Wood industry faces many variables in key markets

Trade defense risks increase for wood exporting enterprises. Illustration photo: N.H

Recovery goes with challenges

At the conference of the wood and forestry processing and export industry in the third quarter of 2024 held last weekend, Mr. Trieu Van Luc, Deputy Director of the Department of Forestry, Ministry of Agriculture and Rural Development, said that with positive signs of recovery in the market, wood and forestry processing associations and enterprises have made efforts and been proactive in production and seeking export markets. Accordingly, the import and export value of wood and forestry products in the first 7 months of 2024 was higher than the same period in 2023. Specifically, wood and forestry product exports are estimated at USD 9.361 billion, up 20.5% over the same period in 2023. Of which, wood products reached USD 5.967 billion, up 22.2%; wood reached USD 2.785 billion, up 20.9%; non-timber forest products reached USD 609 million, up 4.6%. On the other hand, the import value of wood and wood products is estimated at USD 1.504 billion, an increase of 22.3% over the same period in 2023. Thus, in the first 7 months of 2024, the wood industry's trade surplus is estimated at USD 7.857 billion.

However, Mr. Do Xuan Lap, Chairman of the Vietnam Timber and Forest Products Association, said that since the beginning of the year, wood industry enterprises have faced many challenges from changes in the world economic and political situation. Typically, the wood industry has gone through five trade defense lawsuits from the markets of Korea, Canada, and the US. Of which, three cases were from the US market alone.

In addition, the unstable world situation in many regions, the unstable increase in transportation and logistics costs also slow down the recovery of the world economy. Many countries and corporations are building and forming new supply chains, which has significantly impacted the order situation of the Vietnamese wood industry. For example, the Canadian market is calling on businesses to turn to the South American economic bloc and allied countries to build a sustainable and reliable supply chain. This negatively affects the export of furniture. Canada is also increasing imports from the Philippines, Malaysia and Indonesia (expected to sign a free trade agreement with Canada by the end of 2024).

Responding to trade defense risks and wood origin

Forecasting the situation in the last months of the year, Mr. Luc said that although the US has ended the anti-tax evasion investigation on wooden cabinets and dressing tables from Vietnam, in the future, the US will strengthen control and post-inspection of these products, continuing to support domestic enterprises by increasing trade defense measures through anti-dumping and anti-subsidy investigations.

In the Korean market, the continued economic stagnation will strongly affect the export value of wood and wood products of Vietnam. In particular, Korea is a large import market for 2 products of plywood and wood pellets from Vietnam, but in the first 7 months of 2024, the export price of wood pellets to this market decreased to USD 98/ton - the lowest level in recent years. Korea has conducted a final review of the anti-dumping tax order on plywood originating or imported from Vietnam and on May 27, 2024, issued an investigation conclusion and decided to continue to apply anti-dumping tax on Vietnamese plywood manufacturing and exporting companies for the next 5 years, at a rate of 9.78% to 32.28%.

Faced with the increasing risks of trade defense, Mr. Lap suggested that the Ministry of Agriculture and Rural Development, the Ministry of Industry and Trade and relevant Government agencies support and guide enterprises in responding to trade defense investigations by the US Department of Commerce (DOC). At the same time, coordinate and cooperate with the investigating agency in providing information and receiving inspection delegations at enterprises, especially in the context of the DOC expanding its authority and supplementing regulations on anti-dumping and anti-subsidy investigations. According to Mr. Lap, there should be a coordination mechanism to update information on policy changes in key export markets of the Vietnamese wood industry and provide forecasts, warnings and information related to trade defense.

Mr. Lap also suggested that the Ministry of Planning and Investment and the Departments of Planning and Investment have specific policies to discourage FDI enterprises from investing in projects to produce wood products in countries that have been subject to anti-dumping taxes by third countries. The Ministry of Agriculture and Rural Development should introduce policies on wood origin management and promote Vietnam's sustainable forest management certificates in major wood and wood product export markets of Vietnam.

For the European market (EU), the regulation on zero deforestation and forest degradation (EUDR) will take effect in December 2024, but so far there have been no specific instructions, making it difficult for many Vietnamese enterprises to implement. According to Mr. Luc, enterprises in Binh Dinh - the capital of enterprises producing outdoor wooden furniture exported to the EU - are facing many difficulties when EU importers continuously require enterprises to commit to comply with the EUDR. Similarly, enterprises exporting plywood, pellets, and cutlery, when exporting to the EU market, are also asked by importers whether they comply with the EUDR and are required to commit to complying with this regulation.

Therefore, Mr. Luc emphasized the need to continue preventing trade fraud by some export enterprises; replicating successful linkage models between wood processing enterprises and forest planting households to ensure both legal domestic wood origin and increase added value, reduce product costs, thereby enhancing the competitiveness of Vietnamese wood and wood products.