Forest industry to benefit from the EU-Vietnam free trade agreement

Forest industry to benefit from the EU-Vietnam free trade agreement

The EU is one of the top 5 markets for wood and wood products (W&WP) exported from Vietnam. In 2019 the W&WP exports to the EU (then including the UK) was reported at US$865 million.

With the European Union – Vietnam Free Trade Agreement (EVFTA), which entered into force on 1 August 2020, Vietnam’s W&WP export to EU are expected to penetrate new markets rather than just France, Germany, Netherlands, Belgium, Denmark and Spain as was the case prior to the EVFTA.

The EVFTA tax reduction/exemption applicable to W&WP imported from Vietnam into EU are as follows: W&WPs enjoying 0% import tax immediately upon

EVFTA becoming effective

W&WPs under HS group 4401- 4409, previously subject to taxation between 2-4%, now enjoy 0% tax entering EU markets. These W&WPs accounted for 1% of Vietnams exports to the EU in 2019.

W&WPs under HS 4414/15/18/20/21 previously subject to 2.5-4% import tax will enter EU markets with 0% tax. The value of these W&WPs shares 13% of total exports to EU.

Wooden furniture under HS 9403.40 - HS 9403.90 previously taxable between 2.7 -5.6% will enjoy 0% tax. These W&WPs accounted for 7% of the export earnings in 2019.

W&WPs to benefit from 0% tax in 4-6 years

Before the conclusion of EVFTA, W&WPs under HS 4410 – 4412 attracted a 6-10% of import tax. These products will benefit from 0% tax in the coming 4-6 years. Currently, these products accounted for 1.3% of 2019 earnings.

W&WPs which are not affected by EVFTA

The current 0% tax will continue for HS 4413/17/16/19, Seats (other than those of heading 94.02), whether or not convertible into beds and parts thereof (HS 9401); Wooden furniture of a kind used in offices (HS 940330); Wooden furniture of a kind used in the bedroom (HS 940350), Other wooden furniture (HS 9403.60). The export value of these W&WPs accounted for 78.2% of 2019 exports to the EU.

According to Ngo Sy Hoai, Vice President and Secretary General, VIFOREST, with the EVFTA tax structures and the FLEGT licenses set to be issued next year exports to the EU should double over the next 5 – 7 years (from US$865 million in 2019 to US$1.5 – 1.6 billion in 2025).



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