associated with illegal logging go well beyond environmental degradation; they
also divert billions of dollars in trade from government revenue to illegal
syndicates. Up until a few years ago, NGOs and governments alike have been
battling the illegal timber trade with limited success. Now, the two largest
consumers of illegally traded wood, the
In 2006, the U.S.
Congress amended the Lacey Act (originally dating back to 1900), which bars
Americans from breaking foreign and domestic rules when hunting, fishing, and
now, felling timber. Any product with a wooden component is subject to this law.
Although the amendment was effective in 2008, it was agreed to phase in
categories of products up until the summer of 2010.
Under the Lacey Act, importers of many products that are or include plant materials are required to complete a declaration identifying the botanical genus and species being imported and to certify that the plant materials were harvested and exported legally. Although the responsibility may appear to be on the importer, the Lacey Act puts the onus on the end user. Penalties for violations of the Lacey Act range from a simple forfeiture of goods to fines of up to $500,000 and prison time if the company or individual is found to have knowingly engaged in the trade of illegally sourced wood. In late 2009, Gibson Guitar became the first U.S. Company to come under investigation under the Lacey Act for illegally importing rosewood from
For instance, should one purchase and install wooden flooring made of an illegally traded timber species, federal agents of the Fish and Wildlife Service have the right to confiscate the flooring and impose heavy fines, regardless of the end user’s knowledge.
The Lacey Act calls for importers to use due diligence or due care when sourcing products. While the use of “certified” wood (FESC, PEPC, etc.) is considered a positive step towards ensuring compliance with Lacey Act, there is currently no government approved legality verification program, and is appears that documents that prove legality from country of harvesting will not suffice on their own. Ultimately, it is the importers responsibility to know their supply chain so well that they can trace wood back to its stump.
On the other side of
- Amended U.S. Lacey Act in effect from 2008
· Lacey Act does not have clear requirements or guidelines for how companies can verify the legal origin of the wood the purchase. Importers are expected use due diligence when sourcing products.
· Penalties for violating the Lacey Act are confiscation of the illegally imported product with the possibility of fines between $250K and $500K.
· EU Ban on Illegal Timber in effect in 2012.
· EU FLEGT works directly with governments of wood producing countries to protect and manage forests.
· Each EU member state will determine penalties based on the value of the timber, the tax revenue that was lost, and the impact of the damage done by illegal logging to the environment.
From a corporate compliance perspective, monitoring the supply chain can be challenging because the direct supplier often will not know the origin or legal status of the wood it purchased. This fact points to a need on behalf of importers to set up a tracking system to follow the chain of custody of wood to its origin.
In July, 2010, the Chatham House, a UK-based think tank (formerly known as the Royal Institute of International Affairs) released a thorough and updated report on the status of the illegal timber trade. The report highlights remarkable progress over the past decade in reducing the trade of illegal timber by between 50 and 75 per cent from its peak in 2004. 17 million hectares have been protected resulting in curbing 1.2 billion tons of CO2 emissions. This report examines twelve producer, processing, and consumer countries illustrating both public and private efforts to reduce illegal felling.
According to this
The world’s primary
A considerable challenge exists for companies to obtain proof of legal harvesting of wood, when they purchased finished goods from a processing country, which in turn purchases the raw material from a third country. It is likely that many manufacturers in processing countries will not initially be able to provide proof of legality to US or EU importers, and may face challenges of their own, as many probably purchase wood from agents or wholesalers several stages removed from the harvesting company. Apart from the very largest manufacturers overseas, it follows that it will be some time before legality verification is something that is easily proven by importers.
The nature of illegal
logging is perverse with detrimental impacts on the environment, loss of revenue
to governments, and the support of illegal syndicates. Governments of wood
producing countries do not have the resources to quell illegal felling, which is
Submitted by Gregory Freeman,
STR Responsible Sourcing Intern
MBA Candidate, August 2011
Monterey Institute of International Studies, an Affiliate of Middlebury College
Submitted by Gregory Freeman,