This media backgrounder provides journalists with information on the Vietnam-EU Voluntary Partnership Agreement (VPA), which aims to address illegal logging, improve forest governance and promote trade in legal timber products. The backgrounder explains the aims of the VPA, progress to date and next steps.
The Vietnam-EU Voluntary Partnership Agreement
Vietnam’s forest products sector
Forests make an important contribution to Vietnam’s economy and provide jobs and livelihoods to many people.
Vietnam has 44 per cent tree coverage, of which one per cent is primary forest, 74 per cent is secondary forest, and 25 per cent is plantations. Tree cover has been growing at an annual rate of one per cent thanks to a policy prioritising the establishment of protection and production plantations. In 2013, the timber harvested from natural forests equated to just one per cent of the 8 million cubic metres from plantations.
Vietnam also imports timber from more than 80 countries for processing and re-export. Control of imported timber to ensure it is legally harvested is a key part the timber legality assurance system Vietnam is developing. Vietnam’s efforts to ensure the legality of its timber products therefore have great potential to address illegality not only in Vietnam but across the world.
Vietnam’s main timber product exports are furniture, woodchips and paper. In 2016, the value of Vietnam’s wood and wood product exports to the EU was USD 736 million (source: Go Viet -January/February 2017 [PDF]).
What is a VPA?
A Voluntary Partnership Agreement (VPA) is a legally binding trade agreement between the EU and a timber-exporting country outside the EU. A VPA aims to ensure that all timber and timber products destined for the EU market from a partner country comply with the laws of that country.
In addition to promoting trade in legal timber, VPAs address the causes of illegality by improving forest governance and law enforcement. A major strength of VPAs is that they look beyond trade to consider development and environmental issues.
Stakeholders in government, the private sector and civil society develop VPAs through a participatory process. A VPA is, therefore, a vehicle for addressing the needs of different stakeholders and for including many people who have never before had a voice in decision-making.
VPAs are a key component of the EU Forest Law Enforcement, Governance and Trade (FLEGT) Action Plan of 2003. Vietnam is one of nine tropical countries that are negotiating VPAs with the EU. Six more countries have ratified VPAs and are implementing the agreements.
Key elements of a VPA
Key elements of a VPA are described in its main text and annexes. In countries where VPAs have already been signed, these include:
- A timber legality assurance system to verify that timber products are legal and can be issued with FLEGT licences
- Commitments to legal reforms, public disclosure of information and other improvements to forest governance
- A framework for overseeing, monitoring and evaluating implementation of the VPA and its economic, social and environmental impacts.
How a VPA promotes legal timber trade
A VPA partner country that has implemented a timber legality assurance system and other VPA commitments can issue verified legal timber products with FLEGT licences. The advantage of this is that FLEGT-licensed products automatically meet the requirements of the EU Timber Regulation (EUTR), which prohibits EU operators from placing illegally harvested timber and timber products on the EU market.
The EUTR entered into force in 2013. It prohibits the placing of illegal logging on the EU market and requires EU operators to perform due diligence checks to ensure the timber products they place on the EU market are legal. FLEGT-licensed timber meets the due diligence requirements under the EUTR.
A VPA partner country can only issue FLEGT licences through a timber legality assurance system that the EU and the partner country have agreed on, developed and tested. Before a country can begin FLEGT licensing, the EU and the partner country must confirm that the country’s timber legality assurance system works as described in the VPA. Confirmation by the two parties means that the system is robust and will issue FLEGT licences only to legal timber products.
While FLEGT licensing is an important goal, it is not the end point of a VPA process. Governance reforms, legislative and policy reforms, impact monitoring, improvements to the timber legality assurance system and other activities continue.
Through progress on VPAs, the EU Timber Regulation and dialogues with other important timber markets including China, the EU and the VPA partner countries are contributing to a growing global movement to address trade in illegal timber and timber products. The United States and Australia also prohibit the placing of illegal timber on their markets. The process to achieve FLEGT licences may therefore help VPA partner countries such as Vietnam meet the legality requirements of markets beyond the EU.
Viet Nam, Hồ Chí Minh, Quận 7
Source: GaryCicles via Flickr
The Vietnam-EU VPA
Vietnam and the EU are negotiating the terms of the VPA through a cooperative process: both parties share the goal of fostering good forest governance and addressing illegality.
Vietnam and the EU began negotiating the VPA in November 2010. The VPA process involved representatives of Vietnamese civil society organisations, the private sector, government ministries and agencies. Through wide participation, the process aims to foster significant national ownership, stakeholder engagement and a broad consensus that will promote effective VPA implementation.
In November 2016, Vietnam and the EU agreed in principle on the content of the VPA. On 11 May 2017, they initialled the agreement, to indicate that both parties confirm that the wording contained in the document is the wording they agreed. After Vietnam and EU sign and ratify the VPA, its commitments will become legally binding. A Vietnam-EU joint body will oversee the implementation of the VPA and respond to concerns as they arise. VPA implementation can therefore improve as it proceeds.
In order to issue FLEGT licences as required by the VPA, Vietnam will build on existing national initiatives in forest governance to develop a robust timber legality assurance system (VNTLAS). Vietnam will begin issuing FLEGT licences when the timber legality assurance system has been successfully tested, and when Vietnam and the EU are satisfied that it functions as described in the VPA.
VPAs signed to-date have also included commitments to improve transparency, accountability, legislative clarity and other aspects of governance.
The VPA process itself is fostering participation, transparency, legislative clarity and other aspects of good governance (see How the VPA improves forest governance).
Vietnam’s efforts to tackle illegal logging
Vietnam has made significant efforts to address illegal logging. VPA negotiations between Vietnam and the EU began in 2010. Since then, the quality of discussion around illegal logging has improved as the government is increasingly open to civil society and private sector actors being involved. The logging and timber production industries have also become more open to third party certification.
1993: Vietnamese Land Law widens rights accorded to landholders
1994: Vietnam begins allocating forest land it previously managed to public organisations, households and states
1994: Forest Protection Department turned into an enforcement agency
2008: Bilateral MoU committing Vietnam to coordination on forest management and protection, law enforcement and trade with the government of Lao PDR
2010: EU and Vietnam begin negotiating a Voluntary Partnership Agreement (VPA)
2016: The EU and Vietnam reach agreement in principle on the terms of the VPA
2017: In May, the EU and Vietnam initialled the VPA, ahead of signing and ratifying the agreement
Vietnam’s timber legality assurance system
Under the VPA, Vietnam will commit to develop a system for assuring the legality of its timber. The timber legality assurance system (VNTLAS) will have the following elements:
- Legality definition: The legality definition states the aspects of a VPA partner country’s law for which the timber legality assurance system evaluates evidence of compliance. Vietnam’s legality definition is divided into two sections: one for ‘organisations’ (i.e. businesses, including private, state-owned and cooperatives) and one for ‘households’ (i.e. domestic households, individuals and village communities)
- Verifiers of legal compliance: Verifiers are documents referred to in the legality definition that are used for organisations and households to demonstrate legal compliance.
- Supply chain controls: Supply chain controls ensure that timber products verified as legal remain legal throughout all processes associated with the supply chain. Supply chain controls also prevent verified legal products being tainted by unverified products entering the supply chain.
- Verification of compliance: Verification of compliance involves checks that all the requirements of the VPA legality definition and supply chain controls have been met to ensure that timber products are legal. Vietnam will develop a new Organisations Classification System (OCS) to assess periodically the risk level of all organisations with regard to their compliance with VNTLAS requirements.
- FLEGT licensing: Once the VNTLAS is operational, it will provide for the issuance of a FLEGT licence for each shipment of timber products that is exported to the EU market. Such shipments and their exporters must meet all the requirements set out in the VNTLAS legality definition, supply chain controls and verification procedures.
- Internal inspections and a feedback mechanism: Government agencies may make inspections to detect loopholes in laws, regulations and management mechanisms and to recommend solutions; as well as to prevent and combat corruption and to detect and handle violations of the law. There will be a mechanism for stakeholder complaints and feedback concerning the VNTLAS and FLEGT licensing.
- Independent evaluation: An independent evaluator will periodically assess the implementation, efficiency and credibility of the VNTLAS in order to identify, document and report any non-compliances and weaknesses in the system. The independent evaluator will propose measures for improvement to the EU-Vietnam Joint Implementation Committee.
The scope of the VPA covers all export markets, as well as the domestic market. Once the VNTLAS is operating as described in the VPA, Vietnam will issue FLEGT licences to timber products it exports to the EU.
The range of timber products included in the scope of VPA includes all major products exported to the EU. It includes the five compulsory timber products as defined in the EU FLEGT Regulation of 2005 (logs, sawn timber, railway sleepers, plywood and veneer) as well as other timber products such as wood in chips or particles, parquet flooring, particle board and wooden furniture.
Non-compliances with the legality definition (and supply chain controls) will be handled in accordance with Vietnamese legislation, which provide for administrative and criminal sanctions to be applied to both organisations and households.
How the VNTLAS treats the timber Vietnam imports
VPA addresses the legality of not only its own timber products but also those Vietnam imports, from around 80 countries, often for processing and export. To do this, the VPA includes requirements for Vietnamese operators to exercise due diligence to assess the legality of logs and timber they import. Under the VNTLAS, Vietnamese importers will have to gather information from their suppliers in other countries, analyse this information to identify the risk of illegality, and adopt measures to mitigate the risk of importing illegally harvested timber. This means that when the VPA is implemented, it will not only ensure that all Vietnamese timber exports to the EU are legal. It will also raise standards throughout supply chains in the 80 countries that supply timber to Vietnam.
How the VPA improves forest governance
Legal reforms and improved legal clarity
The VPA process in Vietnam is providing an opportunity to increase clarity in legal compliance and law enforcement, as well as to identify areas where some of the current legal framework could be strengthened in future.
- Vietnam has taken steps to consolidate the legislative and regulatory framework. In 2012, for example, the Ministry of Agriculture and Rural Development introduced a new Circular on timber supply chain controls, which brought together previously scattered regulations into a more coherent framework.
- The preparation of the legality definition has, for the first time, brought forestry-specific legislation and regulations together with those of other sectors in a comprehensive framework.
- The Ministry of Agriculture and Rural Development issued a new Circular on harvesting of forest products, which includes several improvements that are consistent with earlier recommendations of the Vietnamese NGO FLEGT Network (VNGO-FLEGT).
Compared to other trade negotiations in Vietnam, stakeholder consultations on the VPA have been wider and more frequent. A variety of consultation mechanisms have been used, and there is an increased level of public disclosure of information. The level of stakeholder participation has grown during the VPA process. The government is recognising the capacity and contributions of NGOs and their ability to engage in policy work, as evidenced by the involvement of one member of the Vietnamese NGO FLEGT Network in the independent review of the forest law that was initiated and received by VNFOREST in 2013. Challenges to effective participation remain and will have to be addressed during the implementation of the agreement.
Enhanced capacity to address illegal logging
The VPA process is strengthening the capacity of government, private sector and civil society to work together to address illegality in Vietnam’s forest sector. The Vietnamese NGO FLEGT Network has provided training and capacity for NGOs working in the forest sector.
The VPA includes provisions for transparency and access to information necessary for and supportive of stakeholders’ involvement in the implementation of the agreement. This assurance that key forestry-related information will be made available to the public also represents an important contribution to reinforcing Vietnam’s forest governance.
Clarification of forest land use rights
Forest land-use rights are fully incorporated in the legality definition for both organisations and households. Vietnam has taken an inclusive approach to defining forest land use rights: In addition to formal Land Use Certificates, the legality definition identifies other documents used as evidence of land use rights. This responds to the current situation whereby some households have still not been allocated formal Land Use Certificates, but are nonetheless legal land users.
How non-state actors have engaged with the VPA process
Non-state actors representing civil society and the private sector have engaged with the VPA process in various ways.
- The Vietnam Timber and Forest Product Association (VIFORES), the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA) and the Forest Products Association of Binh Dinh have undertaken joint work with Forest Trends. This has included a report (PDF) on Vietnam’s imports of logs and sawnwood from natural forests in Cambodia.
- Since 2014, the Vietnamese NGO Pan-Nature has been working with WWF and the Vietnamese Forest Administration on a four-year project intended to ensure communities and small-scale timber processers near the border with Laos will benefit from the VPA.
- The Center for Education and Development (CED) and the Vietnam Chamber of Commerce and Industry (VCCI) have been implementing a strategy to build the capacity of media and business associations to inform stakeholders about the VPA and help them prepare for implementation. See this presentation (PDF) for details.
- To support this work, in 2014, CED and VCCI assessed (PDF) what small and medium enterprises in six provinces knew about timber legality, FLEGT and the VPA, in order to identify information and training needs.
- The Sustainable Forest Management Institute worked with international organisation NEPCon to develop an online training centre at www.FLEGT-tools.org. It aims to provide small and medium sized businesses in Vietnam with know-how to meet EU market demands for legal timber.
Some civil society organisations have set up the Vietnamese NGO FLEGT Network (VNGO-FLEGT). It has provided training and capacity building to Vietnamese NGOs working in the forestry sector. It also assessed possible impacts of the VPA on farmers who grow and harvest timber without land tenure certificates; ethnic minorities who depend on forests; and small-scale wood processing households.
Finalise, sign and ratify the VPA
In November 2016, the EU and Vietnam reached agreement in principle on the substance of the VPA. In 2017, they hope to finalise the text of the VPA technical annexes. The EU and Vietnam expect to start the procedure to ratify the agreement in 2017, following a final review of the VPA text and annexes by lawyers from both parties.
Implement the VPA
The VPA will enter into force after the EU and Vietnam have signed and then ratified it. The EU and the Vietnam will establish a Joint Implementation Committee to oversee implementation of the agreement.
To implement the agreement Vietnam will need to revise and/or issue new legislation to realise the commitments of the agreement. Vietnam will then need to develop the timber legality assurance system described in the VPA and build capacity to operate the system.
Vietnam has committed to include all stakeholders in the implementation of the VPA. It will create mechanisms for stakeholder consultation and participation, including with regard to monitoring implementation of the agreement.
Trade in FLEGT-licensed timber
When a joint EU-Vietnam evaluation concludes that the timber legality assurance system is fully operational as described in the VPA, the Joint Implementation Committee can propose that Vietnam begins to issue FLEGT licences. Once a decision is made to commence FLEGT licensing, the parties will follow their respective internal processes, including legislative measures, such as amending the FLEGT Regulation on the EU side.
Once FLEGT licensing begins, a valid FLEGT licence must accompany all exports to the EU of Vietnamese timber-based products listed in Annex I of the VPA. EU customs officials will deny entry to any products covered by the VPA that arrive without a valid FLEGT licence.
Independent market monitoring
The EC has appointed the International Tropical Timber Organisation as independent market monitor for all VPA countries. Once Vietnam’s timber legality assurance system is in place and issuing FLEGT licences, the independent market monitor will assess the trade in timber products between Vietnam and the EU, and the impacts of FLEGT licensing on this trade.
Kim Bong carpentry village
Source: Duc via Flickr