Thailand-EU Voluntary Partnership Agreement
- Illegal logging creates social problems, environmental degradation and loss of economic opportunities.
- In September 2013, Thailand and the EU began the process to move towards negotiation of a Voluntary Partnership Agreement (VPA) to promote trade in legal timber products and improve forest governance.
- Thailand will develop a timber legality assurance system so it can issue FLEGT licences to verified legal timber products.
- Once Thailand begins FLEGT licensing, the products covered by the VPA will only be exported to the EU accompanied by FLEGT licences attesting to their legality.
- Products not covered by the VPA will remain subject to the exercise of due diligence by EU importers in the context of the EU Timber Regulation.
- FLEGT-licensed timber products from Thailand will be able to enter the EU market without undergoing the due diligence checks required by the EU Timber Regulation.
- Thailand also plans to use the system developed with the EU for other markets.
- Preparations for the VPA process took some time and involved a broad number of Thai stakeholders. The first face-to-face negotiations were held in June 2017.
Thailand’s forest sector
Although forests make a small contribution to Thailand’s economy, the sector provides jobs and livelihoods in many rural areas. About one third of Thailand’s land is forested. Timber is mainly grown by smallholders on private and public lands. The 12th National Economic and Social Development Plan promotes an increase of forest cover to 40% through smallholder plantings.
Half of Thailand’s forests are protected and there are strong restrictions on industrial logging. The wood processing industry is well developed. This combined with growing demand for timber has meant that Thailand has become a major importer of timber, including from neighbouring countries with higher deforestation rates such as Cambodia, Malaysia (Sarawak) and Myanmar. With the log export ban issued in Myanmar in 2014, Thailand has compensated its teak demand by using domestic production and lookalike species from Africa. Two thirds of Thailand's imports are however paper products.
According to UN Comtrade data, in 2014, the value of Thailand’s exports of wood and paper products to the EU was USD 267 million — or six percent of Thailand’s total exports of wood and paper products.
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. Thailand is one of 15 tropical countries that are negotiating or implementing VPAs with the EU.
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 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 implementation of the EU Timber Regulation and dialogues with other important timber market, including China, the EU and its VPA partner countries are contributing to a growing global movement to stop trade in illegal timber and timber products. Australia, the United States and Japan also seek to restrict the placing of illegal timber on their markets. The process to achieve FLEGT licences may therefore help VPA partner countries such as Thailand meet the legality requirements of markets beyond the EU.
The Thailand-EU VPA
Thailand 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.
The VPA process began in September 2013. The national VPA deliberations involve representatives of Thai civil society organisations, the private sector, and government ministries and agencies. Thai civil society has also met with representatives from Indonesia, Laos and Vietnam to learn about their experiences of VPA processes.
After a delay caused by political uncertainty in Thailand, the VPA process continued with the first face-to-face negotiations in June 2017. A second negotiation took place in July 2018.
The Ministry of Natural Resources and Environment set up a national negotiation committee, a technical sub-committee and several working groups, the latter including self-selected representatives from civil society and the private sector.
Through wide participation, the process aims to foster significant national ownership, stakeholder engagement and a broad consensus that will promote effective VPA implementation.
Following the conclusion of negotiations, Thailand and EU will sign and ratify the VPA and its commitments will become legally binding. A Thailand-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, Thailand will build on existing national initiatives to develop a robust timber legality assurance. Thailand will begin issuing FLEGT licences only when the timber legality assurance system has been successfully tested, and when Thailand 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.
Thailand’s efforts to tackle illegal logging
Thailand has made considerable efforts to address illegal logging, a significant problem the country has struggled with since the 1960s, when forests covered 50% of the land. By the mid-1980s this figure was less than 25%, and in 1989, after the worst floods for a century the government introduced a complete ban on logging of natural forests. Since then the area planted outweighs areas of forest loss, making Thailand the only country in the Mekong region with a net growth of forest area.
Since 1989, the government has implemented measures to protect the remaining natural forests and to promote plantation development. Close to a quarter of its forest are planted. Thailand continues to be a major exporter of wooden furniture, sawn timber, wood-based boards, wood chips and paper, mostly to Asian markets.
- 1989: Government introduces a complete ban on commercial logging.
- 1997: Constitution of Thailand agreed, recognising the right and duty of communities to participate in natural resource management.
- 2012: Three national sub-committees on FLEGT set up.
- 2013: VPA process between Thailand and the EU begins; including one video conference and one joint expert meeting.
- 2013: Thailand set up a multistakeholder ad hoc working group (AHWG) to develop the VPA legality definition (it was later tasked with developing all VPA annexes).
- 2013: The Royal Forestry Department founded the Thai-EU FLEGT Secretariat Office (TEFSO).
- 2014: Following a military coup, there is uncertainty about the start of VPA negotiations.
- 2015: European Commission and Thai negotiators agree that technical negotiations can resume; they hold a second video conference.
- 2016: TEFSO and the AHWG continue to prepare VPA annexes.
- 2016: In December the Thai Cabinet approves full negotiations.
- 2017: Second joint expert meeting and first face-to-face negotiations between Thailand and the EU.
- 2018: Third and fourth joint expert meeting and second face-to-face negotiations between Thailand and the EU.
Thailand’s timber legality assurance system
Under the VPA process, Thailand committed to develop a system for assuring the legality of its timber from domestic and imported sources. As in all VPAs, the timber legality assurance system has the following five components:
- 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. The ad hoc Multistakeholder Working Group on the Legality Definition has made good progress in developing and field-testing the Thai legality definition.
- Supply chain controls: Supply chain controls ensures that timber products verified as legal remain legal throughout all processes associated with the supply chain. These controls also prevent verified legal products being tainted by unverified products entering the supply chain. Thailand has started to describe its supply chain control system and is testing tailored solutions for timber from smallholder plantations.
- 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. Verification has been described in the legality definition and for the supply chains of different timber sources.
- FLEGT licensing: A FLEGT licensing authority issues FLEGT licences to consignments of timber products that the verification mechanism has confirmed are legally compliant. FLEGT licensing cannot begin until a joint evaluation of the timber legality assurance system by Thailand and the EU confirms that the system works as described in the VPA (see Next steps).
- Independent audit: The independent audit regularly checks that all aspects of the legality assurance system work properly. An annex to the VPA provides terms of reference for the auditor. The annex has already been drafted.
How the Thailand-EU VPA can improve forest governance
Greater participation in decision-making
Representatives of the government, civil society and the private sector have all participated in the national VPA deliberations. Stakeholders see the VPA process as a vehicle to address their different needs related to legal clarity, land and use rights, simplification of procedures, incentives for smallholder timber production and promotion of Thai timber products.
Enhanced capacity to address trade in illegal timber and timber products
The VPA process is strengthening the capacity of government, private sector, and civil society to work together to promote timber legality and tree planting in Thailand. Regional representatives from different government departments, private sector and civil society have met to discuss issues related to forest governance including enforcement.
The VPA will include an annex that lists the information Thailand commits to making publicly available. A working group led by civil society is currently developing the annex.
Legal reforms and improved legal clarity
The VPA process provides opportunities to clarify what is legal and to identify overlaps, gaps and contradictions in the legal framework. Thailand developed and tested its legality definition in a participatory way and made significant adjustments to its legal framework by publishing a revised Forest Act, a new National Land Act (Khor Thor Chor) and a Community Forest Bill in April/May 2019. Thailand included reclaimed wood as a new legal source of timber, an issue of particular interest by small-scale operators.
Further negotiation sessions
The first face-to-face negotiation session was held in June 2017, followed by a second session in July 2018. Through negotiations Thailand and the EU will agree upon the content of the VPA and its annexes, including important aspects such as the legality definition, the scope of products the VPA will cover, the design of the timber legality assurance system including rules for import of legal timber, and commitments to make information public. Based on experiences in other countries, this negotiation process is expected to take several years.