ANNEX V

VIET NAM TIMBER LEGALITY ASSURANCE SYSTEM

(VNTLAS)

TABLE OF CONTENTS

1. INTRODUCTION 79

2. SCOPE OF APPLICATION 79

2.1 Timber sources 79

2.1.1 Timber sources controlled by the VNTLAS 79

2.1.2 Timber in transit 80

2.2 Scope of control 80

2.2.1 Definition of Organisations and Households 81

2.2.2 Definition of government agencies 81

2.2.3 Definition of Verification Authority and verification entities 81

2.3 Recognition by the VNTLAS of voluntary certification and national certification schemes 81

3. LEGALITY DEFINITION 82

3.1 Structure and content of the Legality Definition 82

4. DEVELOPMENT, VERIFICATION AND APPROVAL OF VERIFIERS AT ALL STAGES OF THE SUPPLY CHAIN 84

4.1 Definition of verifiers 84

4.1.1 Static verifiers 84

4.1.2 Dynamic verifiers 85

4.2 Development of verifiers 85

4.3 Verification and approval/certification of verifiers 85

4.4 Responsibilities of relevant actors 86

4.4.1 Responsibilities of Organisations 86

4.4.2 Responsibilities of Households 86

4.4.3 Responsibilities of government agencies 86

5. ORGANISATION CLASSIFICATION SYSTEM AND RISK-BASED VERIFICATION 86

5.1 Purpose of the Organisation Classification System 86

5.2 Criteria and risk categories 87

5.3 Implementation of the Organisation Classification System 87

5.3.1 Self-assessment and appraisal procedures and frequency 89

5.3.2 Classification results 89

5.4 Responsibilities of relevant actors 90

5.4.1 Responsibilities of Organisations 90

5.4.2 Responsibilities of government agencies 90

6. SUPPLY CHAIN CONTROL 90

6.1 Overview 90

6.2 Critical control points in the VNTLAS supply chain 91

6.3 Verification of timber sources entering the VNTLAS 92

6.3.1 Timber from main harvesting of domestic natural forest (critical control point 1a) 92

6.3.2 Timber from planted production and protection forests (critical control points 1c and 1d) 92

6.3.3 Timber from salvage harvesting and salvage collection (critical control points 1b, 1c and 1d) 92

6.3.4 Timber from home gardens, farms and dispersed trees (critical control point 1e(2)) 93

6.3.5 Rubber wood from domestic sources (critical control points 1e(1) and 1e(2)) 93

6.3.6 Handled confiscated timber (critical control point 1f) 93

6.3.7 Imported timber (critical control point 1g) 94

6.3.7.1 Due diligence and self-declaration requirements for importers 94

6.3.7.2 Handling of violations 95

6.3.7.3 Customs risk assessment system 95

6.3.7.4 Species risk categories 96

6.3.7.5 Risk associated with geographic origin of imported timber 97

6.3.7.6 Risk-based control and management of imported timber 97

6.4 Verification of timber at stages in the VNTLAS supply chain 100

6.5 Supply chain reporting requirements 100

6.6 Responsibilities of relevant actors 100

6.6.1 Responsibilities of Organisations and Households 100

6.6.2 Responsibilities of government agencies 100

7. VERIFICATION FOR EXPORT 101

7.1 General principles for the verification for export 101

7.1.1 Verification for export for Category 1 Organisations 102

7.1.2 Verification for export for Category 2 Organisations 105

7.1.3 Verification for export for Households/individuals 106

7.2 Suspicion of risk and physical checks 107

8. FLEGT LICENSING 107

9. INTERNAL INSPECTION, COMPLAINTS AND FEEDBACK MECHANISMS 108

9.1 Internal inspection 108

9.2 Complaints, denunciations and feedback mechanisms 108

10. INDEPENDENT EVALUATION 108

11. MANAGEMENT OF VIOLATIONS 109

11.1 Management of violations 109

11.2 Record of violations 109

11.2.1 Database of violations of the Law on Forest Protection and Development 109

11.2.2 Databases of violations of other government agencies 109

12. DATA MANAGEMENT AND STORAGE 109

12.1 VNTLAS databases 109

12.2 Data-management and storage responsibilities 110

12.2.1 Responsibilities of Organisations and Households 110

12.2.2 Responsibilities of the Provincial FPD 110

12.2.3 Responsibilities of other local government agencies 110

12.2.4 Responsibilities of the Central FPD 110

12.2.5 Responsibilities of the Licensing Authority 111

12.2.6 Responsibilities of other central government agencies 111

13. INSTITUTIONAL DEVELOPMENT FOR VNTLAS IMPLEMENTATION 111

14. JOINT IMPLEMENTATION COMMITTEE 111

APPENDIX 1A Development, verification and approval of legality verifiers for Organisations 113

APPENDIX 1B Development, verification and approval of legality verifiers for Households 146

APPENDIX 2 Supply chain control 172

APPENDIX 3 Standard form for self-declaration of imported timber sources 189

Acronyms EU European Union FPD Forest Protection Department M/GTC General Department of Customs (under Ministry of Finance) MOF/GDT General Department of Tax (under Ministry of Finance) LD Legality Definition MARD Ministry of Agriculture and Rural Development MOF Ministry of Finance MOIT Ministry of Industry and Trade MOLISA Ministry of Labour, Invalids and Social Affairs MONRE Ministry of Natural Resources and Environment MPI Ministry of Planning and Investment OCS Organisation Classification System VPA Voluntary Partnership Agreement VNFOREST Viet Nam Administration of Forestry VNTLAS Viet Nam Timber Legality Assurance System

1. INTRODUCTION

The Viet Nam Timber Legality Assurance System (“VNTLAS”) aims to ensure that timber and timber products as described in Annex I (hereinafter referred to as “timber”) are legal. Timber exported to the European Union (hereinafter referred to as “the Union”) are subject to specific provisions for FLEGT licensing as described in Annex IV.

The VNTLAS is based on regulations relevant to each step of the timber supply chain, including harvesting, import, transportation, processing, trade and exports of timber.

The VNTLAS is based on the national legislation in force, together with regulations introduced to implement this Agreement, which includes the participation of ministries, sectors, localities, and private-sector and civil-society organisations relevant to forestry and the trade of timber.

The VNTLAS consists of seven system elements, as follows:

1. Timber Legality Definition (LD): Organisations and Households;

2. Development, verification and approval of verifiers at all stages of supply chains;

3. Organisation Classification System (OCS) and risk-based verification;

4. Supply chain control;

5. FLEGT licensing;

6. Internal inspection, complaints and feedback mechanisms;

7. Independent evaluation.

This Annex describes the key content of the aforementioned system elements and how, in principle, the VNTLAS shall work in practice. Other Annexes and Appendices to this Annex also provide additional information on the system functionalities.

This Annex has the following Appendices:

— Appendix 1A (Development, verification and approval of legality verifiers for Organisations);

— Appendix 1B (Development, verification and approval of legality verifiers for Households)

— Appendix 2 (Supply chain control);

— Appendix 3 (Standard form for self-declaration of imported timber sources).

2. SCOPE OF APPLICATION

2.1 Timber sources

2.1.1 Timber sources controlled by the VNTLAS

The following timber sources are controlled by the VNTLAS:

— Timber from domestic natural forests – defined as timber from main harvesting, salvage harvesting and salvage collection from domestic natural forest as defined and regulated by law.

— Timber from domestic concentrated plantation forests – defined as timber from main harvesting, salvage harvesting and salvage collection from concentrated plantation forests, including both planted protection forest and planted production forest, having an area of 0.5 hectares or more and a forest strip of at least 20 metres long and three tree rows or more.

— Timber from home gardens, farms and dispersed trees – defined as timber exploited from trees outside planned areas for forest land and concentrated plantations, including trees around the house and garden, on roadsides, embankments and field-sides, and around temples and pagodas.

— Rubber wood – defined as rubber wood from harvesting from domestic rubber plantations on both agriculture and forest land.

— Confiscated timber – defined as timber impounded as a result of either administrative violations or criminal violations, which is handled as state assets by the Vietnamese competent authorities and thereafter put under auction as required by law.

— Imported timber – defined as all timber, including rubber wood, brought into the territory of Viet Nam from foreign countries, or to special zones in the territory of Viet Nam which are regarded as exclusive customs zones, in accordance with provisions of the law. In the VNTLAS, a distinction is made between primary and complex timber products impacting on the requirement for documentation to be provided to demonstrate the legality of imported timber. Primary products include both logs and sawn timber under the HS codes 4403, 4406 and 4407. Complex products include timber products under all the other HS codes of Chapter 44 and Chapter 94.

Details on the verification of timber sources entering the VNTLAS are given in Section 6.3.

2.1.2 Timber in transit

Timber in transit is not included in the VNTLAS.

“Timber products in transit” means any timber products originating from a third country, which enter the territory of Viet Nam under customs control and leave it in the same form whilst retaining their country of origin.

Transit timber remains segregated from timber entering the VNTLAS supply chain and is under customs supervision from the entry point into Viet Nam until exit from Viet Nam unprocessed in accordance with the laws and regulations of Viet Nam. Transit timber is not subject to VNTLAS legality verification and is not covered by the FLEGT licensing scheme.

2.2 Scope of control

The scope of control of the VNTLAS applies to:

— all timber sources listed in Section 2.1.1;

— all timber product categories listed in Annex I;

— all operators (Organisations and Households) in the timber supply chain.

All principles, criteria, indicators and verifiers included in the LD for Organisations and Households are part of the VNTLAS.

Figure 1 illustrates the relationship between the seven main elements of the VNTLAS.

The VNTLAS is a national system that applies to (a) all Organisations and Households and (b) all domestic and export timber markets, to which the following system elements apply:

1. Timber Legality Definition, as specified in Section 3 of this Annex and in Annex II;

2. Development, verification and approval of verifiers at all stages of supply chains, as specified in Section 4 of this Annex;

3. Organisation Classification System (OCS) and risk-based verification, as specified in Section 5 of this Annex;

4. Supply chain control, as specified in Sections 6 and 7 of this Annex and Appendix 2 thereto;

5. FLEGT licensing, as specified in Section 8 of this Annex and in Annex IV;

6. Internal inspection, complaints and feedback mechanisms, as specified in Section 9;

7. Independent evaluation, as specified in Section 10 of this Annex and in Annex VI.

System element 5 applies to timber exports to the Union market only.

System elements 6 and 7 cover all stages of supply chains up to and including the point of FLEGT licensing (system elements 1 to 5).

Figure 1. Elements of the VNTLAS National system applied to all domestic and export markets Measures applied to the EU market (1) Timber Legality Definition (LD): Organisations and Households (2) Development, verification and approval of verifiers at all stages of supply chains (3) Organisation Classification System (OCS) and risk-based verification (4) Supply chain control (5) FLEGT licensing (6) Internal inspection, complaintsand feedback mechanisms (7) Independent evaluation

2.2.1 Definition of Organisations and Households

Organisations subject to the VNTLAS include forestry companies, state forest enterprises, protection forest management boards, special-use forest management boards, and cooperatives and enterprises involved at any stage of the supply chain and that have business registration.

Households subject to the VNTLAS include domestic households, individuals, village communities and all other entities not belonging to the Organisations category above. Household businesses employing more than 10 labourers on a regular basis are required to register as enterprises and are considered to be Organisations in the application of the VNTLAS.

2.2.2 Definition of government agencies

In the context of this Agreement, government agencies include several ministries and sectors at central level, technical departments under the Provincial and District Peoples Committee and Commune People’s Committees which are involved in the implementation of the VNTLAS, as identified in Appendices 1A and 1B to this Annex and summarised in Table 1.

2.2.3 Definition of the Verification Authority and verification entities

In the context of this Agreement, the Verification Authority comprises the Forest Protection agencies at all levels, namely the Central Forest Protection Department (Central FPD) under the Viet Nam Administration of Forestry (VNFOREST) under the Ministry of Agriculture and Rural Development (MARD), and the Provincial Forest Protection Department (Provincial FPD), including provincial and district offices of the FPD (hereinafter referred to as the “local FPD”).

Verification entities are government agencies and local government authorities, or other units, agencies or individuals in accordance with government regulation, that have responsibility for the development, verification and approval of verifiers under their area of jurisdiction as identified in Appendices 1A and 1B to this Annex and summarised in Table 1.

2.3 Recognition by the VNTLAS of voluntary certification and national certification schemes

A voluntary certification scheme is a market-based non-regulatory mechanism subject to third-party evaluation.

A national certification scheme is a voluntary or regulatory mechanism based on a defined set of criteria subject to government assessment and monitoring.

Recognised voluntary certification and national certification schemes are taken into account as a supplementary verifier for the risk-based verification of timber imports as specified in Section 6.3.7. Imported timber with a FLEGT licence or CITES permit are automatically recognised as legal as specified in Section 6.3.7.

Viet Nam shall assess voluntary certification and national certification schemes in accordance with VNTLAS requirements and decide on a list of certification schemes, which shall be shared with the Joint Implementation Committee (JIC) for information.

The assessment of voluntary certification and national certification schemes shall be conducted on the basis of a methodology approved by both parties in the JIC and the methodology shall be ready before the joint assessment of the VNTLAS (Annex VII). The list of recognised schemes may also be re-assessed, updated and brought to the attention of the JIC during implementation.

3. LEGALITY DEFINITION

The Legality Definition (LD) sets out the core requirements of legislation applicable to timber in Viet Nam as presented in Annex II.

The LD is based on existing laws and legislation in place and has been developed through consultation with government, private-sector and civil-society stakeholders in Viet Nam.

After ratification of this Agreement, Viet Nam shall notify the Union of any changes pertaining to verifiers or legal references in the LD through the JIC, and the JIC shall examine the extent of the changes and the impacts on the LD at least every second year during the implementation of this Agreement as specified in Annex IX.

Viet Nam shall make public all relevant legislation referred to in the LD and any amendments thereto, as specified in Annex VIII.

3.1 Structure and content of the Legality Definition

The LD is divided into two parts: one for Organisations and one for Households, in order to cater for: (i) differences in the regulations that apply to these two target groups; (ii) differences in the size of investment and the scope and arrangement of their activities; and (iii) assuring compatibility of the LD for these two groups and making the VNTLAS clear, specific and implementable.

The differences between the LD for Organisations and the LD for Households are specified further in the introduction to Annex II.

Each part of the LD consists of seven principles, with each principle divided into criteria, indicators and verifiers:

— Principle I: Harvesting of domestic timber complies with regulations on land use rights, forest use rights, management, environment and society;

— Principle II: Compliance with regulations on handling confiscated timber;

— Principle III: Compliance with regulations on importing timber;

— Principle IV: Compliance with regulations on timber transportation and trade;

— Principle V: Compliance with regulations on timber processing;

— Principle VI: Compliance with regulations on customs procedures for export;

— Principle VII (Organisations): Compliance with regulations on tax and employees;

— Principle VII (Households): Compliance with regulations on tax.

To comply with the LD, Organisations and Households shall comply with all the applicable indicators under the seven principles enforced by the Verification Authority and verification entities as defined under Section 2.2.3 and Table 1.

The compliance of the indicators is assessed on the basis of the applicable corresponding verifiers.

For an indicator to be compliant, all the relevant verifiers must be checked and conform.

Table 1. Government agencies responsible for the development, verification and approval of verifiers under the VNTLAS

Principle and types of verifiers Responsible agencies PRINCIPLE I: HARVESTING OF DOMESTIC TIMBER COMPLIES WITH REGULATIONS ON LAND USE RIGHTS, FOREST USE RIGHTS, MANAGEMENT, ENVIRONMENT AND SOCIETY Land use rights and forest use rights Province, District and Commune Peoples Committee; Department of Natural Resources and Environment; Department of Agriculture and Rural Development Business/enterprise registration Department of Planning and Investment; management boards of industry parks / export processing zones Sustainable forest management Department of Agriculture and Rural Development Environmental regulation Province, District and Commune Peoples Committee; Department of Natural Resources and Environment Conversion of forest land use to other uses Province and District Peoples Committee Supply chain control Forest Protection agencies; Commune Peoples Committee PRINCIPLE II: COMPLIANCE WITH REGULATIONS ON HANDLING CONFISCATED TIMBER Handling and auction of confiscated assets Ministry of Finance; Province and District Peoples Committee Supply chain control Forest Protection agencies PRINCIPLE III: COMPLIANCE WITH REGULATIONS ON IMPORTING TIMBER Customs procedures and regulation Ministry of Finance / General Department of Customs; border customs authorities CITES permits CITES Management Authority Plant quarantine Department of Agriculture and Rural Development; border customs authorities Supply chain control Forest Protection agencies Import – export timber trade regulation Ministry of Industry and Trade PRINCIPLE IV: COMPLIANCE WITH REGULATIONS ON TIMBER TRANSPORTATION AND TRADE Business/enterprise registration Department of Planning and Investment; management boards of industry parks / export processing zones Supply chain control Forest Protection agencies; Commune Peoples Committee Domestic timber trade regulation Ministry of Industry and Trade PRINCIPLE V: COMPLIANCE WITH REGULATIONS ON TIMBER PROCESSING Business/enterprise registration Department of Planning and Investment; management boards of industry parks / export processing zones Environmental regulation Province, District and Commune Peoples Committee; Department of Natural Resources and Environment Fire prevention and fire fighting Province fire police Supply chain control Forest Protection agencies Processing industry regulation Ministry of Industry and Trade PRINCIPLE VI: COMPLIANCE WITH REGULATIONS ON CUSTOMS PROCEDURES FOR EXPORT Customs procedures and regulation Ministry of Finance / General Department of Customs; border customs authorities CITES permits CITES Management Authority Plant quarantine Department of Agriculture and Rural Development; border customs authorities Supply chain control Forest Protection agencies Import – export timber trade regulation Ministry of Industry and Trade PRINCIPLE VII (ORGANISATIONS): COMPLIANCE WITH REGULATIONS ON TAX AND EMPLOYEES PRINCIPLE VII (HOUSEHOLDS): COMPLIANCE WITH REGULATIONS ON TAX Tax regulation Ministry of Finance / General Department of Taxation; Province Department of Taxation Labour, health and safety regulation Department of Labour, Invalids and Social Affairs; Work place Unions of the General Confederation of Labour Social insurance Viet Nam Social Insurance

4. DEVELOPMENT, VERIFICATION AND APPROVAL OF VERIFIERS AT ALL STAGES OF THE SUPPLY CHAIN

4.1 Definition of verifiers

Verifiers are documents referred to in Annex II that are used for Organisations and Households to demonstrate legal compliance with the corresponding indicator. For clarifying verification methodologies applied under the VNTLAS, a distinction is made between “static” and “dynamic” verifiers, as identified for each verifier in Annex II.

4.1.1 Static verifiers

Static verifiers, as referred to in the LD, are used to verify the legal compliance of the establishment and operations of Organisations and Households in timber harvesting, processing, transportation and trade.

Static verifiers:

— are developed and approved on a one-time basis and may be renewed on a periodic basis;

— are verified and approved by the verification entities for each verifier on a periodic basis as required by law;

— are used as a criterion as a part of the regular OCS assessment;

— are made available if needed to support the exercise of ensuring the accuracy of the information and the legality of all timber when sourcing timber domestically;

— include but are not limited to verifiers such as business registration, forest land use rights, and tax, labour and environment regulations.

4.1.2 Dynamic verifiers

Dynamic verifiers, as referred to in the LD, are used to verify the legal compliance of timber origin and timber in circulation at each stage of the supply chain. Dynamic verifiers are assessed by the Verification Authority and other responsible verification entities through the regular and frequent control process in the timber supply chain and in the OCS assessment for Organisations.

Dynamic verifiers:

— are developed and approved to demonstrate the legal compliance of individual batches of timber;

— are made available if needed to support the exercise of due diligence and are used to verify the legality of individual batches of timber in the VNTLAS supply chain;

— include but are not limited to verifiers such as timber packing lists and invoices as regulated by Ministry of Finance for Organisations which are included in the timber product dossier at each critical control point in the supply chain;

— are (i) verified and approved by the Verification Authority and other responsible verification entities based on frequency in accordance with the regulations applicable for each verifier and (ii) assessed systematically as part of (a) the OCS, (b) the supply chain controls and (c) verification for export. The static and dynamic verifiers as identified in Annex II may be modified, supplemented or replaced. Annex II shall be updated and supplemented in accordance with Article 24 of this Agreement.

4.2 Development of verifiers

The development of verifiers is the preparation of a document or dossier of documents by Organisations and Households, or by verification entities, in accordance with Vietnamese laws and regulations as set out in Annex II and in Appendices 1A and 1B to this Annex.

In accordance with the legal requirements set out in Annex II, verifiers can be developed by Organisations and Households involved in the timber supply chain or by verification entities for each stage of the timber supply chain.

The responsible entities in charge of developing verifiers are defined in the “Prepared by” column of Appendices 1A and 1B to this Annex.

4.3 Verification and approval/certification of verifiers

The verification and approval of verifiers is conducted as described below.

Verification of verifiers is the process of checking the legality, validity and conformity of verifiers based on documentary and/or physical checks by the verification entities in accordance with regulations as set out in Annex II.

The approval of verifiers by verification entities is the recognition of the compliance of each verifier in accordance with regulations as set out in Annex II and in Appendices 1A and 1B to this Annex.

The term of certification of verifiers is used for approval of the packing list.

The responsible entities in charge of verifying and approving verifiers are defined in the “Approved -certified by” column of Appendices 1A and 1B to this Annex. The responsible entities in charge of checking each verifier are defined in the “Checked by” column of Appendices 1A and 1B to this Annex.

4.4 Responsibilities of relevant actors

4.4.1 Responsibilities of Organisations

1. Organisations shall take responsibility for the accuracy of the information and the legality of all timber sources, including timber from domestic sources. For imported timber, Organisations shall exercise due diligence as specified in Section 6.3.7.

2. Organisations are responsible for the development, verification and approval of verifiers or requiring verification entities to develop, verify and approve the verifiers for each timber purchase at each point of the supply chain.

3. When purchasing timber from any source, Organisations shall check and keep records of the verifiers of legality of the purchased timber.

4. Checks by Organisations entail ascertaining the validity, authenticity and conformity of the timber product dossier, including correlation with the timber, to ensure that the sourced timber is from legal sources. In the case of any suspicion of risk of illegal timber, the Organisations shall not purchase the timber.

5. Organisations shall assess if the timber supplier conducts the checking and documentation of verifiers for legality of the purchased timber.

The appraisal and verification of Organisations in the OCS as specified in Section 5 shall review whether Organisations have adequately checked and documented verifiers of legality of the purchased timber.

4.4.2 Responsibilities of Households

1. Households shall take responsibility for the accuracy of the information and the legality of all timber sources, including timber from domestic sources. For imported timber, Households shall exercise due diligence as specified in Section 6.3.7.

2. Households shall take responsibility for development, verification and approval of verifiers or requiring verification entities to develop, verify and approve the verifiers for each timber purchase at each point of the supply chain.

3. When purchasing timber from any source, Households shall check and keep records of the verifiers of legality of the purchased timber.

4. Checks by Households entail ascertaining the validity, authenticity and conformity of the timber product dossier, including correlation with the timber, to ensure that the sourced timber is from a legal source. In the case of any suspicion of risk of illegal timber, the Households shall not purchase the timber.

5. Households shall assess if the timber supplier conducts the checking and documentation of verifiers for legality of the purchased timber.

4.4.3 Responsibilities of government agencies

The responsibilities of government agencies in the development, verification and approval of verifiers are specified in Appendices 1A and 1B to this Annex and summarised in Table 1.

5. ORGANISATION CLASSIFICATION SYSTEM AND RISK-BASED VERIFICATION

5.1 Purpose of the Organisation Classification System

The Organisation Classification System (OCS) is an integral component of the risk-based verification under the VNTLAS.

The purpose of the OCS is to:

(i) assess the risk level of all Organisations under the VNTLAS with regard to their compliance with VNTLAS requirements in order to apply appropriate verification measures in an effective, efficient and timely manner;

(ii) assess the legal compliance of Organisations with respect to static and dynamic verifiers as specified in the LD; and

(iii) reduce administrative procedures, facilitate the production and business activities of Organisations and encourage Organisations to comply with the law.

The OCS shall apply to all Organisations in the VNTLAS supply chain.

5.2 Criteria and risk categories

Organisations are classified on the basis of the following criteria:

1. compliance with dynamic / supply chain control verifiers to ensure that only legal timber enters the supply chain (as defined in Section 4.1);

2. fulfilment of supply chain control declaration and reporting requirements (as described in Section 6.5);

3. compliance with static verifiers (as defined in Section 4.1);

4. record of violations (as described in Section 11).

Viet Nam shall consider how voluntary certification schemes, voluntary due diligence and chain-of-custody systems recognised under the VNTLAS can be integrated into the OCS methodology.

On the basis of these criteria, Organisations are classified into two risk categories:

— Category 1 (compliant): Organisations that meet the criteria;

— Category 2 (non-compliant): Organisations that do not fully meet the criteria or newly established Organisations.

The application of the criteria to the two risk categories is explained in Table 2.

Table 2. Minimum criteria and risk categories in the OCS

Criteria Organisations Risk Category and minimum criteria for acceptance Category 1 Category 2 1. Compliance with dynamic / supply chain control verifiers to ensure that only legal timber enters the supply chain Fully compliant Any non-compliance 2. Fulfilment of supply chain declaration and reporting requirements Fully compliant Failure to submit declarations and reports in accordance with legal requirement 3. Compliance with static verifiers Fully compliant Non-compliance 4. Record of violations and sanctions No record of violations and sanctions Any record of violations and sanctions 5. Other criteria Newly established Organisations

5.3 Implementation of the Organisation Classification System

The OCS shall be operated on a continuous basis through self-assessment by Organisations and appraisal and verification by the Provincial FPD or other entities authorised by the Government.

The Government of Viet Nam shall issue legislation guiding the implementation of the VNTLAS, including the OCS. Regulations, criteria, procedures, frequencies, methodology and responsibilities of relevant actors shall be elaborated in the VNTLAS implementation guidelines.

The OCS procedure, methodology and responsibilities are described in Figure 2.

Figure 2. OCS procedure, methodology and responsibilities

Organisations • Registration with OCS • Self-assessment / self-reassessment according to OCS criteria Submission of registration and self-assessment Provincial FPD (or other entities authorised by the Government) • Receiving registration and self-assessment • Appraisal of risk category status of Organisations according to OCS criteria Monitoring and verifying compliance status of Organisations through documentary checks and field checks Liaison with other provincial government agencies and verification entities to verify compliance status Provincial FPD database on Forest Law violations Notification of appraisal results Notification of any noncompliance or violation and changes in risk category status OCS database • Public announcement of list of Organisations in each risk category status Central FPD • Issuing implementation guidelines on OCS • Decision on risk category status of Organisations • Database management Central FPD database on Forest Law violations

5.3.1 Self-assessment and appraisal procedure and frequency

After receiving the self-assessment conducted by Organisations, the Provincial FPD or other entities authorised by the government shall appraise the self-assessment through documentary and/or field checks in accordance with criteria 1 to 4 in Section 5.2 and Table 2, including for static and dynamic verifiers, information on cases of non-compliance from other provincial government agencies and verification entities. Information on the compliance of Organisations with regulations on customs procedures for import and export shall be used in the OCS assessment in line with Principles III and VI of the LD in Annex II.

The frequency of the OCS procedure includes: (i) periodic Organisation classification; and (ii) irregular Organisation classification subject to the detection of any non-compliance or violations by government agencies. The self-assessment and appraisal procedure and frequency are specified in Table 3.

Table 3. Self-assessment and appraisal procedure and frequency/timescale under the OCS

Procedure Frequency/Timescale 1. Periodic Organisation classification Registration with the OCS system All Organisations in the VNTLAS supply chain must register with the OCS. Self-assessment / self-reassessment by Organisations — First self-assessment conducted by Organisation after registration with OCS. — Second self-assessment conducted for both Category 1 and 2 within one year of the first classification decision. — Third and following assessments: + For Category 1 OCS: every two years. + For Category 2 OCS: every year. Appraisal of self-assessment by the Provincial FPD or other entities authorised by the government and notification of appraisal results to the Central FPD Appraisal (after receiving self-assessment of Organisations) to be carried out within a specified period of time to be determined in future OCS legislation. Decision and announcement of classification result by the Central FPD Decision (after receiving appraisal results) to be announced within a specified period of time to be determined in future OCS legislation. 2. Irregular Organisation classification Where Organisations are subject to any administrative or criminal non-compliance and violations The Central FPD shall automatically reclassify Category 1 to Category 2 and announce the reclassification results.

5.3.2 Classification results

Public announcements on those Organisations falling into each risk category shall be regularly updated on the OCS database managed by the Central FPD as specified in Section 12 of this Annex and in Annex VIII.

Once registered with the OCS, Organisations shall be able to access their information and decisions on risk categorisation on the OCS database. On the basis of the OCS risk categories, Organisations shall prepare the corresponding timber product dossier for export, as described in Section 7 of this Annex and in Annex IV.

The OCS and the customs risk assessment system are two separate but complementary systems with different data coverage. The customs authority of Viet Nam and the FPD shall regularly exchange information on the respective risk classification of Organisations. Whenever a change in the risk classification of Organisations takes place, this shall be notified between the two agencies and shall be taken into due consideration.

5.4 Responsibilities of relevant actors

5.4.1 Responsibilities of Organisations

All Organisations in the supply chain are responsible for registering with the OCS and submitting self-assessment in accordance with the specified criteria to the Provincial FPD or other entities authorised by the Government for appraisal.

Organisations shall conduct periodic self-reassessment as described in Table 3 and submit the self-reassessment to the Provincial FPD or other entities authorised by the Government for appraisal.

5.4.2 Responsibilities of government agencies

The Government of Viet Nam assigns overall responsibility for the organisation classification system and risk-based verification to the Central FPD and the Provincial FPD.

The Central FPD has responsibility for:

— preparing implementation guidelines on the OCS based on regulations issued by the government;

— creating and managing the centralised Organisations classification and OCS database;

— managing the centralised database of violations of the Law on Forest Protection and Development;

— deciding on the risk-category status of Organisations based on the appraisal results notified by the Provincial FPD or other entities authorised by the government;

— publicising and updating the list of Organisations in each risk category on the FPD website.

The Provincial FPD or other entities authorised by the government has responsibility for:

— receiving the self-assessment of Organisations registering into the system and appraising the self-assessment;

— reassessing the classification status of Organisations as specified in Table 3;

— monitoring the compliance of Organisations with the classification criteria in a timely manner through documentary and field checks to detect any non-compliance and to propose to the Central FPD any change in the category status of Organisations from Category 1 to Category 2;

— liaising with other provincial government agencies and verification entities to verify the compliance status of Organisations;

— reporting the results of the appraisal to the Central FPD for decision and public announcement by the Central FPD;

— reporting to the Central FPD any cases of non-compliance by Organisations in the assessment period, which shall be managed and maintained in the Organisation classification and OCS database by the Central FPD.

6. SUPPLY CHAIN CONTROL

6.1 Overview

Supply chain control aims to prevent the entrance of illegal timber or unverified timber into the VNTLAS supply chain. To achieve this overarching goal, the supply chain control system ensures that:

(a) all Organisations involved in any stages of the timber supply chain are registered in the OCS;

(b) all Organisations in the timber supply chain registered in the OCS report to the Forest Protection agencies in accordance with legal requirements;

(c) supply chain reports are compiled and reconciled by Forest Protection agencies to identify any suspicious timber flow;

(d) systematic, random and ad hoc physical checks by the Forest Protection agencies ensure that timber is consistent with the content of the corresponding documentation as declared by Organisations and Households, including in terms of (i) number of items, (ii) volume, and (iii) class of timber and/or species, at all stages of the supply chain;

(e) identified suspicious timber flows are investigated by the Forest Protection agencies;

(f) supply chain control is based on the documents required in the timber product dossier at each stage of the supply chain, as specified in Appendix 2;

(g) Compliance with supply chain control verifiers and supply chain reporting requirements are criteria under the OCS as specified in Section 5 and Table 2.

Appendix 2 specifies requirements for reliable management of information associated with the timber product dossier at the different critical points of the supply chain.

6.2 Critical control points in the VNTLAS supply chain

Critical control points in the VNTLAS supply chain relate to

(i) the verification of timber sources entering the VNTLAS (as described in Section 6.3); and

(ii) stages in the supply chain from the point of harvest or import to the point of export.

The six critical control points in the supply chain under the VNTLAS are as follows:

1. Timber sources entering the VNTLAS: 1a. Timber from main harvesting of domestic natural forest (Organisations); 1b. Timber from salvage harvesting and salvage collection of domestic natural forest (Organisations and Households); 1c. Timber from main harvesting, salvage harvesting and salvage collection of planted protection forests (Organisations and Households); 1d. Timber from main harvesting, salvage harvesting and salvage collection of planted production forests (Organisations and Households); 1e(1). Rubber wood (Organisations); 1e(2). Rubber wood; timber from home gardens, farms and dispersed trees (Households); 1f. Handled confiscated timber (Organisations and Households); 1g. Imported timber (Organisations and Households).

2. First transport and trade transaction of timber products.

3. Second transport and trade transaction of timber products.

4. Any subsequent transportation and trade of products.

5. Processing site.

6. Export.

6.3 Verification of timber sources entering the VNTLAS

As specified under Section 2.1, all timber entering the VNTLAS is subject to specific regulations pertaining to the specific sources of timber. The verifiers for these timber sources entering the VNTLAS are specified in the LD and in Appendices 1A and 1B to this Annex.

Critical control points are established within the VNTLAS for all timber sources entering the system, as described in Section 6.2 and in Appendix 2.

Appendix 2 provides a detailed list of documents to be archived by Organisations and Households and the local FPD at each critical control point of the supply chain. Organisations should make those documents available to the Provincial FPD or other entities authorised by the Government during the OCS appraisal.

6.3.1 Timber from main harvesting of domestic natural forest (critical control point 1a)

Viet Nam maintains strict control over the management and harvesting of timber from domestic natural forest. Timber from main harvesting from domestic natural forest entering the VNTLAS is required to come from forest with approved Sustainable Forest Management Plans in addition to other specific environmental and supply chain controls as described under Criterion 1 of Principle I in Annex II (Organisations).

6.3.2 Timber from planted production and protection forests (critical control points 1c and 1d)

The policy of the Government of Viet Nam is to encourage the development of plantation forest, in support of which favourable conditions are applied for timber growers (Organisations and Households) as from the decision of land allocation or leasing and encompassing the time of planting, harvesting, transportation and trade of timber.

Legal requirements apply to timber from concentrated plantations depending on different forest categories, including planted protection forests and planted production forests, as specified in Criteria 2 and 3 of Principle I in Annex II (Organisations and Households).

6.3.3 Timber from salvage harvesting and salvage collection (critical control points 1b, 1c and 1d)

Salvage harvesting from natural forest when converting land use from forest use into other uses requires measures on compensation for site clearance approved by the Vietnamese competent authority. Criterion 4 under Principle I in Annex II (Organisations and Households) regulates the legal basis for the decision on land use change, the approval of measures on compensation for site clearance, and the approval of the environmental impact assessment.

Salvage timber may come from salvage harvesting and salvage collection from natural forest or concentrated plantation forest.

Salvage harvesting of timber means the harvesting of timber during the implementation of silvicultural measures, scientific research and site clearance of projects upon conversion of forest use purposes. Salvage collection of timber means the collection of fallen or dead trees due to natural disaster; burnt, rotten or dry timber; and branches of timber remaining in forests.

Regulations for salvage harvesting and collection are specified in Criteria 2 to 7 of Principle I in Annex II (Organisations and Households), including the following:

— Criteria 2 and 3: Compliance with regulations on salvage harvesting and salvage collection from planted protection forest and planted production forests.

— Criterion 4: Compliance with regulations on salvaging harvesting of natural forested areas converted from forest land use to other land uses.

— Criterion 5: Compliance with regulations on salvage harvesting of natural forest while implementing silvicultural measures, scientific research and training.

— Criterion 6: Compliance with regulations on salvage collection of stumps, roots, branches in natural forests.

— Criterion 7: Compliance with regulations on salvage collection of stumps, roots, branches in plantation forests.

6.3.4 Timber from home gardens, farms and dispersed trees (critical control point 1e(2))

VNTLAS requirements related to the harvesting of timber from home gardens, farms and dispersed trees only apply to Households, and are specified in Criterion 7 under Principle I in Annex II (Households). The harvesting of timber from this source is described in Annex II.

6.3.5 Rubber wood from domestic sources (critical control points 1e(1) and 1e(2))

Rubber trees in Viet Nam are considered to be a multi-purpose industrial crop and are planted and harvested from both agricultural and forest land. For rubber wood and products manufactured from rubber wood that are harvested from any domestic sources entering the VNTLAS, it is necessary to present a timber product dossier that demonstrates legal origin, in line with the requirements set out under Principle I in Annex II (Criterion 8 for Organisations and Criterion 8 for Households).

Imported rubber wood is considered to be imported timber and is subject to the provisions of Section 6.3.7.

6.3.6 Handled confiscated timber (critical control point 1f)

Confiscated timber, as a State asset, is handled and managed in accordance with the law and regulations of Viet Nam. Handled confiscated timber is allowed to enter the VNTLAS supply chain and is eligible for FLEGT licensing on the condition that the steps for handling confiscated timber described below have been followed.

— Step 1: Decisions on handling the administrative violations or handling the evidence of violation by State agencies with jurisdiction for confiscation of violated forest products, together with written minutes of treating the violation and a list of confiscated products.

— Step 2. Preparation by local forest rangers of a list of the confiscated forest products (with hammer marks for round timber with diameter of ≥ 25 cm and length ≥ 1 m).

— Step 3: Establishment of asset-valuation council to determine the starting price for auction of confiscated evidence/assets, with the starting price complying with provisions of the law on the enforcement of civil judgments.

— Step 4: Contract for asset auction: authorisation of asset auction by the professional auction centre or auction business (for material evidence of administrative violations authorised by central or provincial authorities); or authorisation of asset auction by the district council (for material evidence of administrative violations authorised by the district authorities).

— Step 5. Publicisation of the auction event.

— Step 6. Registration of auction participants.

— Step 7. Organisation of the auction.

— Step 8. Contract for the purchase of auctioned assets.

— Step 9. Payment for purchase of the assets, delivery of the assets.

— Step 10. Issuance of certificates of ownership of auctioned assets.

Confiscated timber is legally allowed to enter the VNTLAS and the supply chain on evidence of a contract for the purchase of auctioned assets, a certificate of ownership and utilisation rights of auctioned assets, a VAT Invoice and a packing list of auctioned forest products, as described under Principle II in Annex II (Organisations and Households).

Data on the quantity and type of confiscated timber at (a) the point of confiscation and (b) post-auction are recorded in the FPD database on violations of the Law on Forest Protection and Development as described Section 11 of this Annex, and monitored and checked throughout the supply chain by the Forest Protection Agencies.

6.3.7 Imported timber (critical control point 1g)

The control and management of imported timber to Viet Nam is subject to legislation and regulations described in Principle III in Annex II (Organisations and Households) and the following three risk-based verification filters and measures shall apply:

1. Customs risk assessment system;

2. Species risk categories;

3. Risk associated with geographic origin of timber.

The use of the above three filters shall determine:

(a) the need for additional dossier checks and additional physical checks; and

(b) the need for additional documentation to demonstrate the legality of imported timber.

The procedures for the control and management of timber imported into Viet Nam are shown in Figure 3.

The need for additional physical checks and additional documentation to demonstrate the legality of imported timber is specified in Table 4.

One of the following three alternative ways to demonstrate the legality of imported timber is required:

1. a valid FLEGT licence or equivalent export licence covering the entire shipment from an exporting country which has concluded a VPA with the Union and has an operational FLEGT licensing system in place;

2. a valid CITES permit covering the entire shipment; or

3. a self-declaration demonstrating due diligence and additional documentation in accordance with the risk-category status of the imported timber as specified in Table 4.

The controls described in this Section apply to all customs declarants including Organisations and individuals as defined by Viet Nam customs regulations, and Organisations and Households as defined under the VNTLAS.

6.3.7.1 Due diligence and self-declaration requirements for importers

In addition to the verification activities carried out by verification entities, importers shall take responsibility for the legality of imported timber in accordance with the relevant legislation of the country of harvest. For this purpose, they shall exercise due diligence over the legal origin of imported timber, which covers collection of information, risk assessment and mitigation of any risk identified. Importers shall be required to obtain information, and additional documentation on the legality of timber in the country of harvest, independent of the type of product (primary or complex) or length of the supply chain.

“Relevant legislation” means the legislation in force in the country of harvest covering the following matters:

— Rights to harvest: granting of rights to harvest timber, including compliance with legislation and procedures on forest land allocation and forest use and land use rights.

— Forestry activities: compliance with legal requirements regarding forest management and timber processing, including compliance with relevant environmental and labour legislation.

— Taxation and fees: compliance with legal requirements on taxes, royalties and fees directly related to timber harvesting and timber trade.

— Trade and customs: compliance with legal requirements on trading and customs procedures.

The due diligence shall be documented through a self-declaration as specified in the template provided in Appendix 3. The self-declaration shall be required for all imported timber shipments without a CITES permit, or FLEGT licence or equivalent export licence covering the entire shipment from an exporting country which has concluded a VPA with the Union and has an operational FLEGT licensing system in place. The self-declaration shall be submitted together with applicable customs documentation.

The self-declaration includes:

(a) a description of the shipment;

(b) identification of potential risk related to the legality of the shipment in accordance with the relevant legislation in the country of harvest;

(c) mitigation measures for any identified potential risk related to the legal origin;

(d) a list of any attached additional documentation as evidence of legal origin as indicated in Table 4.

When required, additional documentation to be included in the self-declaration shall consist of at least one of the three following elements:

1. voluntary certification or national certification schemes recognised by the VNTLAS;

2. the harvesting document in accordance with the legislation of the country of harvest corresponding to the imported shipment for primary products;

3. alternative additional documentation demonstrating the legality of the timber in accordance with the legislation of the country of harvest, where the harvesting document is not required for primary products in the country of harvest, or where the importers cannot obtain the harvesting document for complex products.

Regarding the alternative additional documentation requirements, Viet Nam shall develop specific implementation guidelines to implement this Agreement.

On suspicion of risk, the verification entities shall carry out additional checks on the legality of the imported shipment. The importer may use the information from due diligence to demonstrate the legality of the imported shipment.

Viet Nam shall issue legislation requiring importers to conduct due diligence as indicated in this Section. In the event of non-compliance with such legislation, adequate, proportionate and dissuasive administrative or criminal sanctions shall be imposed in accordance with the applicable legislation of Viet Nam.

6.3.7.2 Handling of violations

In the case of detection of illegal timber imports by the customs authority or any other agencies, the relevant Vietnamese competent authority under its area of jurisdiction or in coordination with law enforcement agencies shall handle the violation, including the rejection or seizure of the shipment in line with the laws and regulations of Viet Nam.

In the case of detection of illegal timber imports, the agency which has detected the illegal timber imported shall coordinate with other relevant agencies and shall notify the FPD of the detected violation. The FPD shall update the database on violations of the Law on Forest Protection and Development in accordance with Section 11.2.1 of this Annex.

6.3.7.3 Customs risk assessment system

In accordance with the applicable customs legislation of Viet Nam, the classification of levels of risk incurred from import and export shall be carried out on the basis of the degree of the customs declarant’s compliance with the law.

In the process of risk-level classification, the customs authorities shall consider related factors including but not limited to: the customs declarants’ compliance with customs and tax regulations; the frequency, nature and severity of any violations; the nature of the commodities; the origin of imports and exports; the route and mode of transportation; and other factors relating to import and export.

The customs authorities shall evaluate and classify risks imposed on customs declarants and import and export shipments according to different levels (red, yellow and green) in order to apply proper measures for customs examination, supervision and inspection.

— Red (high risk): the customs authority shall conduct physical checks at the border gate. All shipments in the red customs category shall be physically checked. The specific percentage of the checking within each shipment is from 5 % to 100 % of the volume of the shipment and depends on the decision by the head of the customs post.

— Yellow (medium risk): the customs authority shall conduct dossier checks of the shipment. If necessary, the customs authority shall conduct physical checks of the shipment.

— Green (no risk): the customs authority shall allow automatic clearance based on the customs declaration. If necessary, the customs authority shall conduct physical checks of the shipment.

Customs inspection may be conducted at the border gate or through post-customs clearance procedures according to the level of risk. Post-customs clearance can be applied to import shipments including timber. In line with customs legislation, the customs authority shall apply risk management methods to decide on the scope, contents and method of post-clearance inspection of the imported shipment. Post-clearance inspection of the customs dossiers and goods granted clearance shall be carried out within five years of the registration date of the customs declaration.

Close coordination is maintained between the customs authorities and Forest Protection agency in the control and check of timber imports, including both border-gate and post-customs clearance checks on a regular/systematic basis and in addressing cases of suspicion of risk.

6.3.7.4 Species risk categories

Importers shall be required to declare the species name (including the scientific name and the common name) in the importation process. In case of any doubt on the species declaration, inspection shall be conducted by the competent Vietnamese technical authority to confirm species identification.

Imported timber species shall be classified into two groups – high-risk and low-risk – based on the following criteria:

— High-risk species are defined as: those listed in Appendices I, II and III to CITES; critically endangered, precious, and rare species in Group IA and IIA in accordance with the legislation of Viet Nam on controlled timber species; and species illegally traded according to the FPD database of violations of the Law on Forest Protection and Development and the database of the customs authority of Viet Nam. The Joint Implementation Committee (JIC) shall consider additional species which are at risk of being endangered in the country of harvest or illegally traded, as officially proposed by Viet Nam or the Union to the JIC, or based on information from the United Nations Organisation for Drugs and Crimes (UNODC), Interpol, the CITES Secretariat or the World Customs Organization (WCO), for inclusion on the list of high-risk species. Species which are imported into Viet Nam for the first time shall be considered to be high-risk unless otherwise decided by the JIC. Complex timber products that combine both high-risk and low-risk species shall be treated as high-risk.

— Low-risk species are defined as those not belonging to the above category.

The applied criteria and methodology shall result in a list of high-risk species that shall be reviewed, supplemented and adjusted during the implementation of this Agreement and decided by the JIC during its meetings.

Based on the decision of the JIC, the Ministry of Agriculture and Rural Development shall issue legislation presenting the list of high-risk species. That legislation shall be updated periodically as required in accordance with the decision of the JIC. The customs authorities shall take into account that legislation to change their procedures regarding the obligation of importers to provide additional documentation for timber import as defined in Table 4.

6.3.7.5 Risk associated with geographic origin of imported timber

Information on legal requirements for timber export in the country of origin shall be taken into account in the risk-based approach to assess the legal origin of imported timber.

The risk associated with geographic origin of imported timber shall be considered in the control and management of timber imported into Viet Nam.

A country shall be considered low-risk if:

(a) it has an operative timber legality assurance system in place for issuing FLEGT licences; or

(b) it has a binding national regulatory framework on due diligence for timber legality covering the whole supply chain up to the country of harvest, recognised by Viet Nam as meeting the VNTLAS criteria; or

(c) the indicator for effectiveness of government according to the World Bank Worldwide Governance Indicators (WGIs) is 0 or above, a regulatory system for CITES implementation is rated I-level as announced by the CITES Secretariat, and one of the two following conditions is met: (i) Viet Nam has a bilateral agreement on timber legality with that country, recognised by Viet Nam as meeting the VNTLAS criteria, and that agreement has been published, or (ii) that country has a national regulatory timber certification scheme recognised by Viet Nam as meeting the VNTLAS criteria.

The applied criteria and methodology shall result in a list of low-risk countries and territories that shall be reviewed, supplemented and adjusted during the implementation of this Agreement and brought to the attention of the JIC during its meetings.

The Ministry of Agriculture and Rural Development shall issue legislation presenting the list of low-risk countries. That legislation shall be updated periodically as required in accordance with the decision of the JIC. The customs authorities shall take into account this legislation to change their procedures regarding the obligations of importers to provide additional documentation for timber import as defined in Table 4.

6.3.7.6 Risk-based control and management of imported timber

In accordance with the criteria for risk management described above, timber imported into Viet Nam is controlled and managed by the customs authorities as described in Figure 3.

The customs authorities shall carry out systematic documentary checks for imported timber on the basis of the applicable customs documentation, and:

(a) a self-declaration, including any relevant additional documentation, or

(b) a valid CITES permit, or

(c) a valid FLEGT licence.

The risk-based control and management of timber imports to Viet Nam is set out in Table 4.

Table 4. Risk-based control and management of timber imported into Viet Nam without FLEGT licence or CITES permit

No Risk status of the shipment Verification measures based on the risk status of the shipment Species risk category Geographic origin risk category Additional documentation 1 Low Low No 2 Low High Yes 3 High Low Yes 4 High High Yes

The customs authorities shall, in addition, carry out physical checks on the basis of the customs risk assessment categories. The level of physical checks is determined in accordance with the decision of the customs authority. The customs authority shall decide to apply physical checks if necessary on the shipments belonging to the green and yellow categories.

Figure 3. VNTLAS: Chart of timber import controls

Timber import shipments Criteria for additional documentation requirement based on combination of species and geographic risks Species risk Low Low High High Geographic risk Low High Low High [6a] with CITES permit [6b] with FLEGT licence Without CITES permit or FLEGT licence [6c] Self-declaration by importer demonstrating due diligence: • Description of shipment; • Identification of potential risks related to the legal origin of the shipment; • Mitigation measures for any identified potential risks related to the legal origin of the shipment; • Additional documentation demonstrating legal origin according to risk status (if required - as low species risk combined with low geographic risk leads to no additional documentation requirement). No additional documentation Additional documentation required [7a] Voluntary certification or national certification schemes recognised by VNTLAS and/or [7b] Legal harvesting document in line with law and regulations of country of harvest (HS 4403, 4406, 4407) and/or [7c] Alternative documentation demonstrating legality of timber in accordance with legislation of country of harvest (where the harvesting document is not required in the country of harvestfor primary products, or importers cannot obtain harvesting document for complex products). Current customs documentation applied to all import shipments: [1] Customs declaration; [2] Trading invoice; [3] Sales contract; [4] Bill of lading or other equivalent shipping document; [5] Packing list of imported products. Route 1: Standard customs documentation + CITES permit Route 2: Standard customs documentation + FLEGT licence Route 3: Standard customs documentation + self-declaration Route 4: Standard customs documentation + Self-declaration + Additional documentation (*) in collabration with FPD if needed Customs checking points for imports (*) Frequency of documentary checks Route 1: Systematic Route 2: Systematic Route 3: Systematic Route 4: Systematic Frequency of physical checks Green category: Automatic clearance and Check if suspicion Yellow category: Check if suspicion Red category: Systematic Post-customs-clearance check by competent authorities (FPD, customs, market surveillance, police) Discretionary

6.4 Verification of timber at stages in the VNTLAS supply chain

Timber is subject to verification at the stages of the entry of timber into the VNTLAS (critical control point 1), transportation and trade transactions (critical control points 2, 3 and 4), the processing sites, including input and output monitoring (critical control point 5) and export (critical control point 6). Verification of timber at those stages in the supply chain can include:

— checking and certification of the timber product dossier in accordance with Appendices 1A and 1B to this Annex;

— verification of information in input and output monitoring books of Organisations in accordance with Appendices 1A and 1B to this Annex;

— systematic, random and ad hoc physical inspections in accordance with Section 6.6.2;

— review of the archived documents of Organisations during OCS appraisal in accordance with Section 5.3;

— review of the checks and documenting of verifiers of legality of purchased timber as conducted by Organisations in accordance with Section 4.4.1.

6.5 Supply chain reporting requirements

All Organisations are responsible for submitting regular reports on supply chain in line with legal requirements, as follows:

(a) Organisations involved in timber harvesting must submit monthly reports to the Forest Protection Agency;

(b) Organisations involved in timber processing and trade must submit quarterly reports to the Forest Protection Agency.

(c) Organisations involved in the supply chain must maintain input and output monitoring books, the information from which is aggregated on monthly basis.

Requirements for the composition and archiving of the timber product dossier at critical control points in supply chain are specified in Appendix 2.

Consolidated reports are developed by Forest Protection agency at all levels according to periodicity defined by current regulations and the reconciliation requirements in Section 6.6.2.

Further details on the management and storage of supply chain information are set out in Section 12.

6.6 Responsibilities of relevant actors

6.6.1 Responsibilities of Organisations and Households

Organisations and Households shall take responsibility when sourcing timber to ensure that only legal timber enters the supply chain, including when sourcing timber domestically, and shall exercise due diligence when sourcing imported timber, as specified in Section 4.4.

Organisations and Households are responsible for documenting and reporting timber inputs and outputs, complying with reporting requirements to the relevant government agencies as stipulated by the legislation and regulations, in order to allow for volume-based reconciliation and identification of suspicious timber flows as stipulated in Section 6.6.2. Those responsibilities are specified in Appendix 2.

6.6.2 Responsibilities of government agencies

The timber supply chain control system is conducted by a number of government agencies, of which the local Forest Protection Agencies have the main responsibility for conducting checks at each stage of the supply chain and archiving documents, as specified in Appendix 2.

The responsibility of Forest Protection Agencies for supply chain control includes:

(a) reception, entry and archiving of supply chain declarations by Organisations and Households;

(b) systematic, random and ad hoc physical inspections, in particular on the basis of the analyses of supply chain data;

(c) analysis of data to provide for volume-based reconciliations between: (i) quantitative data at different stages of the supply chain as identified in Section 6.2; (ii) quantitative data of suppliers and buyers; (iii) data declared by Organisations and Households and the physical batch of timber; (iv) input and output analysis at processing sites; (v) Organisations and Households in the context of investigations of suspicious timber flows;

(d) verification and endorsement of information in input and output monitoring books of Organisations handling timber from domestic natural forests;

(e) inspection of input and output monitoring books of Organisations as part of systematic inspection and ad hoc inspection on suspicion of risk.

The above reconciliation functions are carried out at each stage of the supply chain in accordance with existing procedures as well as data-collection and management systems, to be revised or developed before the FLEGT licensing regime is operational.

Supply chain control is conducted in accordance with a plan including systematic and random checks. Ad hoc checks are conducted on identifying or receiving any information on any sign of violation by Organisations and Households.

At each stage of the supply chain, the checks by the Forest Protection Agency include the following elements:

(a) conformity between the timber product dossier and actual timber;

(b) archiving of the timber product dossier;

(c) examination of other verifiers relevant to different categories of timber at each stage of the supply chain for Households and Organisations;

(d) on identification of suspicious timber flows, checking conformity between suppliers and buyers.

The responsibility of the customs authority for the control of transit timber includes:

(a) reception, entry and archiving of customs dossiers by traders;

(b) systematic, random and ad hoc documentary and physical inspections, in particular on the basis of the customs risk assessment system;

(c) carrying out and providing data for volume-based reconciliations between points of entry and exit of transit timber.

The management of violations of supply chain control is described further in Section 11.

7. VERIFICATION FOR EXPORT

7.1 General principles for the verification for export

Verification for export aims at assessing whether a shipment of timber to be exported is fully compliant with all VNTLAS requirements.

The level of verification for export for Organisations is based on the OCS and risk-based verification as described in Section 5 and Table 2. Different levels of verification apply to each Organisation risk category, as well as to Households, as follows:

— Category 1 Organisations: No additional verification.

— Category 2 Organisations: Documentary checks and physical checks on all shipments. Physical checks shall be carried out on a minimum of 20 % of the volume of each shipment of the Organisation.

— Households: Documentary checks and physical checks on all shipments. Physical checks shall be carried out on a minimum of 20 % of the volume of each shipment of the Household.

Timber is subject to verification at every stage of the supply chain prior to exporting. At the exporting stage, exporters (Organisations and Households) shall prepare and submit the Timber Export Dossier.

The verification of the Timber Export Dossier shall apply to both Organisations and Households as described below and in Figures 4 and 5.

7.1.1 Verification for export for Category 1 Organisations

The sequence of preparation and verification of the Timber Export Dossier for Category 1 Organisations shall include the following steps:

— Step 1: Organisations shall measure and calculate the volume of each type of timber for preparation of the timber packing list, then self-certify the packing list.

— Step 2: Organisations shall issue invoices as regulated by the Ministry of Finance in accordance with the timber packing list.

— Step 3: Organisations shall prepare the timber export dossier, including: (i) the sales contract or equivalent; (ii) invoices as required by the Ministry of Finance; (iii) the timber packing list; and (iv) one or more additional documents subject to specific stages of the supply chain of different timber sources (e.g. minutes of placing forest hammer marks) providing evidence of timber legality for such shipment as defined in Appendix 2.

— Step 4: Organisations shall perform export procedures: (a) Where timber is exported to non-Union markets: Organisations shall submit the Timber Export Dossier and applicable customs documents to the border customs authorities for exporting timber, as specified in Principle VI in Annex II (Organisations). (b) Where timber is exported to the Union market: Organisations shall submit the Timber Export Dossier together with a FLEGT licence application to the Licensing Authority for the issuance of a FLEGT licence, then submit the Timber Export Dossier, FLEGT licence and applicable customs documents to the border customs authorities for exporting timber, as specified in Principle VI in Annex II (Organisations).

For non-Union markets, upon receipt of the Timber Export Dossier from the exporter, the customs authorities shall check the OCS database to ensure the accuracy of the risk category declared by the exporter in the Timber Export Dossier and that the timber packing list has been duly certified in line with the risk-category status of the Organisation.

For the Union market, the FLEGT Licensing Authority shall check the risk category declared by the exporter in the Timber Export Dossier prior to the issuance of a FLEGT licence, and the customs authorities shall ensure that a valid FLEGT licence is submitted.

The customs authorities, in cooperation with verification entities, shall perform checks in the case of suspicion and based on the customs risk category.

Figure 4. Verification for export – Category 1 Organisations

EXPORTER (OCS Category 1) Self-certified Timber Export Dossier EU MARKET NON-EU MARKET FLEGT LICENSING AUTHORITY FLEGT licence Check OCS database (FPD) VERIFICATION AUTHORITY/ENTITIES Checks based on customs risk assessment CUSTOMS Additional checks if suspicion of risk

Figure 5. Verification for export – Category 2 Organisations and Households

Stage 1: Submission of Timber Export Dossier Stage 2: Review of Timber Export Dossier Stage 3: Approval/rejection of Timber Export Dossier VERIFICATION AUTHORITY/ENTITIES Additional checks if suspicion of risk EXPORTER (Category 2 and Households) Timber Export Dossier Local FPD (a) Check OCS database (only for Organisations) (b) Check completeness of the Timber Product Dossier (c) Check compliance and authenticity of documents and violations database (d) Physical checks and further verification on suspicion of risk Decision on compliance of Timber Export Dossier and additional checks (a), (b), (c), (d) Certified by Local FPD Timber Export Dossier NON-EU MARKET EU MARKET FLEGT LICENSING AUTHORITY FLEGT licence CUSTOMS Checks based on customs risk assessment Check OCS database (FPD) Request Response Workflow

7.1.2 Verification for export for Category 2 Organisations

The sequence of preparation and verification of timber export dossier for Category 2 Organisations shall include the following steps:

— Step 1: Organisations shall measure and calculate the volume of each type of timber for preparation of the timber packing list.

— Step 2: Organisations shall issue invoices as regulated by the Ministry of Finance in accordance with the packing list.

— Step 3: Organisations shall prepare the Timber Export Dossier, including: (i) the sales contract or equivalent; (ii) invoices as required by the Ministry of Finance; (iii) the timber packing list; and (iv) One or more additional documents subject to specific stages of the supply chain of different timber sources (e.g. minutes of placing forest hammer marks) providing evidence of timber legality for such shipment as defined in Appendix 2.

— Step 4: Organisations shall submit one Timber Export Dossier (original copy) to the local FPD for certification.

— Step 5: Upon receipt of the timber product dossier, the local FPD shall carry out the following verification steps: (a) Verify in the OCS database the accuracy of the risk category declared by the exporter in the Timber Export Dossier. (b) Checks the completeness of the Timber Export Dossier. (c) Check the legality and validity of the documents. (d) Check the record of violations in the violation databases: (e) In the case of any outstanding non-compliance by Organisations in the record of violations related to the LD as set out in Annex II, the local FPD shall temporarily refuse to certify the timber packing list for export until the non-compliance has been resolved. (f) Where there are no outstanding violations by Organisations, physical checks shall be conducted on a minimum of 20 % of the volume of the shipment. If no non-compliance is detected following the physical checks, the local FPD shall immediately certify the timber packing list. Where it is necessary to conduct further verification relating to the origin of timber before certifying, the local FPD shall immediately notify the Organisation of verification of suspicious issues in the Timber Export dossier, origin of timber, quantity, volume and/or type of timber. (g) If any non-compliance is detected in the physical check, local FPD shall immediately refuse to certify the timber packing list for export and the local FPD shall take action in line with current legislation.

— Step 6: Following certification of the timber packing list, the Timber Export Dossier is returned to the Organisation and the Organisations shall then perform export procedures: (a) Where timber is exported to non-Union markets: Organisations shall submit the Timber Export Dossier and applicable customs documents to the border customs authorities for exporting timber as specified in Principle VI in Annex II (Organisations). (b) Where timber is exported to the Union market: Organisations shall submit the Timber Export Dossier together with a FLEGT licence application to the FLEGT Licensing Authority for the issuance of a FLEGT licence, then submit Timber Export Dossier, FLEGT licence and applicable customs documents to border customs authorities for exporting timber as specified in Principle VI in Annex II (Organisations).

For non-Union markets, upon receipt of the Timber Export Dossier from the exporter, the customs authorities shall check the OCS database to ensure the accuracy of the risk category declared by the exporter in the Timber Export Dossier and that the timber packing list has been duly certified in line with the risk-category status of the Organisation.

For the Union market, the FLEGT Licensing Authority shall check the risk category declared by the exporter in the Timber Export Dossier prior to the issuance of FLEGT licence and the customs authorities shall ensure that a valid FLEGT licence is submitted.

The customs authorities, in cooperation with verification entities, shall perform checks in the case of suspicion and based on the customs risk category.

7.1.3 Verification for export for Households/individuals

The sequence of preparation and verification of Timber Export Dossier for Households / individuals shall include:

— Step 1: Households/individuals shall measure and calculate the volume of each type of timber for preparation of the timber packing list.

— Step 2: Households/individuals shall obtain invoices from the local Tax Office as regulated by the Ministry of Finance in accordance with the timber packing list.

— Step 3: Households/individuals shall prepare the Timber Export Dossier, including: (i) the sales contract or equivalent; (ii) invoices as regulated by the Ministry of Finance; (iii) the timber packing list; and (iv) one or more additional documents subject to specific stages of the supply chain of different timber sources (e.g. minutes of placing forest hammer marks) providing evidence of timber legality for such shipment as defined in Appendix 2.

— Step 4: Households/individuals shall submit one Timber Export Dossier (original copy) to the local FPD for certification.

— Step 5: Upon receipt of the timber product dossier, the local FPD shall carry out the following verification steps: (a) Check the completeness of the timber export dossier. (b) Check the legality and validity of the documents. (c) Check the record of violations in the violation databases: — In the case of any outstanding non-compliance by Households/individuals in the record of violations related to the LD as set out in Annex II, the local FPD shall temporarily refuse to certify the timber packing list for export until the non-compliance has been resolved. — Where there are no outstanding violations by Households/individuals, physical checks shall be conducted on a minimum of 20 % of the volume of the shipment. If no non-compliance is detected following the physical checks, the local FPD shall immediately certify the timber packing list. Where it is necessary to conduct further verification relating to the origin of timber before certifying, the local FPD shall immediately notify the Households/individuals of verification of suspicious issues on the Timber Export Dossier, origin of timber, quantity, volume and/or type of timber. (d) If any non-compliance is detected in the physical check, immediately refuse to certify the timber packing list for export and take action in line with current legislation.

— Step 6: Following certification of the timber packing list, the Timber Export Dossier is returned to Households/individuals and Households/individuals shall perform export procedures. (a) Where timber is exported to non-Union markets: Households/individuals shall submit the Timber Export Dossier and applicable customs documents to the border customs authorities for exporting timber as specified in Principle VI in Annex II (Households). (b) Where timber is exported to the Union market: Households/individuals shall submit the Timber Export Dossier together with a FLEGT licence application to the FLEGT Licensing Authority for the issuance of a FLEGT licence, then submit the Timber Export Dossier, FLEGT licence and applicable customs documents to the border customs authorities for exporting timber as specified in Principle VI in Annex II (Households).

For non-Union markets, upon receipt of the Timber Export Dossier from the exporter, the customs authorities shall check the Timber Export Dossier, including whether the timber packing list has been duly certified.

For the Union market, the FLEGT Licensing Authority shall check the Timber Export Dossier, including whether the packing list has been duly certified, prior to the issuance of a FLEGT licence, and customs authorities shall ensure that a valid FLEGT licence is submitted.

The customs authorities, in cooperation with verification entities, shall perform checks in the case of suspicion and based on the customs risk category.

7.2 Suspicion of risk and physical checks

Suspicion of risk is based on any information, obtained directly or provided to the Verification Authority or Licensing Authority, which may signal non-compliance of the Organisation or Household with respect to the shipment for export.

In case of suspicion of risk, including any suspicion that the shipment may include round wood or sawn timber which may be sourced from domestic natural forest which is prohibited from export, or from unauthorised sources such as transit timber, the Verification Authority shall conduct documentary and physical checks on the shipment. Where non-compliance is detected, sanctions shall be applied in accordance with the law as specified in Section 11.

Physical checks of the shipment include checking the legitimacy, validity and consistency of the HS code, quantity, volume and species between the Timber Export Dossier and actual timber in the shipment. Upon these checks, if any suspicion persists, further checks shall be conducted.

Following the verification process for FLEGT licensing, shipments of Organisations or Households which do not meet all VNTLAS requirements cannot be granted FLEGT licences.

8. FLEGT LICENSING

FLEGT licences shall be granted for each export shipment of timber that is listed in Annex I to this Agreement and exported to the Union market provided that such shipment and the exporter have met with all the requirements set out in Annex II and supply chain control and verification under the VNTLAS.

FLEGT licences shall be issued prior to the shipment export process.

The Viet Nam CITES Management Authority shall serve as the FLEGT Licensing Authority (referred to as the “Licensing Authority”).

The Government of Viet Nam shall issue a legal document on the FLEGT licensing regulations, procedures and responsibilities. That document shall be publicised to all export operators and other relevant parties as specified in Annex VIII to this Agreement.

The details of the FLEGT licensing system are set out in Annex IV to this Agreement together with the format and mandatory information included on the FLEGT licence.

9. INTERNAL INSPECTION, COMPLAINTS AND FEEDBACK MECHANISMS

9.1 Internal inspection

As an element of the VNTLAS, internal inspection is carried out in accordance with the Law on Inspection. Inspection activities aim to detect loopholes in laws, regulations and management mechanisms and to recommend solutions to the relevant government agencies; to prevent and combat corruption; to detect and handle violations of the law; to assist government agencies, Organisations and individuals in properly observing the law; to protect the interests of the State and the legitimate rights and interests of Organisations and individuals; and to meet the requirements of the settlement of complaints as described in Section 9.2.

Internal inspection shall apply to system elements 1 to 5 of the VNTLAS as described under Section 2.2. Internal inspection is carried out as a separate function of the State administration agencies and is not directly linked to individual FLEGT licensing decisions. Outcomes of internal inspections related to the implementation of VNTLAS shall be communicated in a timely manner to the JIC and the Independent Evaluation or according to the provisions of applicable Vietnamese law. Internal inspection of the VNTLAS may be carried out at the request of the JIC.

Internal inspection is conducted at all levels by competent agencies that include: national, provincial and district inspectorates; inspection units within central government ministries and provincial technical departments; and people’s inspection boards. Inspection activities are carried out in the form of planned and regular inspection, and unexpected inspection upon detecting signs of violations of the law by government agencies, Organisations or individuals.

Internal inspection covers both administrative inspection and specialised inspection in specific sectors and domains, including the implementation of laws, regulations and management mechanisms, the performance of tasks and exercise of powers by government agencies and by Organisations and individuals under the management of such agencies.

9.2 Complaints, denunciations and feedback mechanisms

Complaints by Organisations and Households concerning VNTLAS application and FLEGT licensing are regulated by the Law on Complaints. The Law regulates procedures for lodging complaints by domestic or foreign Organisations or individuals and the settlement of complaints against administrative decisions or acts of administrative agencies or persons in these agencies. The receipt of, response to and settlement of complaints is further subject to the procedures for internal inspection as described in Section 9.1.

Questions, complaints and denunciations from Organisations or individuals shall be received by the Verification Authority and the FLEGT Licensing Authority either directly through VNFOREST or through established feedback mechanisms through the representative timber industry associations and socio-political organisations. This includes denunciations without the name or address of the denunciators provided that they are clear and supply concrete evidence in relation to acts of corruption or violations of the law. All identified denunciators shall be protected.

Feedback on VNTLAS implementation may go through policy dialogues and forums organised by the government, representative industry associations, socio-political organisations and non-governmental organisations in accordance with the laws of Viet Nam. The JIC shall be regularly informed of the outcome of any policy dialogues or forums related to VNTLAS implementation.

10. INDEPENDENT EVALUATION

The independent evaluation is the periodic evaluation of the implementation, efficiency and credibility of the VNTLAS. The independent evaluation shall also identify potential weaknesses and risks in the structures and implementation arrangements of the VNTLAS and propose solutions in this regard.

The Terms of Reference for the independent evaluation, including the objectives, overall scope, qualification requirements of the Independent Evaluator, methodology and intervals of evaluation, are set out in Annex VI.

11. MANAGEMENT OF VIOLATIONS

11.1 Management of violations

Existing laws and regulations of Viet Nam apply for handling non-compliance with the LD and supply chain controls. Depending on the severity of the violation, administrative sanctions, the suspension of activities and/or the prosecution of the Organisation or Household may apply.

For Organisations: the record of violations is taken into account as one criterion under the OCS as specified in Section 5 and Table 2. If Organisations have repeated administrative violations or criminal violations of the law related to forest protection and development and control of forest products, stricter sanctions shall be applied.

For Households: the record of violations is used as a basis for consideration of applying stricter sanctions if Households have repeated administrative violations or criminal violations of the law related to forest protection and development and control of forest products.

It is required that any violations be addressed in accordance with the procedures and timeframe prescribed by the laws and regulations of Viet Nam.

11.2 Record of violations

If the systematic or random checks detect non-compliance within the timber supply chain, the Forest Protection Agency shall conduct additional verification.

Where violations are detected, violation minutes shall be prepared by the Forest Protection Agency in accordance with the laws and regulations of Viet Nam.

Violations are recorded on a central violations database as described below.

The record of violations includes violations of the law in forestry and other key sectors under the LD. Adequate records of violations and records of corresponding remedial actions are kept in relevant databases on the handling of violations recorded in the OCS database and taken into account in the verification process prior to FLEGT licensing.

11.2.1 Database of violations of the Law on Forest Protection and Development

This database, in which forest-related violations of the law by Organisations and Households at the national scale is continuously updated and integrated, is used to assess the legal compliance of all Organisations and Households, not only at their headquarter-based localities but also in other regions where they engage in forest production and business activities.

This database is managed by the Central FPD and is connected with the Provincial FPD nationwide through an internet-based platform.

11.2.2 Databases of violations of other government agencies

Information on non-compliance and violations stored on the portals or databases managed by other verification entities shall be considered in the OCS assessment process as also described under Section 12.2.6.

12. DATA MANAGEMENT AND STORAGE

The VNTLAS data management and storage system is illustrated in Figure 6.

12.1 VNTLAS databases

The VNTLAS includes three centralised databases and associated management information systems:

(i) the database on violations of the Law on Forest Protection and Development, managed by the Central FPD;

(ii) the OCS database, managed by the Central FPD; and

(iii) the FLEGT licensing database, managed by the Licensing Authority.

Additionally, the VNTLAS includes other local-level databases including:

(i) the database on violations of the Law on Forest Protection and Development, managed by the local FPD; and

(ii) the databases on violations managed at local level by other verification entities involved in the implementation of the VNTLAS.

12.2 Data-management and storage responsibilities

The data-management responsibilities are described according to the numbering on Figure 6.

12.2.1 Responsibilities of Organisations and Households

[A] All Organisations and Households are responsible for the development and storage of static and dynamic verifiers as specified in Annex II. Documents in the timber product dossier, including packing lists, sales invoices and other verifiers, are required to be kept for a period of five years.

[B] All Organisations in the VNTLAS supply chain are responsible for regular supply chain declaration and reporting to the Provincial FPD as described in Section 6.4.

[C] All Organisations in the VNTLAS supply chain are responsible for submitting information through self-assessment as a part of the OCS.

[D] All exporters are responsible for providing the Licensing Authority with documents required in the Timber Export Dossier, as described in Section 7, and information required on the application form for FLEGT licensing (for the Union market), as described in Section 8 of this Annex and in Annex IV.

12.2.2 Responsibilities of the Provincial FPD

[E] The Provincial FPD is responsible for recording and archiving supply chain control verifiers for timber from domestic sources, imported timber, and confiscated timber after handling, for an unlimited period as described in Section 6 and Appendix 2.

[F] The Provincial FPD is responsible for preparing consolidated periodic reports on the supply chain input/output reports of Organisations as described in Section 6.6.2.

[G] The Provincial FPD is responsible for maintaining records of violations and handling violations of the Law on Forest Protection and Development, the administrative sanctions or legal proceedings applied thereto, and reporting to the violations database managed by the Central FPD as described in Section 11.2.1.

[H] The Provincial FPD is responsible for receiving registrations and self-assessments by Organisations for the OCS, undertaking the appraisal of the risk-category status of Organisations, undertaking verification tasks and reporting to the OCS database hosted by the Central FPD as described in Section 5.

[I] The Provincial FPD is responsible for conducting verification on shipments for export subject to physical checks, with the results recorded in the form of minutes and stored in accordance with regulations.

12.2.3 Responsibilities of other local government agencies

[J] Other local government agencies are responsible for the development, verification and approval of verifiers under Annex II as described in Sections 4.1 and 4.2 and in Appendices 1A and 1B to this Annex, and for archiving and reporting on compliance and violations as regulated for each verifier under each sector.

The Provincial FPD liaises with other local government agencies on the records of compliance and violations by Organisations under the OCS.

12.2.4 Responsibilities of the Central FPD

[K] The Central FPD is responsible for managing the database on violations of the Law on Forest Protection and Development at national level, which stores records of legal and administrative violations and sanctions in the forestry sector, based on information provided by the Provincial FPD on a regular basis, as described in Section 11.2.1.

The Central FPD shall publicise periodic information on forest and timber trade violations as specified under Section 2.5 of Annex VIII.

[L] The Central FPD is responsible for managing the OCS database and conducting inspection and monitoring the implementation of the OCS by the Provincial FPD. Information is updated on a continuous basis, as described in Section 5.2, and the list of Organisations in each risk-category status shall be publicised on the FPD website.

12.2.5 Responsibilities of the Licensing Authority

[M] The Licensing Authority is responsible for managing the FLEGT licensing database, including FLEGT licences issued and applications rejected as described in Section 8 of this Annex and in Annex IV.

12.2.6 Responsibilities of other central government agencies

[N] Use of information stored on the portals/databases hosted by other government agencies shall be considered in the OCS classification and verification system.

13. INSTITUTIONAL DEVELOPMENT FOR VNTLAS IMPLEMENTATION

The Government of Viet Nam shall issue legal documents, in an appropriate form, regulating the implementation of the VNTLAS. Those documents shall be issued prior to the independent assessment of the operational readiness of the VNTLAS to be conducted by the JIC as described in Annex VII.

The Viet Nam Administration of Forestry shall prepare detailed VNTLAS implementation guidelines and verification manuals, for both Organisations and Households and for the Verification Authorities. Those guidelines and manuals shall be published and publically disseminated prior to the independent assessment of the operational readiness of the VNTLAS. The JIC shall jointly review and comment on the implementation guidelines and verification manuals and on any amendments thereto during implementation of this Agreement.

In order to implement the VNTLAS, public information, capacity building and training shall be conducted for the Verification Authorities, Households and Organisations, local government authorities and other agencies involved in the implementation of the VNTLAS.

Priorities for further capacity building for VNTLAS implementation include:

— the full establishment of the management information systems and databases for the organisation classification system and risk-based verification and for FLEGT licensing;

— further capacity building for the development and implementation of VNTLAS supply chain control mechanisms;

— technical capacity in species identification for risk-based verification of timber imports for the relevant technical agencies and customs authority.

14. JOINT IMPLEMENTATION COMMITTEE

The parties shall establish a Joint Implementation Committee (JIC) to facilitate the management, monitoring and review of this Agreement in accordance with Article 18 of this Agreement.

The overall functions of the JIC in the management, monitoring and review of this Agreement, and the specific functions related to the VNTLAS, are described in Annex IX.

Figure 6. VNTLAS data management and storage