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US timber orders shifted from China to Vietnam
Ngoc Thuy 11:15, 2019/08/23
Sustained demand from the US combined with the 25% tariff imposed on US$200 billion goods imported from China have boosted Vietnam’s exports.
In the past six years, Vietnam’ share of US timber import market increased from 17% to 24%, while that of China fell to 38% from 43%, according to Viet Dragon Securities Company (VDSC). 


According to VDSC, the US is the world’s largest timber importer with US$12 billion on average in the 2012 – 2018 period, with imports growing 6.5% per year. China and Vietnam currently account for 39% and 22% of US imports, respectively. 

The US is also Vietnam’s largest timber importer, accounting for an average of 40% of Vietnam's export value in the 2013-2018 period. This number increased to 47% in the first six months of 2019. 

Vietnam's timber export market is quite concentrated with the US, Japan, China and South Korea accounting for 77% of total value during this period. Exports to the US rose in value from US$2 billion in 2013 to US$3.9 billion in 2018. Meanwhile, the country’s timber exports to Japan and China reported an annual growth of 5% over the same period.

Sustained demand from the US combined with the 25% tariff imposed on US$200 billion goods imported from China have boosted Vietnam’s exports. Vietnam's wood exports rose 15.9% in 2018 to US$4.82 billion, in which the US market made up 47% of the total, followed by Japan with US$632 million worth of timber imports from Vietnam, up 20% year-on-year. 

Long term drivers

The US, the EU, Japan and South Korea are Vietnam’s top wood importers with strict quality standards. Vietnam, therefore, would be able to benefit from the quality of its exported products.

VDSC expected the EU to be a major market for Vietnam in the future, especially with Vietnam having signed the voluntary partnership agreement (VPA) with the EU on forest law enforcement, governance and trade (FLEGT) since June 1, 2019. 

Under the VPA, Vietnam develops the Timber Legality Assurance Systems to verify that its timber exports are legally produced, attested by a set of procedures and requirements, by means of FLEGT licenses. The EU shall accept such timber shipments from Vietnam if they are covered by FLEGT licenses.

Thereby, qualified wood export enterprises and approved by a Vietnamese agency will be exported directly to the EU market and not through any additional censorship from the EU. 

Additionally, with the EU – Vietnam Free Trade Agreement (EVFTA) signed on June 30, 2019, imported timber tariffs should be set at zero percent, creating cost-advantages for Vietnam.

​Overall the current situations have created both short- and long-term opportunities for Vietnam’s timber exports. In the short term, the US - China trade dispute is benefiting Vietnam, while the country’s timber exports, especially to the EU market, will grow because of the VPA/FLEGT, EVFTA and Vietnam’s Forest Law, stated VDSC. 
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