Proposal to negotiate a timber trade agreement with the UK

The Vietnam Timber and Forest Products Association (Viforest) has just issued Official Letter No. 03/HHG-VP requesting the Ministry of Agriculture and Rural Development to coordinate with relevant ministries and agencies to report to the Prime Minister the proposal for negotiation on the Timber Trade Agreement with the UK.

According to this official letter, in 2021, overcoming challenges, difficulties and serious impacts of the Covid-19 pandemic, Vietnam's wood industry has grown impressively by over 20% compared to the previous year and reached the highest export value of wood and non-timber forest products, which is nearly US$ 16 billion.

The UK is becoming one of the important markets of Vietnam's wood industry, in addition to key markets such as the US, Japan, Korea, China, EU

Wood furniture exports to the UK reached US$ 254.4 million in turnover in 2021, up 14.5% from the previous year, and accounted for 2% of the total export value of the industry and 43% of the total export value of Vietnamese wooden furniture to the EU (US$ 597.76 million).

To promote and expand the export of wood products to EU countries, in 2018, Vietnam signed the Voluntary Partnership Agreement (VPA) with the EU, which took effect in 2019.

In the coming time, in order to realize the Voluntary Partnership Agreement, Vietnamese regulatory agencies will issue permits (Forest Law Enforcement, Governance and Trade - FLEGT) for export shipments to the EU. This license will help Vietnam's wood products be allowed to be sold legally and with advantages in all markets in the EU.

Since January 2020, the UK has officially left the EU. This means that Vietnamese furniture exported to the UK market in the future needs to comply with the UK Government's regulations.

In principle, when wood products exported from Vietnam had met the requirements of the VPA already, they will meet the requirements of the British Government. However, according to information of some Vietnamese furniture exporters, the British Government will not automatically accept the FLEGT license, and the exporter needs to meet the new requirements from the British Government.

According to the experiences from Indonesia, the country had previously signed a VPA with the EU, and then signed with the UK the UK - Indo VPA Agreement; most of the basic contents in this agreement are based on the contents of the Indo - EU VPA Agreement signed earlier.

Therefore, in order to help Vietnamese furniture to be smoothly exported to the UK market without facing any barriers when Vietnam's FLEGT licensing system comes into operation, following the proposal in Official Letter No. 74/HHG-VP dated September 30, 2021, in the above Official Letter No. 03/HHG-VP, Viforest continues to request the Ministry of Agriculture and Rural Development to coordinate with relevant ministries and agencies to report to the Prime Minister to authorize discussions with the UK authorities on the negotiation plan to come up with the signing between the two governments on a timber trade agreement between Vietnam and the UK (Vietnam - UK VPA), or recognize the content of the FLEGT VPA Agreement that the Vietnamese government has signed with the EU so that can be applied in the UK market.

According to Viforest, information and statistics from the General Department of Vietnam Customs show that, in January this year, exports of wood and wood products to the UK continued to grow impressively when reaching US$ 30.7 million, up 47.7% compared to January 2021.

Wooden furniture is the main export group with a turnover accounting for 92.1% of the total turnover of wood and wood products exported to the UK.

With the UKVFTA Agreement, many wood products from Vietnam have a tax rate of 0% within 5 years when imported into the UK (material wood currently has a tax rate of 2 - 10%). These tax regulations give Vietnam's wood and wood products a more competitive advantage in the UK market.

With an export turnover of more than US$ 1.5 billion, wood and wooden products have been among 7 groups of export goods of the country with a turnover of more than US$ 1 billion in the first month of 2022 and in the "top 3" of the commodity groups with the double-digit growth (ranked second in growth after textiles and garments). This shows that the export of wood and wooden products is making a larger contribution to the overall export of the country.

With positive signals from the market, many wood industry experts believe that this year's export of wood and wooden products will achieve the target of US$ 16.5 billion as the Government has assigned. Speaking with the press, Do Xuan Lap, Chairman of Viforest, said that the export of wood and wooden products can reach US$ 17.5 - 18 billion this year.