Over the past decade, the European Union entered into collaborative agreements with tropical timber-producing countries to fight forest crime and verify the legality of wood imported into the EU.

Within the Greater Mekong, Vietnam was the first (and to date, only) country to sign such a voluntary partnership agreement (VPA) with the EU, back in 2018. The VPA is a legally binding trade agreement where both sides commit to trading only in verified legal timber products.

Under the VPA, timber-supplying countries have to set up a timber legality assurance system capable of verifying the legality of their timber products. Once operational, the system will issue special EU Forest Law Enforcement, Governance and Trade (EU FLEGT) licenses to accompany exports of verified legal timber products into the EU. Such licensed products are considered to comply with the requirements of existing EU timber regulations, which prohibit the sale of illegally harvested timber and timber products on the EU market.

Now that Vietnam has signed the VPA, it will have to draft new regulations to build up an effective assurance system. Outside the Greater Mekong, another Southeast Asian country offers a glimpse of what this future might look like: Indonesia, which signed the VPA in 2013 and began FLEGT licensing in 2016.

Research suggests VPAs help countries decrease illegal logging rates, especially illegal industrial timber destined for export markets. Since Indonesia signed the VPA, annual deforestation rates have fallen 56%, from 1.1 million hectares (2.7 million acres) between 2014 and 2015, to 480,000 hectares (1.2 million acres) between 2016 and 2017.

But critics say strictly enforcing regulations could harm micro, small and medium enterprises (MSMEs) and worsen rural poverty. A key part of VPAs therefore includes helping MSMEs build the capacity needed to comply with these new international standards.

Initiatives proposed in Laos, Myanmar, Thailand and Vietnam include developing formal registration and operating licences for MSMEs that will allow them access to government support programs; starting MSME timber associations; increasing MSME representation in policymaking; and conducting training sessions for MSMEs to improve operational capacity and reduce waste.

Such programs aim to help MSMEs upgrade their operations while making it easier for governments to monitor MSME compliance with timber legality requirements.

While VPAs have helped reduce illegal logging, experts warn the pandemic could derail progress made. Last year, to mitigate the economic impact of COVID-19, Indonesia issued a decision to eliminate certification requirements for timber exports, despite years of EU FLEGT licensing in place. Following widespread criticism and the threat of being shut out of the lucrative EU market, it quickly backed down and reinstated the requirement.