Illegal logging legislation

As the representative trade association of one of the world’s largest hardwood exporting industries, AHEC has a considerable stake in on-going international policy discussions designed to eradicate illegal wood from trade.

Research undertaken for the American Forest and Paper Association (AF&PA) in 2004 suggests that as much as 23% of hardwood lumber that enters international trade might be considered suspicious[1]. This is largely attributable to the Indonesian situation where a high percentage of production, and hence export, is believed to be illegal. This implies that hardwood exporting countries like the U.S., for which there is clear objective evidence to demonstrate that the vast majority of wood derives from legal sources, are being put at an unfair competitive disadvantage.

The AF&PA research indicates that illegal material is depressing world prices by between 7% and 16% on average, and U.S. prices by between 2% and 4%. In certain important markets, illegal material significantly affects the ability of U.S. producers to export. In fact, if illegal wood were removed from the global market, U.S. exports of sawn lumber and wood panels could increase by a cumulative total of more than $2.8 billion through 2012, or an average of $275 million annually.

Therefore AHEC has a significant interest in promoting policy measures that are effective and efficient in removing illegal wood from trade. AHEC supports the major multilateral process known as the Forest Law Enforcement and Governance (FLEG) process, which originally emerged from a G8 Action Programme on Forests and which has been on-going since 2001.

Through its membership of the U.S. Hardwood Federation, AHEC supported passage of an amendment to the U.S. Lacey Act in May 2008 which makes it an offence within the U.S. to possess any plant (excluding agricultural crops but including wood and derivative products) "taken, possessed, transported, or sold" in violation of any relevant foreign or state law[2].

The Lacey Act amendment is expected to encourage a risk based approach to timber procurement within the U.S. timber trade and industry. A key strength of the law is that it does not dictate mechanisms and procedures by which legality may be demonstrated or impose unnecessary new controls on suppliers in regions where the existing legal framework can be shown to be effective. Instead the law puts pressure on U.S. trading companies to show due care and to take reasonable measures to monitor supply chains. Companies now have a strong incentive to assess their suppliers and to determine where there may be a significant risk of illegal activity. They must take appropriate action based on this risk assessment – for example by demanding independently certified wood from countries where there is a high risk of illegal activity, while imposing lesser requirements on low risk suppliers.

AHEC has also directly engaged in discussions on proposals to introduce similar legislation in the European Union. A European Commission Communication including a detailed proposal for such legislation was issued in October 2008[3]. This legislative proposal will not require European regulatory authorities to capture or monitor individual shipments to ensure they are legal. Instead it will focus on ensuring that EU timber trading and manufacturing companies have effective management systems to reduce the risk of trade in illegal wood. The proposed legislation promotes the use of risk assessment as part of the due diligence process and does not impose requirements for traceability and certification on imported wood supplies from countries considered low risk from the perspective of illegal wood supply.

AHEC’s commissioning of the Seneca Creek risk assessment study is an appropriate response to these legislative initiatives. The study demonstrates that there is less than a 1% risk of any illegal wood entering the U.S. hardwood supply chain. Even the most rigorous tracking and chain of custody systems would be hard pressed to provide an assurance of legality with such a high level of confidence. The results of the Seneca Creek study mean that companies throughout the wood supply chain can continue to deal in U.S. hardwoods confident in the knowledge that they are fully conformant to the new U.S. and European legislation.

AHEC also believes that trade associations in other countries should be encouraged to commission risk assessments using the AHEC-commissioned Seneca Creek study as a model. This would assist customers to implement effective due diligence procedures, contribute to improved transparency in the international wood products trade, and encourage better targeted and more efficient international policy measures to tackle illegal logging in those areas where it is a problem.

¹ “Illegal” Logging and Global Wood Markets: The Competitive Impacts on the U.S. Wood Products Industry. Prepared for: American Forest & Paper Association By Seneca Creek Associates, LLC, November 2004. See here

² For a U.S. government public summary of the implications of the Lacey Act Amendment, see here

³ A full copy of the EC proposal is available: here