EU would clearly define what was meant by legal timber and licensing procedures, as well as origin paths for future negotiations. The two sides hope to sign the VPA by the end of 2012, and for it to take effect in early 2013. Vietnam will find it difficult to meet the demands of the agreement due to poor management in the timber industry and a lack of training among officials, he said. However, signing the agreement will boost the competitiveness of Vietnam’s wood products in the long term.
According to Mr Nguyen Ngoc Khoa, Commercial Director of Bureau Veritas Vietnam, to adapt to the regulations, wood product exporters need to improve their management capacity and have more skilled and literate workers who can adapt quickly to new technology. Wooden furniture makers will have to comply with international certification, including Forest Stewardship Council-Chain of Custody Certificate (FSC-CoC) and Forest Stewardship Council-Forest Management Certificate (FSC-FM).
Mr Hanh from Hawa said that Vietnam is a leading country in number of exporters granted FSC-CoC, with total of 230 exporters gaining certification up to October. This is a competitive advantage for Vietnam compared with other countries such Malaysia and Indonesia in exporting timber to the EU. However, there needs to be effective efforts from the government in negotiating with the EU and exchanging relevant information with countries from where Vietnam imports timber. This will help domestic exporters to understand and strictly comply with the regulations.
Although many exporters are aware of how to locate information regarding the regulations, many ignore or don’t clearly understand the new regulations under the Lacey Act or FLEGT. Mr Hanh said that if exports are unaware of international regulations, they must remove themselves from such a competitive business environment. This will have unnecessary consequences on their business, but existing markets must be developed sustainably.
Source:
http://news.vneconomy.vn/20110304040822881P0C6/from-whence-it-came.htm