New analysis of timber legality assurance systems and good practices in China and Viet Nam released

Particle board manufactured in China for domestic and international markets. Photo: J. Claudon/ITTO

Yokohama, Japan, 5 April 2023: Strengthened legal frameworks in China and Viet Nam are encouraging their timber industries to become more sustainable and creating more efficient ways for importers to verify the legality and sustainability of wood products shipped from these countries, according to reports presented at a webinar co-hosted by ITTO last week.

These are among the findings of a recently completed ITTO project presented during a webinar on 31 March 2023. Co-hosted by the Japan-based Institute for Global Environmental Strategies (IGES), which assisted in the implementation of the project, the webinar was attended by about 190 participants from China, Viet Nam and Japan. The event aimed to disseminate up-to-date information on timber legality for ensuring sustainable forest practices and businesses in support of the implementation of Japan’s Clean Wood Act enacted in 2017.

The project [PP-A/56-342BP], implemented as part of ITTO’s Biennial Work Programme, analyzed timber legality assurance schemes in China and Viet Nam and identified best practices of operators in their timber sectors. In a series of reports, the project also identified steps that international stakeholders can take to further boost the legal and sustainable timber trade.

Opening the webinar, Mr Akahane Gen, Director of the Wood Products Trade Office at the Forestry Agency in Japan’s Ministry of Agriculture, Forestry and Fisheries noted that awareness of timber legality issues is growing in Japan and abroad, including in timber-producing countries.

He expressed hope that the information provided during the webinar would help businesses in ITTO member countries to confirm the legality of their products and implement legality verification more reliably.

ITTO Projects Manager Mr Tetra Yanuariadi, meanwhile, explained how the project advanced ITTO goals including the creation of legal and sustainable supply chains, the promotion of sustainable wood use in domestic markets, and improved forest governance.

Highlights of the country reports presented at the webinar are summarized below.

China

Mr Samejima Hiromitsu, Research Manager at IGES, described findings related to the impact of China’s amended Forest Law and the status of legality confirmation by Chinese business operators. Article 65, added to the Forest Law in 2019, prohibits trade in timber known to have originated from illegal logging.

Among Chinese timber-related enterprises surveyed as part of the project, almost all said they had a due diligence system and provided relevant information to customers, while all said they required timber suppliers to provide legality documentation.

The finding suggests wood-related businesses in China are aware of domestic requirements to verify legality, regardless of their main markets or suppliers, making it easier for enterprises importing wood products from China to request suppliers for verification of legality, which in turn might facilitate due diligence.

Still, the level of due diligence required under Article 65 has not been made explicit. Previously, many Chinese enterprises verified legality according to the demands of Western export customers. A consequence of the revision is that the criteria for determining legality are increasingly determined by China.

A further finding suggests that many businesses have difficulty obtaining the required documentation because, for instance, source countries lack timber legality assurance schemes, and trees grown by Chinese smallholders are not covered by harvesting permits. Chinese businesses were making efforts to solve such problems, for instance by changing suppliers and investing upstream in the supply chain.

By understanding the status of their suppliers in China and supporting their efforts to ensure legality, businesses importing timber and wood products from China will be able to sustainably procure legally certified timber, the study found.

Viet Nam

The project’s findings related to Viet Nam were presented by IGES Research Manager Mr Fujisaki Taiji.

Viet Nam has made substantial efforts to establish legal frameworks to exclude illegal timber from all supply chains. This includes a 2020 decree (Decree 102) that introduced criteria for risk identification and due diligence requirements for Vietnamese importers.

Taking exports to Japan as a case study, the project used customs data, key respondent interviews and a survey of Vietnamese timber importers to identify high-risk species in exported products and generate recommendations for importers.

Key findings include that products made from high-risk timber and exported to Japan have, in recent years, been small in value and trending lower, accounting for just 0.2% of total value in 2020. The number of high-risk species has also fallen.

Also, with Decree 102 enacted only two years before, the researchers found that due diligence by Vietnamese importers and the necessary exchange of information along the supply chain have not yet been fully implemented.

Recommendations for importers, deemed applicable to all countries sourcing wood products from Viet Nam, include among others:

• Identify whether timber is imported (domestically produced timber in Viet Nam is considered low risk) and become familiar with the high-risk species listed in Decree 102.
• Ask suppliers for a copy of the declaration-of-origin form (Form 3) required under Decree 102 when high-risk species are imported into Viet Nam. The form can be regarded as proof of due diligence for subsequently exported wood products.

Due diligence is also complicated by the complex and layered nature of wood product supply chains in the country. The ITTO project looked closely at Viet Nam’s important smallholder acacia plantation sector.

Key findings included that forestry cooperatives in Viet Nam can help ensure and verify the legality of timber production by smallholders and contribute to sustainable forest management. The study also found that processing companies can take measures to improve legality verification, including strengthening linkages with producers, checking supply chain documents and engaging in forest management.

The study suggested that importers consider the above points when seeking to understand their supply chains in Viet Nam, and that they should work with their suppliers to establish, maintain, and improve supply chains.

Timber growers and forest cooperatives stressed that sustainable forest management needs stable timber demand and consumption, and that it is therefore essential for exporters to build trusted relationships with business partners of importing countries.

Summaries of country reports are available for download. Full reports will be available on ITTO’s website from mid-2023.

Disclaimer: Summaries are unedited as submitted by the Executing Agency as part of the project. The contents of and views expressed are those of the authors and do not necessarily reflect the views of ITTO or its members. The designations employed in such materials do not imply the expression of any opinion whatsoever by ITTO concerning the legal status of any country, territory, city or area or its authorities or concerning the delimitation of its frontiers and boundaries.