Vietnam wood industry in the context of EU rules

What is your assessment of the European Union Deforestation Regulation (EUDR) and its applicability to Vietnamese timber industry businesses?

Hoang Thanh, programme manager at the EU Delegation to Vietnam

The EUDR went into effect in June 2023. A mandatory due diligence requirement for businesses importing and exporting into the EU market is a key component of this regulation. The purpose of this requirement is to ensure that importation or export from the EU market is limited to lawful products that do not contribute to or are not associated with deforestation.

These requirements will become effective for small- and medium-sized enterprises and exporters in June 2025, and for large enterprises and exporters in December 2024.

Vietnam’s principal exports to the European market consist of wood and timber products, rubber, and coffee. The aforementioned regulation potentially impacts these sectors. Large Vietnamese enterprises have a remaining timeframe of 12 months to complete their preparatory efforts.

The roadmap stipulates that the European Commission will publish a list of competent agencies in EU member states that are responsible for implementing this regulation in the EU region this month.

In accordance with this regulation, the cut-off date was December 31, 2020. This means that any commodities or products specified in the regulation that were manufactured on land undergoing deforestation or forest degradation before this date will be prohibited from being exported to the EU market.

Regarding EUDR regulations, which aspects must Vietnamese enterprises be mindful of?

There are several noteworthy factors to consider. Initially, this regulation will affect exporting and supplier organisations both within and beyond the EU. Consequently, all pertinent entities (exporting to or from the European market) must make the necessary preparations to implement this regulation by the conclusion of 2024. Thus, organisations that can expedite their preparations will attain a competitive edge.

The EU is prepared to provide coordination and assistance to partner nations in their efforts to foster the transition to sustainable forest management and agricultural production, as well as to establish sustainable and transparent supply chains.

As previously stated, time is running out. In order to meet the obligations of the EUDR, organisations must presently establish a proactive strategy, gather and solicit resources, and solicit assistance from pertinent agencies in the form of a detailed road map.

Does the application of the regulations intersect with the provisions of the Voluntary Partnership Agreement on Forest Law Enforcement, Governance, and Trade (VPA-FLEGT)?

EUDR regulations will supersede VPA/FLEGT regulations. The EU acknowledges and values the endeavours and accomplishments of partner nations, including Indonesia and Vietnam, which have entered into a VPA/FLEGT agreement with the EU.

When a VPA is accompanied by an operating system that is presently exclusive to Indonesia, the licence issued under FLEGT is deemed to have complied with the regulation’s legal requirements. Despite the fact that the new regulations mandate products that do not contribute to deforestation and address legality, operators will continue to be responsible for conducting due diligence and being accountable regarding sustainability aspects.

Does the EU offer any assistance to Vietnamese companies seeking to implement EUDR?

The EU delegation has been collaborating with relevant parties to disseminate information about the EUDR through organisations, government agencies, and the business community, among others, via discussions such as this one. The EU plans to release implementation guidance for the EUDR during the initial quarter of 2024.

At this time, the EU is undertaking three projects involving activities that support the implementation of the EUDR in Vietnam. The first is disseminating information regarding its provisions, facilitating policy dialogue, and introducing the EU approach to assist stakeholders in comprehending the EUDR requirements for better preparedness. The second is promoting and supporting the transition to sustainable forest management and agricultural production. The final initiative is developing a transparent and lawful framework to ensure compliance with the EUDR.

Wood and timber sector anticipating strong finish to year Wood and timber firms have reported an uptake in orders and are taking measures to increase exports in the build up to vibrant year-end shopping season.

Wood sector anticipates rosier future According to figures from the Vietnam Handicrafts Exporter Association, Vietnam can expect around $14 billion from the export of wood and wooden items in 2023, falling short of the $17 billion target. However, such a figure could be deemed encouraging amid the recession in the global market and consumers’ tightened spending.