[WEEKLY NEWS 09/2024] Vietnamese enterprises urged to comply with upcoming EU deforestation regulation

As the European Union's Deforestation Regulation (EUDR) is set to take effect on December 31, 2024, Vietnamese businesses have been advised to act promptly to ensure compliance with this new rule, which is crucial for maintaining export activities to the EU, a major market for Vietnam, according to the Vietnam News Agency.

The Vietnam Trade Promotion Agency, operating under the Ministry of Industry and Trade (MoIT), highlighted that the EUDR, which was issued in June 2023, aims to establish deforestation-free supply chains. The regulation prohibits the import or consumption of products and goods associated with deforestation or forest degradation within the EU. Businesses exporting to the EU must demonstrate that their products do not originate from land deforested or subjected to forest degradation after December 31, 2020.

The EUDR specifically targets commodities with a significant impact on deforestation, including coffee, cocoa, soybeans, palm oil, cattle, timber, wood products, and rubber. Of these, three major Vietnamese exports—timber, rubber, and coffee—are directly affected by this regulation, representing over 2.5 billion USD in annual export revenue to the EU.

Hoang Thanh, a representative of the EU Delegation to Vietnam, noted that the EUDR will initially apply to large enterprises starting December 31, 2024, with small and medium enterprises (SMEs) required to comply by June 30, 2025. Only products that meet the criteria of being non-deforestation-compliant and legal will be allowed entry into the EU market or be exported from the EU.

Discussing the challenges posed by the EUDR, Dinh Sy Minh Lang, a representative from the MoIT’s European-American Market Department, warned that the requirements for origin tracing and EUDR certification could increase export costs, particularly for SMEs. Vietnamese products could face intense competition, as businesses from other countries may be better prepared for EUDR compliance.

Lang also pointed out that the difficulty in identifying legal farming zones could impact the accuracy of assessing and classifying risks based on country and production zones. Additionally, controlling input materials in the supply chains of coffee, timber, and rubber is complex due to the involvement of multiple layers of traders.

Experts, as reported by the Vietnam News Agency, have emphasized that with the EUDR and other stringent EU regulations approaching, Vietnamese enterprises must swiftly adjust their production processes. Complying with the EUDR could present numerous opportunities, including improving competitiveness, as businesses with sustainable supply chains and quality material sources will be prioritized by European partners.

Thanh added that the EU will assist Southeast Asian countries, including Vietnam, in building capacity, raising awareness, and sharing information about EUDR requirements.

The Vietnam Rubber Association has proposed that the Ministry of Agriculture and Rural Development issue technical guidance for the affected sectors so they can develop timely response plans. It also suggested that state agencies devise measures to support businesses in adapting to the EUDR, particularly in terms of positioning data and origin tracing.

Echoing this view, Assoc. Prof. Dr. Nguyen Thuong Lang from the National Economics University stressed the need for authorities to provide more detailed instructions to enterprises, open a support website, or establish groups of related companies and parties to provide updates on the EUDR and other green standards of the EU. He added that it is necessary to issue detailed policies and guidance, set up a question-and-answer unit to quickly meet information demand, and conduct surveys to assess their capacity for providing appropriate assistance.

Source: VNA