Vietnam’s wood exports are experiencing a positive recovery, but the industry still faces significant risks related to trade defense measures and wood origin control policies in key markets.
Recovery Accompanied by Challenges
At a recent conference on wood processing and exports held in the third quarter of 2024, Mr. Trieu Van Luc, Deputy Director of the Department of Forestry under the Ministry of Agriculture and Rural Development, highlighted the positive recovery signals in the market. He noted that wood processing enterprises and associations have proactively sought out new export markets. As a result, the import-export value of wood and forestry products in the first seven months of 2024 was higher compared to the same period in 2023.
Here are some key statistics:
- Total wood and forestry product exports: Estimated at $9.361 billion, a 20.5% increase compared to the same period in 2023.
- Wood product exports: Reached $5.967 billion, up 22.2%.
- Wood exports: Totaled $2.785 billion, up 20.9%.
- Non-wood forestry product exports: Estimated at $609 million, an increase of 4.6%.
On the import side, the value of wood and wood product imports was estimated at $1.504 billion, a 22.3% increase from the same period in 2023. The wood industry achieved an estimated trade surplus of $7.857 billion in the first seven months of 2024.
Industry Faces Multiple Challenges
Despite this recovery, the industry is not without challenges. According to Mr. Do Xuan Lap, Chairman of the Vietnam Timber and Forest Product Association, since the start of 2024, wood industry enterprises have faced numerous challenges due to global economic and political shifts.
Significantly, the industry has been subject to five trade defense cases from markets such as South Korea, Canada, and the United States. Of these, the U.S. market alone accounted for three cases.
Moreover, global instability and rising transportation and logistics costs have slowed the pace of economic recovery worldwide. Many countries and corporations are now building new supply chains, which has a substantial impact on the order situation for Vietnam’s wood industry.
For instance, the Canadian market is encouraging enterprises to focus on the South American economic bloc and allied countries to build a sustainable and reliable supply chain.This shift is negatively affecting the export of furniture products. Canada has also increased imports from countries like the Philippines, Malaysia, and Indonesia (which is expected to sign a free trade agreement with Canada by the end of 2024).
Addressing Trade Defense and Wood Origin Risks
As we approach the final months of the year, Mr. Luc highlighted challenges for Vietnam’s wood industry. Despite the U.S. concluding its anti-circumvention investigation on Vietnamese wooden cabinets, stricter controls are expected. This could lead to increased trade defense measures, including more anti-dumping and countervailing duty investigations.
In South Korea, economic stagnation is affecting Vietnam’s wood and wood product exports. South Korea is a major importer of Vietnamese plywood and wood pellets. However, the export price of wood pellets dropped to $98 per ton, the lowest in years. South Korea recently reviewed anti-dumping duties on Vietnamese plywood. As of May 27, 2024, it continued these duties on Vietnamese plywood producers for five years, with rates from 9.78% to 32.28%.
Preparing for Increased Trade Defense Risks
To address the growing risks related to trade defense, Mr. Lập, Chairman of the Vietnam Timber and Forest Product Association, urged the Ministry of Agriculture and Rural Development, the Ministry of Industry and Trade, and other relevant government agencies to support and guide businesses in responding to trade defense investigations by the U.S. Department of Commerce (DOC). He emphasized the need for close cooperation with investigating agencies to provide accurate information and assist with inspections, especially as the DOC expands its authority and updates its anti-dumping and countervailing duty regulations. Mr. Lap also stressed the importance of a coordinated mechanism to keep businesses informed of policy changes in key export markets and to provide timely forecasts and warnings regarding trade defense.
Additionally, Mr. Lap recommended that the Ministry of Planning and Investment and local Departments of Planning and Investment develop specific policies to discourage foreign direct investment (FDI) enterprises from producing wood products that are already subject to anti-dumping duties by other countries. The Ministry of Agriculture and Rural Development should promote wood origin management and advocate for Vietnam’s sustainable forest certifications in major export markets.
Navigating EU Regulations
The EU’s new regulation on deforestation and forest degradation (EUDR) will take effect in December 2024. However, many Vietnamese enterprises struggle with compliance due to unclear guidelines. Mr. Lực noted that companies in Binh Dinh, a hub for outdoor wood furniture exports to the EU, are facing numerous challenges. EU importers demand that these companies commit to EUDR compliance. Similarly, exporters of plywood, wood pellets, and wooden utensils to the EU face the same requirement.
Ensuring Compliance and Competitiveness
Given these challenges, Mr. Luc emphasized preventing trade fraud and expanding successful collaboration between wood processing companies and forest-owning households. This approach ensures a legal domestic wood supply, increases product value, reduces costs, and enhances Vietnam’s global competitiveness.
In conclusion
In summary, while Vietnam’s wood exports industry are recovering, it must navigate significant challenges in the form of trade defenses, shifting supply chains, and increased competition from other countries. These factors will continue to shape the industry’s trajectory in the coming months.
Reference: Ngành gỗ đối mặt nhiều biến số tại các thị trường trọng điểm
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