The Hanoitimes - After signing the VPA/FLEGT, wood export value from Vietnam to the EU is predicted to hit US$800 million in 2019, up from the current US$700 million.
By reaching a voluntary partnership agreement (VPA) with the EU on forest law enforcement, governance and trade (FLEGT), not only would the deal improve timber’s trade value from Vietnam to EU, but also promote legal logging in the country, according to Viet Dragon Securities Company (VDSC).
VPA, a key component of the FLEGT, is a legally binding trade agreement between the EU and a timber-exporting country outside the EU. VPAs are expected to promote trade in legal timber, and moreover, address the causes of illegality by improving forest governance and law enforcement.
The deal proved significant for Vietnam, as in 2013, the EU Timber Regulation (EUTR), which prohibits operators from placing illegally harvested timber and timber products on the EU market, entered into force. As a result, only legally harvested timber and timber products are allowed to enter the European market.
Moreover, Heidi Hautala, vice president of the European Parliament, said during a meeting with Vietnam’s Ministry of Agriculture and Rural Development on January 7 that the implementation of VPA would help Vietnam gain advantage in the upcoming discussion about the EU – Vietnam Free Trade Agreement (EVFTA).
After signing the VPA, Vietnam can issue verified legal timber products with FLEGT licenses. The advantage of this is that FLEGT-licensed products automatically meet the requirements of the EUTR. Under the VPA, Vietnam will build a timber legality assurance system (VNTLAS) so it can issue FLEGT licenses for verified legal timber products.
The FLEGT- licensed timber products from Vietnam can be exported to the EU without undergoing the due diligence checks required by the EUTR. Tax and tariff barriers will also be reduced once Vietnamese wood and wooden products have a FLEGT license. Moreover, VPA/FLEGT qualification could increase the price of timber products by 20% to 25%. Therefore, Vietnamese timber producers are expected to improve their trade value with the EU after signing the VPA/FLEGT.
Europe is the fourth biggest importer of Vietnamese timber products. Export value of this item to EU has remained stable over the last three year, with an annually average value of over US$700 million, stated VDSC’s report.
Currently, Germany, France and the Netherlands are Vietnam’s major trade partners within the block. After signing the VPA/FLEGT, timber export value from Vietnam to the EU is predicted to hit US$800 million in 2019.
Vietnam is one of 15 tropical countries that are negotiating or implementing VPAs with the EU. Vietnam started negotiating VPAs in 2010, and in 2017, the country and the EU agreed in principle on the content of the VPA. In October 2018, Vietnam and the EU officially signed the VPA.