Editor’s pickVietnam's VPA Voyage Builds Momentum

13-07-2018
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The artisanal community must also be brought through the VPA.

Vietnam still has obstacles to overcome to reach the key objective of its EU Forest Law Enforcement Governance and Trade Voluntary Partnership Agreement (FLEGT VPA) — issuing FLEGT licences that assure the legality of its timber exports to the EU.

The country’s sizeable timber producing and processing industries, which last year hit exports of US$8 billion, comprises some major operators. But they also include many thousands of SMEs, plus significant and diverse artisanal and ‘household’ producer sectors. All must be brought through the VPA timber legality assurance system (VNTLAS), which also applies to the domestic timber market and all exports, not just those to the EU.

Vietnam is also, of course, one of Southeast Asia’s biggest timber importers. It ships in around 40 per cent of its requirements from about 90 countries and, under the VNTLAS, its importers will additionally have to subject foreign suppliers to new levels of legality assurance scrutiny and due diligence.

But while it won’t be easy, the consensus is that Vietnam’s FLEGT VPA journey is gathering pace.

KEEPING ILLEGAL TIMBER OUT

Significant headway was already made during VPA negotiations in engaging the wider timber sector via their trade associations. New mechanisms have since been developed to formally take account of the views of civil society organisations (CSOs). The outcome is reported to be broad and growing support for the VPA and appreciation of its potential benefits. That, it is hoped, will add impetus to the upcoming stages of implementation.

“After the VPA was initialled, we signed a joint industry statement entitled ‘the business community says no to illegal timber’,” said Huynh Van Hanh, vice president of the Handicraft and Wood Industry Association. “We see it improving our industry’s image and growing our markets.”

While Vietnam’s prospective new import legality rules may initially seem an additional administrative burden, potential reputational and consequently trade returns are also seen stemming from these.

“ Thanks to the EU Timber Regulation, US Lacey Act and timber market legality regulation elsewhere, there’s appreciation in Vietnam that this is the way international trade winds are blowing,” said Vietnam VPA Joint Implementation Coordinator Edwin Shanks.

After seven years of negotiation, Vietnam and the EU initialled the VPA in May 2017. Both are now putting it through their ratification processes and are expected to complete this and make the VPA legally binding by the year-end.

In the meantime, the groundwork is being laid for implementation into the day-to-day operation of the timber sector. Last November, the EU and Vietnam launched a VPA Joint Preparation Committee (JPC), which will later become the Joint Implementation Committee (JIC), with EU and Vietnamese government representation. 

The JPC has also endorsed a VPA Joint Implementation Framework (JIF). This defines implementation actions and how different stakeholders’ involvement will be ensured.

One route for the latter will be the multi-stakeholder core group, which was created last year and includes representatives of the Vietnamese Forestry Administration, trade bodies, CSOs, development partners and other non-state actors. This body had input into the JIF, and its role going forward is to act as a channel for conversation between authorities and other stakeholders.

“It will streamline messaging from the JIC to group members’ constituencies and relay their opinions back,” said Dominic Stanculescu, Vietnam technical advisor for German international cooperation agency GIZ. “Its other roles include shaping broad communications strategy and helping develop independent timber sector VPA monitoring frameworks.”

“CSOs were consulted in the VPA negotiation phase, but, unlike trade associations, had no official place at the table,” said Tue Tran Ngoc, FLEGT manager at the Centre for Sustainable Rural Development. “So the multistakeholder group is a significant development. It shows the government recognises the importance of wider stakeholder engagement.”

Also in November, Vietnam’s national assembly passed a revised forest law. This encompasses areas ranging from sustainable forest management to forest ownership rights. It also includes a new chapter on ‘processing and trade’, defining the elements of the VNTLAS.

The latter will be based partly on existing laws and regulation. But there will also be new legislation to incorporate the new import controls and due diligence requirements and to establish a timber operations risk-based classification system, the process of legality verification for exports and the FLEGT licensing scheme for exports to the EU. This is also all expected to be finalised in 2018. 

Material stacked and ready for manufacture.

POTENTIAL SPEED BUMPS

Key issues still to be resolved include how independent monitoring of the VNTLAS and FLEGT licensing is to be structured to underpin the VPA’s credibility. In Indonesia, the first country to start FLEGT licensing, CSOs play a core role here. But in Vietnam there is no precedent for civil society monitoring of private sector activities, so, said Mr Shanks, it’s still an ‘ongoing discussion’.

The administrative burden the VNTLAS, FLEGT licensing and other export controls will impose is in focus too.

“It is estimated Vietnam exports 5,000–6,000 wood products consignments monthly. When the VPA is implemented, this means issuing 170-200 FLEGT licences per day,” said Dr Phuc Xuan To, Forest Trends senior policy analyst. “The government says licences will be granted electronically and free, but businesses worry it doesn’t yet have the administrative capacity and that delays in licensing could have reputational and financial costs.”

There’s belief the government will additionally need to increase capacity if it decides to register the thousands of household timber producers, he added.

It also remains to be seen whether simpler documentary evidence of legal compliance will be agreed for SMEs, artisanal businesses and household producers, which, with logging of natural forest banned, source their generally lower value wood from plantations.

“But Vietnamese authorities have shown willingness to minimise business red tape, wherever possible,” said Mr Shanks.

Potentially further easing the administrative burden of the new import controls, some believe these will have a ripple effect, driving legality assurance measures among Vietnam’s suppliers, so in the medium- to long-term their timber will require less scrutiny. This argument is reinforced by the fact that FLEGT-licensed timber imported into Vietnam from other countries will be exempt further due diligence.

FOCUSED ON THE END GOAL

Understandably, given the work still to be done, the Vietnamese government is not naming definite dates for full VPA implementation. The consensus among commentators is that it will take at least another three years, with FLEGT licensing commencing sometime after.

But further underlining their determination to get through the process, Vietnamese authorities, businesses and CSOs have also been liaising with their Indonesian counterparts to glean VPA and FLEGT licensing expertise.

Dr Phuc highlighted that wood industries in the two countries are very different, but said Vietnam could still learn lessons from Indonesia on a VPA’s scope, third-party monitoring and how implementation methods must fit a country’s situation.

From Indonesia’s experience, Vietnam could also gauge the obstacles and opportunities for FLEGT-licensed timber in the marketplace. “Our industry hopes, of course, a licence will provide added value for our products and strengthen their international reputation,” said Dr Phuc.


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