Vietnam’s Timber Trade Agreement with the EU

Vietnam has become the second nation globally to sign the Voluntary Partnership Agreement (VPA) with the EU, a significant timber-trade agreement targeting the legality of timber exports. This partnership demands stringent compliance, while some other nations have expressed opposition to it.

The VPA is a legally binding agreement that aims to enhance forest management and promote the trade of legally sourced timber in the EU market.

Countries wishing to export timber to the EU under this agreement must implement the Timber Legality Assurance System (TLAS) to validate the legal status of their timber products. To import timber, the EU mandates a Forest Law Enforcement, Governance and Trade (FLEGT) certificate.

Nguyen Canh Cuong, a former Vietnamese trade counselor involved in the VPA negotiations, noted that the relationship began as voluntary but has shifted to fulfill the growing demand for sustainability and stringent sourcing guidelines in the EU market. Thus, what was once voluntary has now turned into a requirement.

The VPA sets clear standards that exporters need to meet, focusing on issues related to land rights, environmental management, timber processing, and compliance with labor laws.

This agreement presents several technical challenges for timber exporters from Vietnam, Malaysia, Indonesia, and Thailand.

Despite these challenges, Cuong encourages Vietnamese businesses to view the VPA as a chance for growth rather than a hindrance.

“While the stringent requirements of the EU may pose immediate hurdles, they will ultimately contribute positively to sustainable development in Vietnam,” Cuong stated.

Ngo Sy Hoai, deputy chair and secretary general of Vifores (Vietnam Timber & Forest Products Association), mentioned that Vietnam is proactively establishing a legal and management framework to comply with the VPA’s requirements.

However, there is still a need to develop an effective mechanism for FLEGT licensing for timber exports to align with the EU Deforestation Regulation (EUDR).

For compliance with EUDR, Vietnam must take two critical steps: Firstly, adopt due diligence practices regarding timber sourcing, and secondly, maintain electronic records of geographical coordinates for logging areas to ensure that forest usage remains consistent and does not shift from natural forests to plantations or other uses.

“These regulations may appear complex, yet Vietnamese companies are prepared to meet EU requirements. Numerous stakeholders in the supply chain—including farmers, traders, and exporters—are involved,” Hoai explained.

“Legal frameworks must be developed to guide stakeholders effectively, ensuring serious adherence to EUDR, thereby creating mutual benefits for all parties involved,” he added.

Although Vietnam’s timber exports to the EU are currently less than those to the US and other markets, the country aims to adhere strictly to EUDR, signaling a commitment to forest conservation and the timber industry.

“We view the EU’s strict deforestation and degradation measures as both challenges and opportunities,” Hoai remarked.

Neighboring countries, including Malaysia and Thailand, have expressed disapproval of the agreement. If Vietnam can meet its requirements, it may maintain or even grow its presence in the EU market.

“Despite the challenges, we are confident in our ability to comply with EUDR,” Hoai said.

“The trends of green production, trade, and growth are essential. If we allow our timber industry to contribute to deforestation and climate change, we risk being excluded from import markets. Adhering to sustainable forest management regulations is crucial for the Vietnamese timber sector’s future,” Hoai emphasized.