Trade remedies applied on Vietnam’s surging timber exports

Vietnam should have a strategy to develop domestic material resources for the wood sector

Import, export value grows strongly

According to the Vietnam Administration of Forestry under the Ministry of Agriculture and Rural Development, the export value of timber and forest products in the first eight months of 2020 reached an estimated US$7.83 billion, a year-on-year increase of 10.3 percent, accounting for 29.9 percent of the agricultural sector’s total export value. Specifically, timber and wood product exports reached an estimated US$7.32 billion, up 9.6 percent; and non-wood forest product exports reached US$511 million, up 21.6 percent.

Major export markets in the first eight months included the US, Japan, China, the EU and the Republic of Korea, with combined export value reaching US$7 billion, accounting for 89.5 percent of total export value of Vietnamese timber and forest products.

According to the Vietnam Timber and Forest Product Association (Viforest), the import of wood products from China has increased rapidly with prices much lower than the cost of production in Vietnam. In the first half of 2020, while the import value of most other kinds of goods decreased, that of wood products increased by nearly 170 percent compared with the same period last year, with imports from China accounting for 83 percent.

Long-term solution

The Trade Remedies Authorities of Vietnam under the Ministry of Industry and Trade (MoIT) has dealt with a total of 176 investigations and trade remedies initiated by foreign countries against Vietnamese exports. These include seven investigations of wood product exports, accounting for four percent of all cases but constituting a significant increase compared to a total of three cases in the decade from 2007 to 2017.

The latest case involves the US Department of Commerce, which in June 2020 initiated an anti-dumping and countervailing duty investigation to be applied to Chinese plywood products imported from Vietnam.

Pham Chau Giang, Deputy Director of the Trade Remedies Authorities of Vietnam, said that in the context of Vietnam’s involvement in various free trade agreements (FTAs), including the EU-Vietnam Free Trade Agreement that took effect on August 1, 2020, Vietnamese exporters cannot ignore trade remedies such as anti-dumping, anti-subsidy and safeguard measures.

In an effort to prevent trade fraud and adhere to laws of origin, the government recently issued Decree 102/2020/ND-CP stipulating the clear responsibilities of businesses and state authorities in ensuring the legality of timber exports to discerning markets like the EU. The decree takes effect on October 30, 2020.

“The European market attaches great importance to the origin of goods as well as the transparency and environmental friendliness of products. The EU-Vietnam Voluntary Partnership Agreement (VPA) regarding Forest Law Enforcement, Governance and Trade (FLEGT) requires Vietnam to prove the legality of timber,” said Pham Van Dien, Deputy Director General of the Vietnam Administration of Forestry.