Memo. EU and Vietnam complete negotiations on a FLEGT Voluntary Partnership Agreement

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1 Mem EU and Vietnam cmplete negtiatins n a FLEGT Vluntary Partnership Agreement Brussels, 11 May 2017 After nearly six years f negtiatin, tday, Mrs Astrid Schmaker, Directr fr Glbal Sustainable Develpment f the Eurpean Cmmissin s Directrate-General fr the Envirnment and Dr Ha Cng Tuan, Vietnamese Vice-Minister f Agriculture and Rural Develpment initialled the text f the FLEGT VPA. This marks the frmal cnclusin f the negtiatins. The tw sides will nw undertake a legal review f the negtiated text which will then be fllwed by translatin f the Agreement int the EU's fficial languages and Vietnamese. Befre the agreement can enter int frce, each Party will have t cmplete the prcedure fr signature and ratificatin f the Agreement in line with its internal prcedures. This VPA, fr which negtiatins started in Octber 2010, is the EU s secnd VPA with an Asian cuntry (after Indnesia). Vietnam is a majr timber imprting and prcessing cuntry which has seen an expnential grwth f its frest-based industries ver the past decade and which plays an imprtant rle in the glbal market. The VPA is a further building blck in the EU s fight against illegal lgging and assciated trade and twards imprving frest gvernance wrldwide. Once the VPA is fully implemented, Vietnam s shipments f timber and timber prducts t the EU will be accmpanied by a FLEGT licence, demnstrating the legal rigin f these prducts. As FLEGT-licensed prducts autmatically meet the requirements f the EU Timber Regulatin, Vietnam s timber and timber prducts will nt be subject t the due diligence prvisins f the EU Timber Regulatin, which prhibits the placing f illegal timber n the EU market. What are Frest Law Enfrcement Gvernance and Trade Vluntary Partnership Agreements?

2 FLEGT VPAs are bilateral agreements between the EU and timber exprting cuntries. They aim t imprve frest sectr gvernance and ensure that the timber and timber prducts imprted int the EU are prduced in cmpliance with the laws and regulatins f the VPA partner cuntry. Once agreed, the VPAs are legally binding n bth parties, cmmitting them t trading nly in wd prducts that has be verified as legal. Under these agreements exprting cuntries develp systems t bth verify and certify the legality f their timber exprts t the EU. Objective f the EU-Vietnam VPA The bjective f the agreement, cnsistent with the EU and Vietnam s jint cmmitment t the sustainable management f all types f frests, is t prvide a legal framewrk aimed at ensuring that all imprts int the EU frm Vietnam f timber and timber prducts cvered by the VPA have been legally prduced. This is achieved thrugh the establishment f a Timber Legality Assurance System t mnitr the supply chain and a FLEGT licensing system t ensure that nly prducts duly accmpanied by a FLEGT licence will in the future be able t enter the EU market. In ding s, the VPA is intended t make an imprtant cntributin t the fight against illegal lgging and prmte trade in timber prducts that are frm sustainably managed frests and are harvested in accrdance with the dmestic legislatin in the cuntry f harvest. Scpe f the EU-Vietnam VPA The scpe f the agreement cvers all exprt markets and the dmestic market in Vietnam. In terms f surces, the agreement cvers bth imprted timber, a majr surce f raw materials fr Vietnam, and all dmestic surces in Vietnam, including natural and plantatin frests, cnfiscated timber (under specific cnditins), timber frm hme-gardens, farms and scattered trees, and rubberwd. The range f timber prducts included in the scpe f the agreement encmpasses all majr prducts exprted t the EU, particularly the five cmpulsry timber prducts as defined in the FLEGT Regulatin f 2005 (lgs, sawn timber, railway sleepers, plywd and veneer) and als includes a number f ther timber prducts such as wd in chips r particles, parquet flring, particle bard and wden furniture. The cre f the VPA is the descriptin f the Vietnam Timber Legality Assurance System (VNTLAS), which will ensure that timber prducts exprted frm Vietnam t the EU are verified legal accrding t specified requirements fr all stages f the supply chain, frm imprt and harvesting nwards. The VNTLAS has seven elements: 1. Timber legality definitin

3 The VPA defines legally prduced timber as timber prducts harvested r imprted and prduced in accrdance with legislatin f Vietnam as set ut in the legality definitin and ther relevant prvisins f the VPA, and in the case f imprted timber, timber prducts harvested, prduced and exprted in accrdance with the relevant legislatin f the cuntry f harvest (cvering rights t harvest, frestry activities, taxatin and fees and trade and custms) in line with the prcedures described in the VPA annex n the VNTLAS. The legality definitin itself sets ut the cre requirements f legislatin applicable t timber in Vietnam in the frm f principles, criteria and verifiers. All elements f the legality definitin need t be cmplied with in rder t cnsider that the timber has been legally prduced. The legality definitin is divided int tw sectins: ne fr Organisatins (i.e. business, including private, state wned and cperatives) and ne fr Husehlds (i.e. dmestic husehlds, individuals and village cmmunities), in rder t cater fr the differences in the regulatins that apply t these tw grups. 2. The develpment, verificatin and apprval f verifiers f legal cmpliance f peratrs at all stages f supply chains Verifiers are dcuments referred t in the legality definitin that are used fr Organisatins and Husehlds t demnstrate legal cmpliance. There is a distinctin between static and dynamic verifiers: Static verifiers are used t verify the legal cmpliance f the establishment and peratins f Organisatins and Husehlds in timber harvesting, prcessing, transprtatin and trade. Dynamic verifiers are used t verify the legal cmpliance f timber rigin and timber in circulatin at each stage f the supply chain. 3. The Organisatins Classificatin System (OCS) and risk-based verificatin t assess the cmpliance f peratrs The purpse f the OCS a new system that is ging t be develped by Vietnam as part f the future implementatin f the agreement is t assess peridically the risk level f all Organisatins invlved in the timber supply chain with regard t their cmpliance with VNTLAS requirements in rder t apply apprpriate verificatin measures in an effective, efficient and timely manner. The OCS will be perated by the Frest Prtectin Department r ther entities authrised by the gvernment. The OCS will als supprt the Frest Prtectin Department in its management f vilatins f the law n frestry and ther key sectrs under the legality definitin. 4. Timber supply chain cntrls

4 Supply chain cntrls aim t prevent the entrance f illegal timber r unverified timber int the VNTLAS supply chain. They apply t all three supply chain critical cntrl pints in the VNTLAS: Timber surces entering the VNTLAS: Vietnam maintains strict cntrl ver the management and harvesting f timber frm dmestic natural frest, and fr allwing cnfiscated timber t enter the VNTLAS supply chain. T ensure cmpliance f imprted timber, Vietnam shall issue legislatin requiring imprters t cnduct due diligence ver the legal rigin f imprted timber, which cvers cllectin f infrmatin, risk assessment and mitigatin f any risk related t the legal rigin. Cmpliance with due diligence requirements will be verified by Vietnam Custms in cperatin with ther relevant agencies. Adequate, prprtinate and dissuasive sanctins fr vilatins f the future imprt regulatin will be put in place. Intermediate stages: The cntrls include systems t supprt data analysis t mnitr timber vlumes within and between stages f supply chains; and physical inspectins particularly n the basis f the analyses f supplychain data. Exprt t any market: A risk-based apprach will apply, based n the OCS categry, fr the verificatin f shipments f timber destined bth fr EU and nn-eu markets. 5. FLEGT licensing Once the VNTLAS is peratinal, it will prvide fr the issuance f a FLEGT licence fr each shipment f timber that is exprted t the EU market. Such shipment and the exprter will have t have meet all the requirements set ut in the VNTLAS legality definitin, supply chain cntrls and verificatin prcedures. 6. Internal inspectins, cmplaints and feedback mechanism and management f vilatins Gvernment agencies may carry ut inspectins t detect lphles in laws, regulatins and management mechanisms and t recmmend slutins; as well as t prevent and cmbat crruptin and t detect and handle vilatins f the law. There will be a mechanism fr stakehlder cmplaints and feedback cncerning the VNTLAS and FLEGT licensing. Vilatins will be handled in accrdance with Vietnamese legislatin, which prvide fr administrative and criminal sanctins t be applied t bth Organisatins and Husehlds. 7. Independent evaluatin An independent evaluatr will peridically assess the implementatin, efficiency and credibility f the VNTLAS in rder t identify, dcument and reprt any nncmpliances and weaknesses in the system. The independent evaluatr will

5 prpse measures fr imprvement t the EU-Vietnam Jint Implementatin Cmmittee. In additin t the seven elements f the VNTLAS, the VPA includes prvisins fr transparency and access t infrmatin necessary fr and supprtive f stakehlders invlvement in the implementatin f the agreement. This assurance that key frestryrelated infrmatin will be made available t the public als represents an imprtant cntributin t reinfrcing Vietnam s frest gvernance. Twards implementatin f the Agreement The VPA will enter int frce after it has been signed and then ratified by bth the EU and Vietnam. T implement the agreement Vietnam will need t revise and/r issue new legislatin t realise the cmmitments f the agreement. It will then need t develp the VNTLAS elements and build capacity t perate the system. Befre the FLEGT licensing scheme can becme peratinal, the EU and Vietnam will undertake a jint assessment t cnfirm that the VNTLAS is perating as described in the VPA accrding t a detailed set f criteria included in a dedicated Annex t the Agreement. A Jint Implementatin Cmmittee will versee implementatin f the agreement. Pending its entry int frce, the Parties have als agreed n key elements fr Interim gvernance arrangements and ther measures t be taken in preparatin f the implementatin f the Agreement. Vietnam has cmmitted t include all stakehlders in the implementatin f this Agreement. T this end it will put in place adequate mechanisms fr cnsultatin and participatin f stakehlders, including with regard t mnitring implementatin f the agreement. VPA implementatin will require external technical assistance and supprt frm the EU and its Member States. In additin, Vietnam will have t mbilise its wn resurces t build the capacity f all actrs t implement the future VNTLAS.