Expect price hikes in exports, which will, in turn, filter through to consumer products. That is according to Dinh Sy Minh Lang, director of the Vietnamese Ministry of International Trade European-American Market Department, warning that “origin tracing and the EUDR certification procedures will inflate export costs, which pose a major risk to Vietnamese exporters of timber and rubber.”
Mr Lang’s warning comes as Vietnam is among the hardest hit by a rapidly deteriorating wood market. According to the International Tropical Timber Organization, regional wood processing and manufacturing “remains extremely weak,” with “Vietnam’s exports of wood and wood products dropping by almost 16% in 2023, from US $16.1 billion in 2022 to just US $13.4 billion last year.”
And that is only exacerbated by the increasingly soft EU market, now grappling to shore up its supply chains ahead of the EUDR rollout. The ITTO said, “In the last quarter of 2023, EU imports of all timber and wooden furniture products from tropical countries fell to an all-time low.” Â
“It is inevitable that such low levels of trade will hamper efforts towards sustainable and responsible wood industry development.”
Yesterday, Hoang Thang, Vietnam’s trade delegate to the EU, flagged that the new legislation – already opposed by representatives in India, China, the United States, New Zealand, Malaysia, Indonesia, Australia and Brazil, will “considerably affect (Vietnam’s trade in) timber, rubber and coffee, which make up over US $2.5 billion in export revenue.”
Wood Central understands that one of Vietnam’s unique challenges is the huge number of smallholders who supply the timber, coffee and rubber supply chains – with the traceability and compliance of smallholders to meet regulations, an obvious blindspot for EU and Vietnamese regulators.
“The difficulty in identifying legal farming zones will affect the results of assessing and classifying country- and production zone-based risks. The control of input materials in coffee, timber, and rubber supply chains is relatively hard due to multiple layers of traders,” Mr Thang said.
Then, there are the vast quantities of tropical “high-risk” hardwoods exported into Vietnam and manufactured into furniture before being exported as merchandise to European markets.
In July, Wood Central reported that the EU imports more than 11,000 tonnes of timber furniture from Vietnam – making it the EU’s fourth-most important trading partner for furniture.
While Vietnam has signed a deal with the European Union to reform its timber sector and, in return, boost access to the strictly regulated EU markets, experts have warned that mechanisms introduced to eliminate illegal timber are failing.
“Nothing has changed,” says a senior policy analyst at the Forest Trends Organisation who aims to put an economic engine behind nature conservation. “The authorities allow the importing companies to bring in high-risk timber … just as before.”
As it stands, thousands of enterprises import between 5 million to 6 million cubic metres of timber from more than 100 countries into Vietnam annually – at least one-third of timber imported from tropical hardwood from Cambodia, Laos, Papua New Guinea and 20 African countries.
- To learn more about the US $2.5 billion compliance cost associated with the EUDR and how it could impact the cost of global forest products, click on Wood Central’s special feature.
