Wood industry needs concerted effort to surmount barriers

Experts expressed concerns on Tuesday over the high risk of Vietnam’s furniture products facing punitive tariffs in major export markets, and called for concerted effort from both the Government and business to cope with the matter.

Nguyen Ton Quyen, chairman of the Vietnam Timber and Forest Product Association (Vifores) stressed at a conference that antidumping lawsuits against Vietnam’s woodwork were looming large in major markets like the U.S. and the EU.

No sooner had Vietnam’s wood processing industry recovered from the global recession – as seen in the rising number of overseas orders – than it faced the menace of anti-dumping lawsuits, Quyen told the meeting organized by TFT Co. and the Handicraft and Wood Industry Association of HCMC (Hawa).

He explained that as Vietnam’s furniture shipments to the U.S. and Europe were recovering, there were signs that new regulations limiting the country’s exports are to be imposed soon, such as the Lacey Act stateside and FLEGT of the EU.

Under the amended Lacey Act effective this April, all the importers of timber products to the U.S. must declare the names of the wood used in a product and its origin, otherwise U.S. agencies will have the right to seize the products and impose heavy fines.

Similarly, the European Union’s Forest Law Enforcement Governance and Trade (FLEG) Action Plan also is also meant to fight illegal logging worldwide.

“There are a lot of difficulties awaiting the country’s wood exports, which I can say are the risks of being sued for dumping furniture in the U.S. Meanwhile, the EU has also sought to limit Vietnamese timber exports,” Quyen said.

The imminent actions, according to Quyen, are due to the fast recovery of Vietnam’s woodworking industry after sharp contractions in the past two years.

In the first five months of 2010, Vietnam’s furniture industry reported US$1.4 billion in export earnings, up 29% year-on-year. Such a robust growth rate is highly encouraging given sharp contractions in recent times, Quyen said.

Vietnam’s wood exports to the U.S. fell 15% in 2008 and a further 7% in 2009. In the EU, the contraction was 34% in 2008 and 14% in 2009, while in Japan, the impact was less severe, with the respective contraction of 8% and 5%.

Quyen expected the total export turnover of wood products in 2010 to hit US$3 billion, which may more than double to US$7 billion by 2020.

The biggest problem for local wood processors is lack of awareness about the imminent threat, said another speaker at the conference.

Huynh Van Hanh, vice chairman of Hawa, said that while many of Hawa members were shipping products to Europe, they didn’t have ideas what the law would be like and how to comply with it once it was approved by the European Commission and came into effect next year.

“Vietnamese wood products exporters are very anxious about the implementation of the Lacey and FLEGT, Hanh said.

Both of the above acts require serious compliance, forcing enterprises to use only legally-logged timbers, while Vietnamese manufacturers still depend on imported raw materials from different countries that can’t be controlled totally.

Scott Poynton, executive director of The Forest Trust, a non-profit international organization in the forestry sector, said that along with heavy dependence on high-risk imported timber, i.e. materials from places with loose control, “there are still many enterprises failing to find legal raw materials.”

Quyen of Viforest suggested that collaboration among relevant stakeholders be tightened to protect Vietnamese furniture products in other markets.

“In order to meet requirements of the Lacey and FLEGT, it is necessary to boost collaboration among stakeholders for better control from exploitation of raw materials to transportation, processing and sale of products.”

Quyen also called for joint efforts to “establish a certification agency to certify legal timber for Vietnamese manufacturers and exporters.”

Up to date, no Government agency has issued any document guiding local enterprises to respond to the requirements. Meanwhile, Vietnam and the U.S. have not reached agreement on which Vietnamese agency will be assigned to issue certificates of origin for exports to the U.S.

Tags: Vietnam Wood industry