[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
H.R. 1497, LEGAL TIMBER PROTECTION ACT
=======================================================================
LEGISLATIVE HEARING
before the
SUBCOMMITTEE ON FISHERIES, WILDLIFE
AND OCEANS
of the
COMMITTEE ON NATURAL RESOURCES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
Tuesday, October 16, 2007
__________
Serial No. 110-49
__________
Printed for the use of the Committee on Natural Resources
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COMMITTEE ON NATURAL RESOURCES
NICK J. RAHALL, II, West Virginia, Chairman
DON YOUNG, Alaska, Ranking Republican Member
Dale E. Kildee, Michigan Jim Saxton, New Jersey
Eni F.H. Faleomavaega, American Elton Gallegly, California
Samoa John J. Duncan, Jr., Tennessee
Neil Abercrombie, Hawaii Wayne T. Gilchrest, Maryland
Solomon P. Ortiz, Texas Chris Cannon, Utah
Frank Pallone, Jr., New Jersey Thomas G. Tancredo, Colorado
Donna M. Christensen, Virgin Jeff Flake, Arizona
Islands Stevan Pearce, New Mexico
Grace F. Napolitano, California Henry E. Brown, Jr., South
Rush D. Holt, New Jersey Carolina
Raul M. Grijalva, Arizona Luis G. Fortuno, Puerto Rico
Madeleine Z. Bordallo, Guam Cathy McMorris Rodgers, Washington
Jim Costa, California Bobby Jindal, Louisiana
Dan Boren, Oklahoma Louie Gohmert, Texas
John P. Sarbanes, Maryland Tom Cole, Oklahoma
George Miller, California Rob Bishop, Utah
Edward J. Markey, Massachusetts Bill Shuster, Pennsylvania
Peter A. DeFazio, Oregon Dean Heller, Nevada
Maurice D. Hinchey, New York Bill Sali, Idaho
Patrick J. Kennedy, Rhode Island Doug Lamborn, Colorado
Ron Kind, Wisconsin Mary Fallin, Oklahoma
Lois Capps, California Vacancy
Jay Inslee, Washington
Mark Udall, Colorado
Joe Baca, California
Hilda L. Solis, California
Stephanie Herseth Sandlin, South
Dakota
Heath Shuler, North Carolina
James H. Zoia, Chief of Staff
Jeffrey P. Petrich, Chief Counsel
Lloyd Jones, Republican Staff Director
Lisa Pittman, Republican Chief Counsel
------
SUBCOMMITTEE ON FISHERIES, WILDLIFE AND OCEANS
MADELEINE Z. BORDALLO, Guam, Chairwoman
HENRY E. BROWN, JR., South Carolina, Ranking Republican Member
Dale E. Kildee, Michigan Jim Saxton, New Jersey
Eni F.H. Faleomavaega, American Wayne T. Gilchrest, Maryland
Samoa Cathy McMorris Rodgers, Washington
Neil Abercrombie, Hawaii Bobby Jindal, Louisiana
Solomon P. Ortiz, Texas Tom Cole, Oklahoma
Frank Pallone, Jr., New Jersey Bill Sali, Idaho
Patrick J. Kennedy, Rhode Island Don Young, Alaska, ex officio
Ron Kind, Wisconsin
Lois Capps, California
Nick J. Rahall, II, West Virginia,
ex officio
------
CONTENTS
----------
Page
Hearing held on Tuesday, October 16, 2007........................ 1
Statement of Members:
Bordallo, Hon. Madeleine Z., a Delegate in Congress from Guam 1
Brown, Hon. Henry E., Jr., a Representative in Congress from
the State of South Carolina................................ 2
Statement of Witnesses:
Barringer, Victor Clay, II, President and CEO, Coastal Lumber
Company, on behalf of the Hardwood Federation.............. 21
Prepared statement of.................................... 22
Response to questions submitted for the record........... 26
Blumenauer, Hon. Earl, a Representative in Congress from the
State of Oregon............................................ 3
Prepared statement of.................................... 5
Forester, Craig S., Vice President and General Manager, Rex
Lumber Company, on behalf of the International Wood
Products Association and America's Imported Wood Suppliers,
Distributors, and Users.................................... 38
Prepared statement of.................................... 40
Sobeck, Eileen, Deputy Assistant Attorney General,
Environment and Natural Resources Division, U.S. Department
of Justice................................................. 7
Prepared statement of.................................... 8
von Bismarck, Alexander, Executive Director, Environmental
Investigation Agency, Inc.,................................ 27
Prepared statement of.................................... 28
Wrobleski, Ann, Vice President, Global Government Relations,
International Paper Company, on behalf of the American
Forest & Paper Association................................. 14
Prepared statement of.................................... 16
Response to questions submitted for the record........... 19
Additional materials supplied:
Alley, Patrick, Director, Global Witness, Statement submitted
for the record............................................. 58
America's Imported Wood Suppliers, Distributors, and Users,
Letter submitted for the record............................ 68
Gardiner, Barry, MP, The Prime Minister's Special Envoy for
Forestry, Statement submitted for the record............... 69
Gilman, Brad, Robertson, Monagle & Eastaugh, on behalf of
Trinity Yachts, Inc., Letter submitted for the record...... 72
Grogan, Dr. James, Yale University School of Forestry &
Environmental Studies, New Haven, Connecticut, Statement
submitted for the record................................... 73
Hershowitz, Ari, Director, Biogems Project, Latin America,
Natural Resources Defense Council, Statement submitted for
the record................................................. 75
Hogan, Jane, Secretary-Treasurer, Ontario Hardwood Co., Inc.,
Letter submitted for the record............................ 77
Hutchins, Lawrence Q., President, Quail's Nest Industries,
Letter submitted for the record............................ 78
Jenkins, Peter T., Director, International Conservation,
Defenders of Wildlife, Statement submitted for the record.. 79
World Wildlife Fund and TRAFFIC, Statement submitted for the
record..................................................... 80
LEGISLATIVE HEARING ON H.R. 1497:
LEGAL TIMBER PROTECTION ACT.
----------
Tuesday, October 16, 2007
U.S. House of Representatives
Subcommittee on Fisheries, Wildlife and Oceans
Committee on Natural Resources
Washington, D.C.
----------
The Subcommittee met, pursuant to call, at 10:05 a.m. in
Room 1324, Longworth House Office Building, Hon. Madeleine Z.
Bordallo, [Chairwoman of the Subcommittee] presiding.
Present: Representatives Bordallo, Brown and Sali.
Also Present: Representative Blumenauer.
STATEMENT OF THE HONORABLE MADELEINE Z. BORDALLO, A
REPRESENTATIVE IN CONGRESS FROM GUAM
Ms. Bordallo. Good morning, everyone. The hearing will come
to order. The Subcommittee is meeting today to hear testimony
on H.R. 1497, the Legal Timber Protection Act, introduced by
our colleague from Oregon, Mr. Blumenauer.
Pursuant to Committee Rule 4[g], the Chairman and the
Ranking Minority Member will make opening statements. If any
other members have statements they will be included in the
hearing record.
H.R. 1497, the Legal Timber Protection Act, would amend the
Lacey Act to make it unlawful to import any plant taken in
violation of any foreign law or any product made from such a
plant. Such restrictions already apply to fish and wildlife
harvested in violation of foreign laws and have been used
successfully by fish and wildlife law enforcement agents for
decades to curb the importation of fish and wildlife harvested
illegally abroad.
No such enforcement tool exists today for plants and plant
products such as timber, however, unless the species is listed
under CITES. As a result, a wide range of logs harvested
illegally can currently be imported to the United States, and
this is a problem for several reasons.
First, widespread and unsustainable illegal logging
activities in developing nations throughout Africa, Southeast
Asia and Latin America and are undermining governance in
economic growth and development. The World Bank estimates that
those countries lose more than $10 billion a year in revenues
as a result of illegal logging.
Local communities, social structures and conservation
efforts are also undermined as the forests that indigenous
peoples and many species of wildlife rely upon for survival are
wiped out by illegal logging operations. Second, illegal
logging in foreign countries also impacts the U.S. timber
industry by creating unfair competition and lowering prices.
Our witnesses from the Hardwood Federation and the American
Forest and Paper Association will speak more about this. Yet,
as the world's largest wood products consumer and one of the
top importers of tropical hardwoods, the United States may
inadvertently create more incentive for illegal logging to
occur to satisfy our demand.
As the Justice Department will testify, existing U.S. laws
do not adequately address this particular problem. The
Department and many others believe that amending the Lacey Act,
as H.R. 1497 proposes to do, is a sensible way to provide the
necessary additional legal authority to deter the importation
of illegally harvested foreign timber, protect domestic forest
businesses, reduce the incentive for illegal logging in foreign
countries, and reduce the impacts that such logging is having
on the people, the environment and the economy in those
countries.
While I recognize that there are some concerns with the
legislation today, I do think it is incumbent upon all of us to
work together to resolve our differences and move legislation
that will be an important tool in protecting the communities
that are so devastated by illegal logging as well as our own
timber industry. So I look forward to hearing from our
witnesses today, and to working with you in the future to
achieve progress on this important issue.
Now, as Chairwoman of the Subcommittee I recognize Mr.
Brown, the Ranking Republican Member, for any statement he may
have.
STATEMENT OF THE HONORABLE HENRY E. BROWN, JR., A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF SOUTH CAROLINA
Mr. Brown. Thank you, Madam Chairwoman. As owner of a small
family tree farm in Cordesville, South Carolina, I have the
highest respect for the men and women in this country who grow,
harvest, mill, manufacture and sell timber products. Tree
growers are some of our greatest conservationists.
Nevertheless, there isn't one who can defend the illegal
logging that may be taking place in some foreign countries.
While the United States and the government of Indonesia
signed a bilateral agreement last year to fight this
indefensible practice the regrettably depressed reports
continue to indicate the destruction of additional forest
lands. These reports indicate that millions of wooded acres are
being destroyed each year and that U.S. companies are annually
losing almost a half of a billion dollars in export
opportunities.
This is a serious problem that will be extraordinarily
difficult to solve for there are many experts who believe that
we already have sufficient legal authority to stop and
prosecute those who are involved in illegal logging. The
authors of H.R. 1497 suggest an amendment to the Lacey Act as
an alternative solution.
At the same time, there are reports that wood and wood
products are being sold in this country below cost. As a free
market economy we cannot tolerate the dumping of any goods, and
it may be time for the U.S. industry to file an antidumping
petition with the International Trade Commission. However, the
subject of today's hearing is H.R. 1497, the Legal Timber
Protection Act.
During the course of this hearing I look forward to
learning why the Lacey Act was chosen, why the U.S. Fish and
Wildlife Service and Department of Agriculture can effectively
use this statute to stop this practice, if these governmental
entities have the resources to undertake this effort and why
existing Federal laws are inadequate.
At the same time I want to ensure that U.S. importers who
have not broken any laws are not required to hire a private
investigative firm to carefully examine each chain of sales
certificate and they do not risk civil and criminal penalties
including prison for not intimately knowing the laws of every
importing timber nation. We must include an innocent owner's
legal defense.
We are all committed to stopping the spread of illegal
logging into the United States. The issue is what is the best
way or approach to accomplish that goal without making
criminals of innocent Americans? I also find it ironic that the
strongest proponent of this bill are the very same
organizations who have consistently opposed legal logging in
this country.
Thank you, Madam Chairman. I look forward to hearing
testimony this morning.
Ms. Bordallo. I thank the Ranking Member from South
Carolina, Mr. Brown, for his statement.
I would now like to recognize our very first witness,
Congressman Earl Blumenauer from the State of Oregon, the
sponsor of this important legislation. Thank you very much,
Congressman, for being here today and for your leadership on
this issue. You may go ahead.
STATEMENT OF THE HONORABLE EARL BLUMENAUER, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OREGON
Mr. Blumenauer. Thank you, Madam Chair, Ranking Member
Brown. I deeply appreciate the Subcommittee making time on your
crowded schedule to deal with this issue, and I strongly agree
with the sentiments that were expressed in both your opening
statements. I think you understand the problem and the
opportunity that face us here today.
You know, I was not a member of a community that was
actively involved in logging, but I became first involved with
this issue when my son was writing a Master's degree thesis at
the University of Michigan in business on illegal logging in
Indonesia.
I must say that I was shocked at the detail to which he was
able to document the abuse of this practice and the far
reaching impact that it had not just on the environment, which
we understand for threatening endangered species, these people
are often involved with reckless timber harvest practices, but
it undermined the fabric of a struggling democratic society, it
took away resources that otherwise would have been available to
people in that country and it actually harmed people in the
United States because the honest timber brokers had to deal
with people who were cheating.
The people who took the time to understand where the timber
came from and paid a premium for having it handled properly
were undercut. It also drove down the prices in this country
because we had to compete with things in the marketplace for
the cheaters.
It led me on an odyssey here that ends up today with the
legislation that is before you, and in fact the amendment that
has been suggested because since this was first introduced we
have been working with a wide variety of stakeholders to have
legislation that meets the needs and meets the tests that both
of you raise.
I think we ought to put in mind that we are talking about
not just environmental damage overseas and undercutting
indigenous societies, but it also is a billion dollar hit on
the American economy for the people who don't cheat in the
forest product industry. There will be testimony in a grander
scale that we talk about half of the world's forests that have
already disappeared and that the illegal removal of high value
threatened tree species destined for international trade is
often the first step toward widespread clearance.
We could have spent the entire hearing talking about how
deforestation accounts for 20 percent of the annual greenhouse
gas emissions, more than the entire transportation sector. The
trade in illegally harvested timber undermines democratic
governance, threatens, as I mentioned, the indigenous
populations because the cheaters bribe, they use fraud, and in
some cases, and you may have testimony about this today,
extreme violence are part and parcel of the illegal traffic in
timber.
I hope that we will be able in the course of this hearing
to assuage your concerns that there are any problems associated
with the Lacey Act in its implementation. The reason that we
have introduced this bipartisan legislation is because the
simple extension of the Lacey Act where we have had a century
of experience shows that we have taken the least burdensome
mechanism to be able to equip the U.S. Government to be able to
deal meaningfully.
I think it is clear that there are mechanisms that can be
used like in the seafood industry where people don't pay until
it is cleared by Customs. You will find testimony here today,
the vast majority of American industry wants to know where that
lumber comes from. They are playing by the rules, and that
simple extension of the Lacey Act is an opportunity for us to
have it both ways.
We can protect the environment, we can protect American
jobs and we can have something that protects the actors in
American industry, both foreign products, and lumber and
furniture manufacturing, that are playing by the rules. That is
why you have the unusual array of people that are supporting
it.
You would expect that there might be some of our
environmental friends from the Sierra Club or the Defenders of
Wildlife. I am proud of the fact that we have worked with
people in the industry, the Sustainable Furniture Council, the
Society of Foresters, the Hardwood Federation, individual
companies that care deeply about this.
You also see that there are unions, Teamster, Carpenters,
Steel Workers, who understand that cheaters overseas undercut
American jobs here at home. As I mentioned, Madam Chair and Mr.
Ranking Member, the work that we have done since the bill was
first introduced has produced some changes.
We have been open to the give and take with the
environmental community, with the industry, and we have a
product that is available, the amended product, that I think
will satisfy the needs that you both have raised. I would like
to conclude by thanking particularly the American Forest and
Paper Association, the Hardwood Federation and the
Environmental Investigation Agency for helping us lead this
process.
I deeply appreciate your courtesy and your interest. I look
forward to working with the Subcommittee on putting forth a
piece of legislation that can have the broad bipartisan support
that it merits and that we can protect the environment,
American jobs and we can reinforce people who are playing by
the rules. Thank you very much.
Ms. Bordallo. I thank my colleague, Mr. Blumenauer, the
sponsor of this legislation, and I hope that you will be able
to stay and join us here on the dais for the remainder of the
hearing. We invite you to come forward.
I would like to recognize our panel of expert witnesses,
this is Panel No. 2, to please come forward and take a seat at
the witness table. And, also, for those standing in the back,
if you would like, I am inviting you to come up and sit around
the second layer here, the dais, right around here, if you
would. Don't be shy. Please come forward. You don't want to
stand through this entire hearing. Please come forward.
[Pause.]
Ms. Bordallo. I wish to thank the witnesses who are with us
on Panel No. 2 and to introduce them at this time.
Ms. Eileen Sobeck, Deputy Assistant Attorney General of the
Environment and Natural Resources Division at the Department of
Justice; Ms. Ann Wrobleski, Vice President of International
Paper, and testifying on behalf of the American Forest and
Paper Association; Mr. Victor Barringer, President and CEO of
Coastal Lumber Company, testifying on behalf of the Hardwood
Federation; Mr. Alexander von Bismarck, Executive Director of
the Environmental Investigation Agency; and finally, Mr. Craig
Forester, Vice President and General Manager of Rex Lumber
Company, and testifying on behalf of the International Wood
Products Association.
I thank you all for being here today, and as Chairwoman I
now recognize Ms. Sobeck to testify for five minutes. I would
note for all witnesses that the timing lights on the table will
indicate when your time has concluded, and we would appreciate
your cooperation in complying with the limits that have been
set as we have many witnesses to hear from today.
Be assured that your full written statement will be
submitted for the hearing record. Now, I recognize Ms. Sobeck.
[The prepared statement of Mr. Blumenauer follows:]
Statement of The Honorable Earl Blumenauer, a Representative in
Congress from the State of Oregon
Chairwoman Bordallo and Ranking Member Brown,
Thank you for holding this hearing on the Legal Timber Protection
Act and for the opportunity to testify.
As the experts you have scheduled will testify in greater depth,
illegal logging threatens some of the world's richest and most
vulnerable forests and cost the U.S. forest products industry over $1
billion every year in lost opportunities and lower prices.
Half of the world's forests have already disappeared, and the
illegal removal of high value threatened tree species destined for the
international trade is often the first step leading to forest
clearance. The tracks and roads built to access and remove timber
become entryways for further illegal cutting, hunting and burning.
As illegal logging contributes to deforestation, the local and
regional climatic systems are dramatically altered and the water
balance and dynamics of this fragile ecosystem disrupted. The resulting
soil erosion induces floods and landslides. In fact, deforestation
accounts for 20% of annual global greenhouse gas emissions--more than
the entire global transportation sector.
Trade in illegally harvested timber undermines democratic
governance and threatens indigenous populations as bribery, fraud and,
in some cases, extreme violence are all part and parcel of illegal
timber trafficking. Moreover, it causes losses to up to $15 billion for
low-income countries. By avoiding export duties, timber royalties and
taxes on their profits, companies operating unlawfully are robbing
national governments of millions of dollars every year.
In our domestic industry, since as much as 30% of hardwood lumber
and plywood traded globally could be of suspicious origin, responsible
U.S. companies lose an estimated $460 million in export opportunities
every year because of displacement caused by illegally harvested
timber. On top of that, the annual value of U.S. exports is between
$500-$700 million lower due to downward pressure on prices from
illegally harvested timber. For my home states of Oregon, that means
losses of up to $150 million each year.
The United States has a number of tools at our disposal to address
the problems of illegal logging from capacity building in source
countries to verification through trade agreements, the use of which
are not mutually exclusive. However, we have not done enough when it
comes to the demand side of the equation.
Quite simply, illegal logging is timber theft and yet, unlike other
kinds of theft, our government lacks the authority to prevent these
illegal products from entering the United States.
For this reason I, along with Congressmen Weller and Wexler, have
introduced H.R.1497, the bi-partisan Legal Timber Protection Act, which
is designed to prohibit trade in illegally harvested timber in the
United States. The mechanism by which is does so by extending the
protections of the Lacey Act to timber and other plants.
The Lacey Act, which dates back to 1900, prohibits trade in
wildlife, fish, and plants that have been illegally taken, possessed,
transported or sold. In this way, Lacey strengthens and supports other
federal, state, and foreign laws protecting wildlife by making it a
separate offense to take, possess, transport, or sell wildlife that has
been taken in violation of those laws.
What our legislation means is that, if wood has been stolen from a
forest reserve in Brazil or taken without paying the appropriate
royalties in Indonesia, the U.S. government will now have the authority
to prevent its importation into the United States and punish those
responsible.
This bill is designed to go after the worst of the worst. It asks
companies to take very basic responsibility that shouldn't be a problem
to any legitimate importers: know your sources and be able to document
what species from what countries are you importing. Civil and criminal
liability is limited only to those who don't take due diligence or
those who knowingly import illegal wood. This is a free-market
solution, helping companies move to more responsible suppliers, instead
of requiring burdensome inspections or certifications.
When I first introduced the ``Legal Timber Protection Act,''
earlier this year, I made clear that I was interested in working with
all stakeholders to ensure that the bill which eventually emerged from
the House of Representatives would be as effective as possible and not
unintentionally harm legitimate businesses.
Since then, I am pleased that the work of a broad coalition of
environmental and industry groups has produced a series of
clarifications and changes that strengthened the original legislation.
I have circulated this new text to other members of the House and it
has been introduced in the Senate as S.1930. I am also including it at
the end of my written statement. The changes include clarifications to
the types of underlying laws that would trigger a Lacey violation and
to the documentation requirements.
I hope that the Legal Timber Protection Act will be soon be marked
up by this committee or otherwise pass the House. While I remain open
to the continued input of involved parties, when the bill moves to
mark-up (or should otherwise come to a vote) I will support the
adoption of a substitute amendment containing the text agreed to by the
environmental and industry groups.
I believe that our solution gets at the heart of the illegal
logging issue without getting legal timber trade caught up in the net
or putting over-burdensome regulations on those involved in perfectly
legitimate international trade. One of the drivers of the illegal
timber trade is the cost-differential between legal and illegal timber,
so we've tried our hardest to make sure that we don't impose compliance
costs with a perverse impact.
I am particularly pleased by the broad coalition of industry,
environmental and labor groups who both support this effort and have
put countless hours into a this process, in order to ensure that our
legislation would be as effective as possible. It is indeed a coalition
of strange bedfellows, but by including domestic lumber producers,
importers, organized labor, and the environmental community, we feel
confident that we have a solution that meets the needs of all those who
are involved in legitimate and legal trade. I would like to
specifically thank the American Forest & Paper Association, the
Hardwood Federation, and the Environmental Investigation Agency for
leading this process.
I look forward to exploring the issues in this bill with you in
greater detail during the course of this hearing and for your support
to move this important bill forward.
______
STATEMENT OF EILEEN SOBECK, DEPUTY ASSISTANT ATTORNEY GENERAL,
ENVIRONMENT AND NATURAL RESOURCES DIVISION, U.S. DEPARTMENT OF
JUSTICE
Ms. Sobeck. Thank you, Chairwoman Bordallo, Representative
Brown, members of the Subcommittee. Thank you for inviting the
Department of Justice to testify about H.R. 1497, the Legal
Timber Protection Act, which would amend the Lacey Act to
extend its protection to plants including timber illegally
harvested outside of the United States.
The administration supports the general approach of this
legislation and would be pleased to have this added authority
to address the problem of importation of illegal timber and
timber products so as to further implement the President's
initiative on illegal logging.
I am a Deputy Assistant Attorney General of the Environment
and Natural Resources Division of the U.S. Department of
Justice. The Environment Division is responsible for
representing the United States in litigation involving
environmental and natural resources statutes including
enforcement cases against individuals or entities that violate
those statutes.
Among the statutes that the division is responsible for
enforcing is the Lacey Act. We work closely with several other
Federal agencies in enforcing the Lacey Act including the
Department of the Interior's Fish and Wildlife Service, the
Department of Commerce, Department of Agriculture and
Department of Homeland Security.
First enacted in 1900, the Lacey Act is the United States'
first major national wildlife protection statute. The current
version of the Lacey Act, which includes significant amendments
made in 1981 and 1988, is an anti-trafficking statute and
provides broad protection with respect to fish and wildlife.
A unique feature of the Lacey Act is that it allows us to
prosecute persons who import wildlife into the United States
that has been taken, possessed, transported or sold in
violation of a foreign law or regulation. The Lacey Act's
assimilation of foreign laws is not an effort to police other
countries.
Rather, our assimilation of such laws is designed to reduce
demand in the United States for species poached in foreign
countries and to encourage international cooperation and mutual
reciprocal enforcement efforts. While the Environment Division
has brought many successful cases to prosecute violations of
the Lacey Act's provisions protecting fish and wildlife, in its
current form the Act provides only very limited coverage and
limited enforcement tools with respect to timber or other
plants.
As you have already heard, illegal trafficking in timber
and timber products has been demonstrated to be a major problem
for both domestic and international interests. Illegal logging
destroys forest ecosystems, deprives national governments and
local communities of needed revenues, undercuts prices of
legally harvested forest products on the world market, finances
regional conflict and acts as a disincentive to sustainable
forest management.
The administration through the President's initiative
against illegal logging has made it a priority for the United
States to curb trafficking and illegally logged timber. Under
President Bush's direction to reduce illegal logging abroad the
administration has been evaluating existing domestic laws to
determine their adequacy as tools to stem this importation of
illegally harvested foreign timber and timber products made
from illegal timber.
Based on our review, we believe that existing U.S. laws do
not adequately address the problem. As you have noted, we
believe that amending the Lacey Act is a sensible way to
provide the necessary additional legal authority that would
serve to deter the importation of illegally harvested foreign
timber, protect domestic forest businesses and advance the
President's initiative against illegal logging.
While we support the general approach of amending the Lacey
Act, the administration has identified a few concerns with the
bill. For example, under the proposed legislation the
definition of plant is very broad. It could indeed encompass
items such as wooden shipping containers and packing materials
made from paper and cardboard, and I think the focus of our
concerns is on timber and timber products.
But we look forward to continuing to work with the
committee and with all the others who are testifying here today
in what has already been a cooperative and collegial effort to
come up with a solution that will address a problem that we all
acknowledge needs to be addressed. I welcome the opportunity to
be here today.
Ms. Bordallo. Thank you very much, Ms. Sobeck. Now, I
recognize Ms. Wrobleski to testify for five minutes.
[The prepared statement of Ms. Sobeck follows:]
Statement of Eileen Sobeck, Deputy Assistant Attorney General,
Environment and Natural Resources Division, U.S. Department of Justice
INTRODUCTION
Chairwoman Bordallo, Representative Brown, and Members of the
Subcommittee, thank you for inviting the Department of Justice to
testify about H.R. 1497, the ``Legal Timber Protection Act,'' a Bill to
amend the Lacey Act to extend its protections to plants, including
timber illegally harvested outside of the United States.
I am a Deputy Assistant Attorney General of the Environment and
Natural Resources Division (Environment Division), U.S. Department of
Justice. The Environment Division is responsible for representing the
United States in litigation involving environmental and natural
resource statutes, including enforcement cases against individuals or
entities that violate those statutes. The Environment Division has a
docket of about 7,000 pending cases or matters, with cases in nearly
every judicial district in the nation. We litigate cases arising under
more than 70 different environmental and natural resources statutes.
Among the environmental statutes that the Environment Division is
responsible for enforcing is the Lacey Act, discussed in more detail
below. While the focus of this testimony is the Environment Division's
role in criminal prosecution of Lacey Act violations, I should add that
a number of other federal agencies are involved in the implementation
of the Lacey Act, including the Department of the Interior's U.S. Fish
and Wildlife Service, the Department of Commerce, the Department of
Agriculture, and the Department of Homeland Security.
While the Environment Division has brought a number of cases to
prosecute violations of the Lacey Act's provisions protecting fish and
wildlife, in its current form the Act provides limited coverage and
limited enforcement tools with respect to timber or other plants.
As I explain in greater detail herein, illegal trafficking in
timber and timber products has been demonstrated to be a major problem
for both domestic and international interests. The Administration has
made it a priority for the United States to do its part to try to curb
trafficking in illegally logged timber. Under President Bush's
direction to reduce illegal logging, the Administration has been
evaluating existing domestic laws to determine their adequacy as tools
to stem the import of illegally harvested foreign timber and timber
products. Penalties on illegal imports applied by the U.S. would
provide additional deterrence and additional protection to forest
ecosystems overseas and U.S. forest businesses. Based on our review, we
believe that existing U.S. laws do not adequately address this problem.
We believe that amending the Lacey Act is a sensible way to provide the
necessary additional legal authority that deters importation of
illegally harvested foreign timber, protects domestic forest
businesses, and advances the President's Initiative Against Illegal
Logging.
We appreciate and applaud the cooperative and collegial efforts of
many of those testifying today and others in the timber industry and
conservation community regarding this legislative issue. While we
support the general approach of amending the Lacey Act, the
Administration has identified a number of specific concerns with the
language in H.R. 1497. We believe that those concerns, discussed
further below, warrant further discussion.
PRESIDENT'S INITIATIVE AGAINST ILLEGAL LOGGING
Our support for greater protections and enforcement tools with
respect to plants, including timber, is fully consistent with the
Administration's efforts to combat illegal logging internationally. In
February 2002, President George W. Bush directed the Secretary of State
to develop an initiative against illegal logging. The following year
then Secretary of State Colin Powell launched the President's
Initiative Against Illegal Logging (the President's Initiative, or
PIAIL) as a framework for action to assist developing countries to
combat illegal logging, the sale and export of illegally harvested
timber, and corruption in the international forest sector. By illegal
logging, we are referring to timber that is harvested, transported,
processed, or sold in contravention of a country's laws. Illegal
logging destroys forest ecosystems, deprives national governments and
local communities of needed revenues, undercuts prices of legally
harvested forest products on the world market, finances regional
conflict, and acts as a disincentive to sustainable forest management.
International trade in illegally harvested timber creates economic
incentives for those who violate the law, and thereby increases the
magnitude of the problem.
The World Bank [see ``Strengthening Forest Law Enforcement and
Governance, Report No. 36638-GLB, August 2006] estimated in 2006 that
timber harvested illegally worldwide on public lands alone results in
lost assets and revenue in excess of $10 billion annually in developing
countries. That money represents funds that could otherwise be used by
governments in developing countries, where much of the illegal
harvesting occurs, to meet the basic needs of their people, better
manage their forests and other natural resources, and reduce their
international debt. In addition to the ecological damages associated
with illegal logging, trade in illegal timber also hurts U.S. wood
products companies.
The President's Initiative emphasizes identifying and reducing
threats to protected areas and other high conservation value forests
from illegal logging through four key strategies:
Good Governance--Building country capacity to establish
and strengthen legal regimes and enforcement of laws affecting forest
management, especially those aimed at illegal logging;
Community-Based Actions--Enhancing community involvement
in forest governance and related wildlife issues;
Technology Transfer--Developing integrated monitoring
systems and building in-country capacity to monitor forest conditions
and activities and compliance with laws, including using remote sensing
and ground-based technologies to monitor changes in forest conditions;
and
Harnessing Market Forces--Promoting good business
practices, transparent markets, and legal trade, including in-country
capacity to implement obligations under the Convention on International
Trade in Endangered Species of Wild Fauna and Flora (CITES).
Several federal departments and agencies, including the Department of
Justice, as well as U.S.-based international organizations and
intergovernmental agencies, have been involved in international
activities to implement the President's Initiative Against Illegal
Logging. The President's Initiative has included actions in Africa,
Asia, and Latin America, as well as global activities beyond particular
countries' borders. While I will not discuss all of these activities,
let me describe some of the activities in which the Department of
Justice has recently been involved.
In November 2006, the United States Trade Representative, Susan C.
Schwab, signed a Memorandum of Understanding with the Minister of Trade
for the Government of the Republic of Indonesia on Combating Illegal
Logging and Associated Trade. The Agreement is designed to promote
forest conservation by combating trade in illegal timber, and to help
ensure that Indonesia's legally produced timber and wood products
continue to have access to markets in the United States and elsewhere.
Attorneys from the Environment Division have actively participated in
the bilateral working group established under the Agreement to
facilitate joint efforts by the United States and Indonesia to combat
illegal logging and associated trade. In addition, the Environment
Division will apply a portion of the $1 million that the United States
has committed to fund projects under the Agreement to assist in
training judges and prosecutors in Indonesia on methods of prosecuting
crimes involving illegal timber and timber products. The workshops will
focus on investigation of illegally harvested timber and related
``forest'' crimes in Indonesia, general crimes like money laundering
applicable to illegal logging, gathering evidence, and successful
prosecution of such cases. The Environment Division already provides
training to judges and prosecutors in countries that are participants
in the Association of Southeast Asian Nations - Wildlife Enforcement
Network (ASEAN-WEN) on methods of prosecuting crimes involving trade in
illegally taken wildlife and wildlife parts. This training is conducted
in conjunction with the ASEAN-WEN Support Group, the U.S. Fish and
Wildlife Service and several non-governmental organizations.
THE LACEY ACT--BROAD APPLICABILITY TO FISH AND WILDLIFE
As I stated previously, the Lacey Act is a key statutory tool
relied on by federal prosecutors in cases involving illegal trafficking
in fish and wildlife. First enacted in 1900, the Lacey Act is the
United States' first major national wildlife protection statute. The
current version of the Lacey Act, which includes significant amendments
made in 1981 and 1988, is an anti-trafficking statute that provides
broad protections with respect to fish and wildlife. The Lacey Act
applies to all ``wild'' (i.e., non-domesticated) animals from mammals
to invertebrates, whether alive or dead. It also applies to any animal
part, product, egg, or offspring, even if bred in captivity. 16 U.S.C.
Sec. 3371(a). The Act's prohibitions have two ``prongs'': provisions
relating to wildlife trafficking, both domestic and transnational; and
provisions relating to false labeling, which proscribe making or
submitting any false record, account, label for, or false
identification of wildlife.
The first ``prong'' of the Lacey Act makes it unlawful (1) to
import, export, transport, sell, receive, acquire, or purchase any fish
or wildlife already taken (i.e., captured, killed or collected),
possessed, transported, or sold, (2) in violation of state, federal,
American Indian tribal, or foreign laws or regulations that are fish or
wildlife-related (the so-called ``underlying law'' or ``predicate
offense''). 1 Together, these are referred to as the ``two
steps'' necessary for an offense under the Lacey Act. A two-tiered
penalty scheme exists, creating both misdemeanor and felony offenses,
distinguished by the defendant's knowledge of the underlying law
violations. 16 U.S.C. Sec. 3373(d)(1) and (2). For a Lacey Act
violation to be a felony, the defendant must ``know'' about, or be
generally aware of, the illegal nature of the wildlife, but not
necessarily the specific law violated. 2 A misdemeanor
requires that the defendant ``in the exercise of due care'' should have
known the facts constituting the underlying law violation. Felony
violations, in addition to a ``knowing'' scienter or mens rea
requirement, require either proof that the defendant ``knowingly''
imported or exported wildlife, or ``knowingly'' engaged in conduct
during the offense that involved the sale or purchase of, the offer for
sale or purchase of, or the intent to sell or purchase wildlife with a
market value over $350.
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\1\ 16 U.S.C. Sec. 3372 (a)
\2\ United States v. Santillan, 243 F.3d 1125 (9th Cir. 2001);
United States v. Todd, 735 F.2d 146 (5th Cir. 1984).
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The second ``prong'' of the Lacey Act prohibits the making or
submitting of any false record, account, label for, or identification
of any wildlife transported or intended to be transported in interstate
or foreign commerce, or imported, exported, transported, sold,
purchased, or received from any foreign country. A violation of these
provisions may be prosecuted as either a misdemeanor or felony,
depending upon the nature of the offense, paralleling trafficking
offenses.
One unique feature of the Lacey Act is that it allows the
incorporation of foreign law as an underlying law or predicate offense
that ``triggers'' a Lacey Act violation. Not all foreign laws, however,
can serve as a trigger to a Lacey Act offense--only foreign laws
related to fish or wildlife. 3 A person who imports wildlife
into the United States that has been taken, possessed, transported, or
sold in violation of a foreign law or regulation can be prosecuted in
the United States for a Lacey Act offense. The law or regulation must
be of general applicability, but may be a local, provincial, or
national law. The defendant need not be the one who violated the
foreign law; the wildlife itself becomes ``tainted'' even if someone
else commits the foreign law violation. However, the defendant must
know or, in the exercise of due care, should know, about its illegal
nature.
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\3\ 16 U.S.C. Sec. 3371(d).
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This assimilation of foreign law under the Lacey Act is illustrated
by a case involving the prosecution of Taiwanese nationals for
attempting to import 500 metric tons of salmon that was taken in
violation of a Taiwanese law that they themselves had not violated, but
which they nonetheless knew had been violated when the fish were
harvested. 4 In another example, over 144,000 pounds of blue
king crab was seized and forfeited when it was imported after being
harvested and transported in violation of Russian law. 5
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\4\ United States v. Lee, 937 F.2d 1388 (9th Cir. 1991).
\5\ United States v.144,774 pounds of Blue King Crab, 410 F.3d 1131
(9th Cir. 2005).
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The Lacey's Act's assimilation of foreign laws is not an effort to
police other countries. Rather, our assimilation of such laws
potentially reduces demand in the U.S. for species poached in foreign
countries. Assimilation of foreign laws also encourages international
cooperation and mutual reciprocal enforcement efforts. The Senate
Report issued in connection with the 1969 Amendments to the Lacey Act
described what assimilation of foreign law accomplishes:
On the international level...[b]y prohibiting the sale in the
United States of wildlife protected by a foreign government,
the demand [in the U.S.] for poached wildlife from that country
will be sharply reduced. In addition, however, such a law is
also designed to promote reciprocity. If we assist a foreign
country in enforcing its conservation laws by closing our
market to wildlife taken illegally in that country, they may in
turn help to enforce conservation laws of the United States by
prohibiting the sale within their borders of wildlife taken
illegally within the United States. 6
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\6\ S. Rep. No. 91-526, 91st Cong., 1st Sess. 12 (1969), reprinted
in 1969 U.S.C.C.A.N. 1425.
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The Lacey Act occupies a central place within the framework of
federal wildlife laws and is a key enforcement tool for several
additional reasons. First, the Lacey Act applies to a wider array of
wildlife than any other single protection law, including the Endangered
Species Act. Second, it has the stiffest potential penalties. Third,
its prohibitions have a greater reach, including offenses that start
out in foreign countries as violations of the laws of another country.
THE LACEY ACT IS CURRENTLY OF NARROW APPLICABILITY TO PLANTS, INCLUDING
TIMBER
Although the Lacey Act provides broad authority and strong
enforcement tools to combat transnational wildlife trafficking, it does
not currently apply to international traffickers of plants, including
timber or associated wood products derived from illegal logging. The
prohibitions of the Lacey Act that assimilate foreign law were not
written to include foreign laws relating to plants, only fish and
wildlife-related laws. 7 Plants were added to the Lacey Act
enforcement scheme in 1981 to improve the effectiveness of existing
State laws by providing a federal enforcement tool to crack down on
those who blatantly violate State laws designed to conserve plants
threatened with extinction. The 1981 amendments also apply to U.S.
native plants that are listed under CITES. However, the provisions with
respect to plants are more limited than those for wildlife. While the
Lacey Act prohibits the taking, possession, transport, or sale of any
fish or wildlife in violation of any State or foreign law, it omits the
assimilation of foreign law for such acts with respect to plants. The
Act prohibits only the taking, possession, transport, or sale of plants
in violation of State law.
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\7\ 16 U.S.C. Sec. 3372(a)(2)(B). However, no similar impediment
prevents using the false labeling provisions of 16 U.S.C. Sec. 3372(d)
for violations involving plants.
---------------------------------------------------------------------------
Just as the Lacey Act's plant enforcement reach was deliberately
limited, the statute's definition of plant was likewise narrowly
circumscribed. The Lacey Act defines ``plant'' and ``plants'' as ``any
wild member of the plant kingdom, including roots, seeds, and other
parts thereof (but excluding common food crops and cultivars) which is
indigenous to any State and which is either (A) listed on an appendix
to the Convention on International Trade in Endangered Species of Wild
Fauna and Flora (CITES), 8 or (B) listed pursuant to any
State law that provides for the conservation of species threatened with
extinction.'' 9 (emphasis added). The Lacey Act only reaches
plants native to the United States which are listed in one of the three
appendices to CITES or protected by a State law that conserves species
threatened with extinction. Listing of a plant under CITES does not
bring a plant under the coverage of the Lacey Act if it is not native
to the United States. Native plants listed under CITES can also be
excluded from coverage if they are deemed to be food crops or cultivars
under the definition of ``plant.'' 0
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\8\ CITES is an international agreement which entered into force in
July 1975 and to which the United States and 171 other countries are
parties. The aim of CITES is to ensure that international trade in
specimens of wild animals and plants does not threaten their survival.
CITES currently accords varying degrees of protection to approximately
30,000 species of animals and plants.
\9\ 16 U.S.C. Sec. 3371(f)
\0\ 0One court ruled that American ginseng, listed in Appendix II
of CITES, was a common food crop or cultivar and not protected by the
Lacey Act. United States v. McCullough, 891 F. Supp. 422 (N.D. Ohio
1995).
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INTERDICTION EFFORTS AGAINST TRAFFICKING IN ILLEGALLY LOGGED TIMBER ARE
FRUSTRATED BY THE ABSENCE OF BROAD-BASED CRIMINAL SANCTIONS
Absent protection afforded to various tropical timber species under
CITES, it appears that no violation of U.S. law occurs upon the
importation of stolen or illegally harvested logs. In other words, even
if both the importer and federal enforcement officials know that the
logs were taken illegally, so long as the documents submitted to the
United States upon importation are complete, truthful and not false, no
actionable criminal violation has occurred.
The Department has reviewed the federal criminal code to determine
what laws might apply to such conduct. The Department reviewed a number
of criminal provisions in Title 18 of the United States Code and
concluded, based on this review, that none of those provisions could be
applied to interdict and prosecute our hypothetical timber trafficker.
11 The only possible exception to this conclusion is under
the unlikely circumstance that a foreign country treats unlawfully
harvested timber as stolen goods or property and has the evidence to
prove it, allowing prosecutors here to prosecute the subsequent
transportation of the stolen timber in foreign commerce to the U.S.
---------------------------------------------------------------------------
\11\ The laws reviewed included those related to transportation of
stolen goods in foreign commerce (18 U.S.C. 2314); false statement
crimes (18 U.S.C. 542, 1001); smuggling of goods (18 U.S.C. 545); and
money laundering (18 U.S.C. 1956 and 1957).
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One provision of Title 18 of the U.S. Code that is particularly
useful in prosecuting wildlife traffickers, the smuggling statute at 18
U.S.C. Sec. 545, has limited utility in prosecuting timber traffickers.
There are two types of smuggling offenses set forth in the statute that
are commonly used in cases involving wildlife. But those two types of
smuggling offenses have limited applicability to plants because the
offenses require a knowing importation ``contrary to law.'' That term
has in general been determined by the courts to mean contrary to United
States law. Therefore, while a case involving wildlife trafficking can
be prosecuted as a smuggling offense if the importation is contrary to
either CITES or in rare instances the broad provisions of the Lacey Act
itself applicable to wildlife, the narrow provisions of the Lacey Act
applicable to plants and the relatively few timber species listed under
CITES as described below limit its broader use against illegal logging
and other illegal plant trade. In the Department's review of criminal
statutes that we could possibly use to prosecute the importer of
illegal timber, we also looked at offenses potentially chargeable under
other titles of the U.S. Code, including conservation statutes, plant
pest statutes, and cultural property provisions. We concluded that only
if the importer acts in a manner violating CITES, which would enable us
to include the violation as a component of a smuggling charge, would we
have a legal mechanism by which to bring criminal charges.
CITES seeks to regulate the international wildlife and plant trade
12 by listing species in one of three ``Appendices,'' based
on the degree to which a species is at threat of extinction and in
international trade. CITES regulates trade between countries, imposing
the greatest restrictions on species found in Appendix I, and the least
on those in Appendix III.
---------------------------------------------------------------------------
\12\ By international wildlife and plant trade we refer to the
import, export and re-export of live and dead animals, fish and plants,
and their parts and derivatives).
---------------------------------------------------------------------------
CITES protections are implemented through a system of permits and
certificates issued by both member and non-member countries that must
accompany lawful shipments of listed plants or wildlife. The type of
permit or certificate required, and the restrictions placed on the
CITES shipment, depend on the particular appendix in which a species is
listed: Appendix I, II, or III. CITES, Arts. III, IV, V. Appendix I is
the most restrictive listing category and bans wildlife trade in listed
species between countries for commercial purposes. Appendix II permits
commercial trade under permit for species not yet considered in danger
of extinction, as long as the trade is not detrimental to the survival
of the species and the species were obtained in accordance with
national law. Appendix III includes species identified by a Party as
being subject to regulation within its jurisdiction and needing
cooperation of other Parties in the control of the trade. CITES Art. V.
While CITES may provide a basis for pursuing a smuggling
prosecution with respect to timber, it provides only a very limited
basis for prosecuting cases involving the illegal-timber trade due to
the fact that only a few of the many species subject to illegal logging
and trafficking are listed under CITES. 13 Furthermore, the
threshold that must be met for listing species under CITES is high and
decisions to list species are frequently contentious. 14
Moreover, many timber species in international trade simply do not meet
the criteria for listing under CITES. Consequently, even the listing of
a species in a CITES appendix is no guarantee of effective
international trade regulation by the member countries. In the United
States, the Endangered Species Act is the statute by which we implement
our CITES obligations. 15 To date there is not one reported
successful criminal prosecution in the U.S. involving CITES-listed
timber. The only reported civil case arising from U.S. efforts to apply
the CITES restrictions to illegal logging is Castlewood Products,
L.L.C. v. Norton, 365 F.3d 1076 (D.D.C. 2004), a case in which the
court upheld the detention by U.S. officials of a number of bigleaf
mahogany shipments from Brazil where U.S. officials doubted the
validity of the accompanying Brazilian CITES export permits. Given that
CITES currently regulates only a small number of timber species, it is
not sufficient to cover the broader problem of illegal logging and
timber trafficking.
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\13\ Brazilian rosewood, brazilwood, bigleaf mahogany and ramin are
some of the timber species listed under CITES. A number of other tree
species are listed. Not all of the tree species listed are traded as
timber; some are traded as medicinal or horticultural specimens. See
plant listings under CITES appendices at www.cites.org.
\14\ For example, an Appendix-II listing requires the CITES Parties
to agree that the species, although not necessarily currently
threatened with extinction, may become so unless international trade is
subject to strict regulation in order to avoid utilization incompatible
with the species' survival. CITES, Art. II.
\15\ The Act designates the Secretary of the Interior and the
United States Fish and Wildlife Service to carry out its functions and
further the Secretary of Agriculture with respect to enforcement of the
CITES provisions pertaining to the importation or exportation of
terrestrial plants, and prescribes criminal penalties with up to one
(1) year imprisonment and $100,000 fine for an individual, and $200,000
for an organization, for anyone convicted of ``knowingly'' importing or
exporting CITES-listed specimens contrary to CITES, or possessing
CITES-listed specimens traded in violation of the treaty. 16 U.S.C.
Sec. Sec. 1532(15); 1537a; 1538(c)(1), 1540(b)(1). See United States v.
Winnie, 97 F.3d 975 (7th Cir. 1996) (possession of cheetah imported in
violation of CITES illegal, even if imported outside of the statute of
limitations). While the penalties for CITES offenses themselves are
low, as noted earlier a CITES violation can support a felony smuggling
charge.
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THE DEPARTMENT OF JUSTICE SUPPORTS LEGISLATION TO STOP ILLEGAL LOGGING
AND TIMBER TRAFFICKING
In 1981, when Congress overhauled the Lacey Act, it was prompted to
do so by evidence that had been ``uncovered of massive illegal [and
highly profitable] trade in fish and wildlife...handled by well
organized large volume operations run by professional criminals [who]
utilize ``white collar'' crime tactics such as multiple invoicing and
other fraudulent documentation to carry out and conceal their illicit
activities.'' 16 Congress further warned that ``the illegal
wildlife trade has grim environmental consequences. It threatens the
survival of many species...we value because of their commercial
values...and the economic consequences of this trade are...severe.''
17
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\16\ S. Rep. No. 97-123, 97st Cong., 1st Sess. 1 (1981), reprinted
in 1981 U.S.C.C.A.N. 1748.
\17\ Id.
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Almost identical language could be used today to describe the
global problem of illegal logging and timber trafficking and the need
for stronger enforcement tools to address it. Worldwide, illegal
logging is estimated to be a multi-billion dollar industry activity.
The adverse environmental consequences of illegal logging, including
destruction of forest ecosystems and critical wildlife habitat, are
enormous. Just as Congress recognized in 1981 that greater enforcement
tools needed to be added to the Lacey Act to combat illegal trade in
wildlife, stronger enforcement tools should now be added to address
trade in illegally-obtained timber.
In general, the Administration supports amending the Lacey Act to
provide enforcement agencies with adequate and clearly defined legal
tools to address illegal logging and trafficking of foreign timber.
Addition of such enforcement tools to address trafficking in illegal
timber is consistent with the President's Initiative and would enhance
our ability to take steps against the multi-billion dollar trade in
illegally logged timber. Such an amendment would support international
good governance; it would provide a tool for effective enforcement in
our domestic markets, thereby reducing demand for illegal timber; and
it would encourage international cooperation and reciprocal enforcement
efforts.
H.R. 1497, THE LEGAL TIMBER PROTECTION ACT
The Administration has, however, identified a number of concerns
with the language in H.R. 1497 and issues that must be addressed.
First, under the proposed legislation, the definition of ``plant'' is
very broad; it could, for example, encompass items such as wooden
shipping containers and packing materials such as paper and cardboard.
We believe the scope should include timber and timber products, because
there is a clear need for additional enforcement tools to address trade
in illegal timber and timber products. However, we believe items like
shipping containers and packing materials should not be included in the
definition of ``plant.'' We request that the Committee continue to work
with the Administration on the scope of the term ``plant'' in the Bill.
In addition, by expanding the current conservation scope of the
Lacey Act, H.R. 1497 places additional responsibilities on the Federal
agencies that share responsibility for policing international plant
trade in the United States. While meeting these responsibilities will
require agency resources, we note that the President's FY 2008 budget,
which was proposed some time ago, does not provide funds to responsible
agencies to implement this legislation.
Furthermore, H.R. 1497 does not currently specify which government
agency will lead implementation of the legislation's many operational
tasks, such as development of regulations, inspection of shipments and
collection of declaration information, reporting, and investigation of
significant violations. We also want to ensure that deadlines for
executive branch agencies to finalize regulations are realistic and
based on time frames that will allow the agency to conduct the
appropriate analyses, develop and propose suitable regulatory language,
conduct the appropriate analyses required by law for such regulations,
provide for adequate public notice and comment, and finalize the
regulations. We thus recommend that the Committee consult with the
affected agencies on appropriate deadlines.
H.R. 1497 also includes provisions that may raise certain
complexities in implementation and enforcement. For example,
prohibitions based on failure to pay ``royalties, taxes, or stumpage
fees'' could raise complex enforcement issues. We also foresee
questions surrounding declaration requirements, such as whether
declarations will be required for all paper and paper products in
international trade; which Federal agency will collect and analyze
declaration information; and how that information will be processed.
Notwithstanding these various issues that must be addressed, we are
pleased that we all share the goal of finding an effective but prudent
means of fighting the illegal trafficking in foreign timber and timber
products. We look forward to working with the Committee to ensure the
clarity and effectiveness of any potential amendments to the Lacey Act.
CONCLUSION
Thank you for the opportunity to appear before the Subcommittee
today to discuss this important topic. I would be happy to answer any
questions that you may have about my testimony.
______
STATEMENT OF ANN WROBLESKI, VICE PRESIDENT, PUBLIC AFFAIRS,
INTERNATIONAL PAPER COMPANY, ON BEHALF OF THE AMERICAN FOREST &
PAPER ASSOCIATION
Ms. Wrobleski. Thank you, Madam Chairman, Mr. Brown. Good
morning. I am Ann Wrobleski, Vice President, Global Government
Relations for International Paper. I served previously as Vice
President International at the American Forest and Paper
Association. I appreciate the opportunity to present the views
of the Association this morning.
Let me first tell you about AF&PA. It is the national
association for the forest, pulp, paper, paper board and wood
products industry. The industry accounts for about six percent
of total U.S. manufacturing output, employs more than a million
workers and ranks among the top 10 manufacturing employers in
42 states with an estimated payroll of over $50 billion.
Sales of forest and paper products top $230 billion. AF&PA
and its 200 member companies and associations have long been
keenly interested in illegal logging. After recent discussions
with a wide range of stakeholders we believe there is a
legislative path forward that will be affective in combating
global illegal logging.
I want to discuss three aspects of the problem: economic,
social, reputational. The economic costs of global illegal
logging are hard to estimate, and in fact, the only widely
accepted credible study was published by AF&PA in 2004. The
study found that illegal logging likely depresses prices for
legally harvested timber between seven and 16 percent.
The study estimated that the value of U.S. wood exports
could increase by almost a half a billion dollars, $460
million, annually if there were no illegally harvested wood in
the global marketplace. The social, environmental and political
costs of illegal logging are less obvious but perhaps more
destructive.
Illegal logging takes place generally in very poor
countries or regions. Illegal logging goes hand in hand with
corruption among government, military, law enforcement and
erodes public confidence in what are likely to be already weak
institutions. Illegal logging is a significant contributing
factor to deforestation, to loss of biodiversity and to land
degradation.
Finally, the forest products industry sees illegal logging
as a reputational issue. Every time an acre of land is
illegally harvested in Indonesia, in Russia, in Brazil, there
is the possibility that the public will react negatively to our
industry. For these reasons, AF&PA has cooperated with the U.S.
Government and environmental stakeholders in several programs
in an effort to combat illegal logging.
In 2003 we joined with the U.S. Department of State,
Conservation International and others to launch the President's
initiative against illegal logging. In 2004 we published the
landmark report on the economic consequences of illegal
logging. In 2005 AF&PA joined with Conservation International
to create the Alliance to Combat Illegal Logging, a partnership
to help halt timber operations in national parks in Indonesia.
In 2006 we applauded the announcement that the U.S. had
signed an MOU with Indonesia to combat illegal logging. We are
very supportive of the U.S. Government committing $1 million to
finance on the ground efforts in Indonesia. This year the
industry commends the administration for including illegal
logging as a topic of discussion with the Chinese in the
strategic economic SED dialogue talks.
Given all of these initiatives and activities we have
watched the debate over expansion of the Lacey Act with keen
interest. We applaud the Congress, particularly Mr. Blumenauer
and Senator Wyden, for their work in this field. We have
endorsed S-1930, the Combat Illegal Logging Act of 2007,
introduced in July by Senator Wyden, and we would endorse a
bill in the House using Mr. Blumenauer's substitute language
which utilizes the approach taken in the Wyden legislation.
The Wyden-Blumenauer approach is carefully crafted to
address harvesting that is in clear violation of specific
foreign and state laws designed to protect forests from
criminal activity. While the bill does require companies to
record specific information it does not require a costly chain
of custody regime.
AF&PA and its member companies welcome action that raises
the risks for the illegal trade without harming the legal
trade. This is an important step toward leveling a playing
field that is currently stacked against U.S. producers that are
committed to trading in legal forest products. Ultimately,
effective action must be taken where the activity takes place.
But expansion of the Lacey Act to include timber harvested
illegally overseas sends a strong signal to governments, forest
products producers, importers and exporters around the world
that the U.S. Government, the forest products industry and the
environmental community recognize the problem and are prepared
to take corrective action.
Thank you, Madam Chairman. I look forward to your
questions.
Ms. Bordallo. Thank you, Ms. Wrobleski. Now, I would like
to recognize Mr. Barringer.
[The prepared statement of Ms. Wrobleski follows:]
Statement of Ann Wrobleski, Vice President, Global Government
Relations, International Paper Company, on Behalf of the American
Forest & Paper Association
I appreciate this opportunity to present the views of the American
Forest & Paper Association and its members regarding H.R. 1497--the
Legal Timber Protection Act. AF&PA is the national trade association of
the forest, pulp, paper, paperboard and wood products industry. The
industry accounts for approximately 6 percent of the total U.S.
manufacturing output, employs more than a million people, and ranks
among the top 10 manufacturing employers in 42 states with an estimated
payroll exceeding $50 billion. Sales of the paper and forest products
industry top $230 billion annually in the U.S. and export markets. The
more than 200 companies and related associations AF&PA represents have
a strong interest in assuring that international trade in forest
products is based on compliance with the laws of all countries. We have
held extensive discussions with stakeholders on this issue and believe
an effective approach can be developed to assist in the world-wide
effort to control this environmental and economic threat.
What is illegal logging?
First, it is important to define what we are talking about. Illegal
logging and illegal trade in forest products is a complex set of
interrelated legal, political, social and economic issues. The term
``illegal logging'' clearly signifies legal abuses, but the types of
activities considered to be ``illegal'' that are described in various
published and web-posted reports are wide-ranging. It is important to
note that there is no international definition of illegal logging. Yet,
there are some kinds of abuses that, in the context of policy and trade
discussions, rise to a level of both domestic and international
significance. These activities involve organized efforts to outright
steal trees or otherwise ignore a country's efforts to control and
preserve its nation's forests, such as harvesting without authority in
designated national parks or forest reserves, logging in excess of
authorized amounts, failing to pay taxes or royalties on harvested
logs, and exporting logs in violation of export limitations.
The concern surrounding illegal logging is a shared one and is a
primary example of an area where the business and environmental
communities are united on the need to develop credible and practical
solutions to the problem. Illegal logging continues to grow as an
important international issue that the forest products community
recognizes and is working to address. It undermines the economic
viability of legally harvested and traded forest products and
contributes to deforestation. Illegal harvesting can have deleterious
impacts on biodiversity and other globally important environmental
services. Among the factors driving illegal logging are: unclear or
poorly enforced forest tenure, weak political institutions, poverty,
corruption, inadequate natural resources planning and monitoring, and
lax enforcement of sovereign laws and regulations.
Economic Considerations of Illegal Logging
Illegal logging, associated illegal border trade, and the use of
illegally obtained timber in manufacturing distort international trade
and reduce market opportunities for U.S. suppliers. The very presence
of illegally procured wood fiber in the international marketplace
affects the competitiveness of U.S. producers who operate legitimately
in accordance with national and international environmental and trade
rules.
In 2004, AF&PA commissioned what is widely considered to be the one
of the most credible and informative reports on illegal logging and
which has been separately submitted for the record. The study measured
the economic impact on timber production and trade which results from
illegally harvested wood products. The report concluded that many of
the estimates on the extent of illegal logging are likely exaggerated,
but the problem is nevertheless significant and depresses world prices
by between 7 and 16%. The study also estimated that the value of U.S.
wood exports could increase by over $460 million annually were there no
illegally harvested wood in the global market. Eliminating suspicious
roundwood in the global market would have an effect on domestic prices
and on the pulp and paper sector which would be in addition to the
impact on U.S. wood exports.
Based on the study's analysis, there is credible evidence to
suggest that illegal logging of the kind that warrants international
concern does, in fact, represent on the order of 8%-10% of global wood
products production and a roughly similar share of global wood products
trade. This includes only the impact on production and trade of logs,
lumber, and wood panels, and does not include the impact on production
and trade of secondary wood products, furniture, or pulp and paper. In
aggregate, about 8% of the world's roundwood production is suspicious
(likely illegal), somewhat less for lumber (6%), somewhat higher for
plywood (17%).
Operators that flout the law are a relatively small segment of the
total forest products business, but those that choose to engage in
illegal forest activity do so largely because of the higher profit
potential and/or shortages of legal material. Typically, higher returns
are possible because illegal timber is presumably obtained at a lower
cost than otherwise would be the case if legal.
Ultimately, the report concluded that to be effective, solutions to
the illegal logging issue must reduce the spread between the costs of
operating illegally and the costs of operating legitimately. Thus, to
lessen the spread, the cost of illegal material needs to rise. This can
be accomplished by enhancing enforcement making the risk higher and it
more difficult (more costly) to operate in illegal timber.
Programs and Initiatives to Address Illegal Logging
AF&PA and its members are already recognized as leaders in fighting
illegal logging and have worked proactively on the issue for several
years. In 2003, AF&PA joined with the U.S. Department of State,
Conservation International (CI), and others to announce the launch of
the President's Initiative Against Illegal Logging. In 2004, AF&PA
released its illegal logging report, as previously referenced, which
for the first time analyzed the economic impacts of illegally produced
and traded wood products. And, in 2005, AF&PA joined with CI to create
the Alliance to Combat Illegal Logging, a partnership designed to help
put a halt to timber operations in national parks and other protected
areas.
Also in 2005, the Sustainable Forestry Initiative (SFI) standard,
adherence to which is a condition of AF&PA membership, was revised to
incorporate a new Performance Measure. The new measure states that SFI
program participants shall have procurement programs in place that
support the principles of sustainable forestry, including efforts to
thwart illegal logging and promote conservation of biodiversity.
AF&PA and its members have also been and continue to be strongly
supportive of ongoing efforts of the U.S. Administration to address
illegal logging. In November 2006, AF&PA applauded the announcement
that the U.S. Trade Representative's office and Indonesia's Ministries
of Trade and Forestry had signed a memorandum of understanding (MOU)
through which the United States and Indonesia pledged to combat illegal
logging and the trade associated with it. The Administration
subsequently backed up this pledge by committing $1 million in
financing to support on-the-ground efforts in Indonesia. Our industry
also commends the Administration for its efforts to combat illegal
logging through the Strategic Economic Dialogue (SED) talks, taking
place between the U.S. and China. The recently completed second round
of SED talks resulted in an agreement to establish a Joint Working
Group to develop a Bilateral Agreement Addressing Illegal Logging and
Associated Trade. We welcome and encourage continued discussions on
this topic.
In the coming weeks, AF&PA is set to release a second report,
``Wood for Paper: A Statistical Analysis of Sustainable and Suspicious
Fiber Sourcing in the Global Pulp Industry''. Preliminary analysis
indicates that illegal logging, while an issue of concern in the pulp
and paper industry, manifests itself much less in this sector than in
solid wood products manufacturing. On a global basis, credible
allegations about suspiciously (potentially illegal) procured wood
fiber for the pulp industry represent less than 2% of the total fiber
consumption by the pulp producing sector. In the case of the U.S.,
practically all roundwood used by the U.S. pulp industry is from
managed natural forests or plantations of indigenous species.
At International Paper, we believe our wood procurement philosophy
is among the most stringent in the industry. As a global leader in the
production of paper and packaging products, integrity in the system
(i.e. preventing illegal logging) is critical to our business and our
ability to operate in a global market place. Our company, for example,
has a long-standing policy of using no wood from endangered forests.
We comply with all applicable laws and regulations in our
harvesting and procurement of primary wood (roundwood and chips) and
market pulp. We do not procure or accept primary wood or market pulp
for our mills from legally designated conservation areas or wood that
has been harvested in violation of international trading rules or
agreements, such as export bans or the Convention on Trade in
International Species (CITES), or wood that is harvested without
authorization or in excess of concession permit limits.
We assess risk, for non-North American fiber supply, of attaining
illegally logged wood and address significant risk accordingly. We do
not use wood fiber from tropical rainforests in our products, nor do we
use any natural wood attained from areas designated by Conservation
International to be ``Tropical Wilderness Areas'' or ``Biodiversity
Hotspots.'' Additionally, because we find it difficult to discern legal
and sustainable forestry from the illegal and unsustainable, we have
also placed a moratorium on any fiber use from Indonesia.
AF&PA and its members are doing the right thing and believe that
any reduction in illegal logging will assist our legal products in
competing against products manufactured from lower-cost illegal
material. And we welcome action that raises the risks for illegal trade
without harming the legal trade. This is an important step toward
leveling a playing field that is currently stacked against U.S. forest
producers that are committed to trading in legal forest products.
H.R. 1497--The Legal Timber Protection Act
We appreciate the increased interest shown by Congress to this
important issue. AF&PA recognizes that legislation can potentially have
a significant impact on the world-wide problem of illegal logging. In
recent months, AF&PA has discussed legislation on this issue with other
stakeholders, including the Environmental Investigation Agency (EIA),
to seek a workable U.S. legislative approach to this problem that would
minimize the impact on legal trade while creating an effective tool to
regulate illegal trade coming into the United States.
These stakeholders have focused on the Lacey Act, a federal law
designed to control illegal trade in wildlife, as the appropriate
vehicle to address trade based on illegal logging. We support such an
approach provided it specifies the types of foreign law violations that
would trigger Lacey Act liability for forest products. Moreover, to be
effective, it is critical that any legislation does not inadvertently
increase the cost of legally-obtained timber and timber products,
thereby making illegal logging more cost effective. Thus, any
legislation should avoid costly chain-of-custody requirements that
place undue burdens upon law-abiding businesses.
We particularly appreciate the leadership on this issue shown by
Congressman Earl Blumenauer through his introduction earlier this year
of H.R. 1497, the Legal Timber Protection Act. The introduction of this
legislation, which would amend the existing Lacey Act to extend its
scope to cover plants and plant products taken in violation of foreign
and state law, has sent a signal that the United States Congress is
serious about combating illegal logging. In fact, it was the
introduction of this legislation that resulted in the completion of the
stakeholders' discussions and a revised approach supported by AF&PA,
its member companies, other forestry-related groups, labor unions, and
the environmental community.
Rep. Blumenauer has drafted legislative language to substitute for
his bill which utilizes the approach followed in S. 1930, the Combat
Illegal Logging Act of 2007, introduced in July by Senator Ron Wyden.
We have endorsed Senator Wyden's bill and would endorse a bill in the
House that uses Rep. Blumenauer's substitute language. The bill is
carefully crafted to address harvesting that is in clear violation of
specific foreign and state laws designed to protect forests from
criminal activity. While the bill requires companies to record specific
information about their plant-related imports, it does not require
companies to prove a negative, that is, to prove to the U.S. government
that their import is not illegal as a condition of clearing customs.
AF&PA encourages the Committee to incorporate the bill language from S.
1930 as it moves forward on H.R. 1497.
AF&PA stands ready to continue to work with legislators and other
interested stakeholders to craft appropriate solutions that do not
hinder legitimate business transactions. We need to work together to
stop this international problem that hurts the environment, the
economy, and those companies that are doing right by our forests
worldwide.
We believe that the importance of this issue to AF&PA extends well
beyond the economic value of the trade opportunities lost to the U.S.
forest products industry. To the extent that the general public
associates logging, in any country, with ``illegal activity,'' there is
a danger of a negative impact on the image of our industry and the
products that we produce.
Ultimately, we recognize that support for an amendment to the Lacey
Act will have limited impact on combating illegal logging on the
ground. But it will send a positive signal to governments, and forest
product producers and exporters around the world that the U.S.
government, its forest products industry and environmental community
recognizes the problem and is prepared to take action.
On behalf of International Paper, Inc. and the American Forest &
Paper Association, I appreciate the opportunity to offer our views on
the issue of illegal logging and on H.R. 1497--the Legal Timber
Protection Act.
______
Response to questions submitted for the record by the
American Forest & Paper Association
Questions from Ms. Bordallo (D-GU)
1. It's not often that the forest products industry comes to Congress
hand in hand with the environmental community to ask for more
regulation. Why does the industry think this legislation is so
important? Are you not concerned that your own companies might
inadvertently be caught up in the Lacey Act?
AF&PA Response
We are committed to maintaining healthy forests in the U.S. and
abroad and are deeply concerned that under-priced, illegally harvested
wood is creating a negative economic and environmental impact for both
the forest products industry and society as a whole.
The companies we represent, including domestic, exporting, and
importing interests, have been consulted throughout this process. Upon
considerable discussion they recommended that the Association support
this legislation, which represents a balanced approach raising the
risks for illegal trade without harming legal trade and without being
overly burdensome on responsible industry actors. It is an important
step toward leveling a playing field that is currently stacked against
U.S. forest producers that are committed to trading in legal forest
products.
2. Can you provide some more details about the negative impacts that
imports of illegally harvested timber are having on the
domestic forest products industry?
AF&PA Response
The economic costs of illegal logging are hard to estimate, and in
fact the only widely accepted, credible study was published by AF&PA in
2004. A complete copy of this study was submitted for the hearing
record.
The study found that illegal logging likely depresses prices for
legally harvested timber by between 7 and 16%. It also estimated that
the value of U.S. wood exports could increase by almost a half billion
dollars annually if there were no illegally harvested wood in the
global marketplace.
In certain important foreign markets illegal material significantly
affects the ability of U.S. producers to export. For example, Russia
exports hardwood logs to China, a substantial portion of which is
likely of suspicious origin and which compete directly with U.S.
hardwoods in the Chinese furniture industry. This trade represents one
of the most direct examples of competition between illegal wood
supplies and U.S. exports of wood products.
Questions from Mr. Brown (R-SC)
1. Would your members support the addition of an ``innocent owner''
provision to H.R. 1497? Why or why not?
AF&PA Response
We believe innocent owners are already protected by the Lacey Act,
as the government must prove intent or negligence to bring any charges
against an individual. This bill would authorize the forfeiture of
timber products when U.S. authorities can prove that these items were
taken illegally. To do otherwise would allow goods proven illegal to
continue in commerce--a practice that would undermine businesses
selling legal product and create a perverse incentive to avoid doing
due diligence.
2. How do your members track their logs back to the source of the
harvest, especially with products like gatewood?
AF&PA Response
AF&PA members are committed to implementation of and compliance
with the principles and objectives of the Sustainable Forestry
Initiative--Standard (SFIS). Objective 8 of the Standard is focused on
broadening the practice of sustainable forestry through procurement
programs. For example, Performance Measure 8.3 requires program
participants to clearly define and implement policies to ensure that
mill inventories and procurement activities do not compromise adherence
to the principles of sustainable forestry. In practice this means that
participants shall have programs in place that ensure the purchase of
raw material from qualified logging professionals, wood producers, and
other wood suppliers. In addition, such programs must ensure that
harvests of purchased stumpage comply with best management practices.
Best management practices are defined as: A practice or combination
of practices that is determined by a federal, provincial, state, or
local government or other responsible entity, after problem assessment,
examination of alternative practices, and appropriate public
participation, to be the most effective and practicable (including
technological, economic, and institutional considerations) means of
conducting a forest management operation while addressing any
environmental considerations.
3. How do your members prove that the products they buy and sell were
not harvested, transported, or sold in violation of any law?
AF&PA Response
AF&PA members are committed to implementation of and compliance
with the Sustainable Forestry Initiative--Standard (SFIS). Objective 11
requires all SFI participants to comply with applicable federal,
provincial. state, or local laws and regulations. In addition, SFI
program participants are committed through their international land
management and procurement activities to promote the conservation of
natural forests in areas identified as biodiversity hotspots and major
tropical wilderness areas. Additionally, Performance Measure 8.5 in the
SFIS states that ``program participants shall ensure that their
procurement programs support the principles of sustainable forestry,
including efforts to thwart illegal logging and promote conservation of
biodiversity.''
4. A recent report by the Seneca Creek Associates for AF&PA found
that: ``Most illegally produced timber is used domestically and
does not enter international trade.'' Is this statement
correct? What percentage of illegally produced timber is
consumed within each country?
AF&PA Response
The Seneca Creek report did estimate that most illegally produced
timber is used domestically and does not enter international trade. In
most cases, the majority of illegal wood is consumed in the domestic
market, where fewer questions may be asked on wood origin than in the
export markets. In addition, in developing countries where the majority
of illegal harvesting is taking place, exporting tends to be done by
larger companies, and those with relatively larger, better quality
processing facilities. Since these companies are larger and well-known,
it is logical to assume that government supervision would be heavier on
these groups, rather than the smaller mills, and that relatively less
of the wood produced and exported by these more well-known companies
would be illegal.
The suspicious volume of roundwood (logs) that enter international
trade represents on the order of just 1% of global production for both
softwood and hardwood. However, on a global export basis, the study
estimates that 12% of global softwood log exports and as much as 17% of
global hardwood log exports are of suspicious origin. As much as 23% of
hardwood lumber exports and 30% of hardwood plywood exports might be
considered suspicious. This is largely attributable to the Indonesian
situation where a high percentage of production, and hence export, is
believed to be illegal.
The percentage of illegally produced timber consumed within
different countries/regions varies. The Seneca Creek report, submitted
to this hearing's record, contains more detailed information on a
targeted list of areas, including Brazil, Indonesia, Malaysia, West
Africa, China, and Russia.
______
STATEMENT OF VICTOR C. BARRINGER II, PRESIDENT AND CEO, COASTAL
LUMBER COMPANY, ON BEHALF OF THE HARDWOOD FEDERATION
Mr. Barringer. Madam Chairman and members of the
Subcommittee, thank you very much for holding this hearing. My
name is Victor Barringer. I am President and CEO of Coastal
Lumber Company. As a company and as an industry we recognize
the critical issues related to illegal logging worldwide and
appreciate this committee's willingness to address these issues
today.
Coastal Lumber Company operates in nine states employing
1,300 employees at 24 hardwood lumber manufacturing plants
nationwide. We are proud to be one of the largest employers in
Chairman Rahall's State of West Virginia. Since January 1,
2000, there have been 314 furniture plant closures with massive
layoffs affecting some 69,190 workers.
Manufactured household names such as Thomasville, Henredon,
Broyhill, Century Collect now only have one to two
manufacturing plants left in the U.S. The hardwood lumber
industry which supplies wood to the furniture industry has lost
38 percent of its existing mills since 2000. One of the main
reasons the furniture industry went to China is cheap wood to
supply these plants.
Despite this we can compete with legally logged timber from
around the world no matter where the plant is located. We
cannot compete with bribes being paid to forestry officials and
others along the Russian-Chinese border. These people have no
regard to what this illegal trade is doing to the environment
or to manufacturing jobs in the U.S.
The furniture industry aside, there are a lot of jobs at
stake here. For example, there are 29,000 forest products
industry related paychecks being generated annually in the
State of West Virginia. Pennsylvania has about 95,000. In
short, this is an environmental and economic catastrophe
unfolding before this committee.
I have traveled throughout Southeast Asia in recent decades
and I have personally witnessed large blocks of deforested
timber land. I have been to the log yards around the northern
Chinese border trading in illegal timber, and I have witnessed
this illegal trade from Russia. I am here today to inform the
Congress that this situation is far worse than any report you
may have seen.
Essentially, there exists no enforcement of local
harvesting laws due to the ranging system of bribes and
criminal conduct. Joining us in this concern is the Hardwood
Federation, the largest hardwood forest products industry
association in the United States, representing 14,000
businesses, 30 trade associations and over one million hardwood
families in the U.S. and Canada.
However, the pressing concerns over illegal logging and the
need to seek legislative solutions was given a unanimous vote
of endorsement by the Hardwood Federation board of directors
earlier this year and it is viewed as the top priority for the
association. Coastal Lumber Company is obviously not alone
having seen firsthand the devastation caused by the corruption
in this logging trade.
We do not plan to sit by and watch illegal practices create
an unfair playing field. Our intention to sustainable forest
practices is a costly element in our business, and as CEO I can
attest to the fact that abiding by these laws which govern
private business is costly, but we do it. In the case of
forestry laws we know that in doing so we are investing in the
future of our business.
Earlier this year the Hardwood Federation issued the first
public statement of support for efforts to end illegal logging
including the possibility of amending the Lacey Act. Since that
time, legislation has been developed which we believe will curb
illegal wood imports and will help protect law abiding forest
products industries and employees as well as the forest
ecosystems around the world.
We applaud Representative Blumenauer's leadership in
introducing H.R. 1497 and the amendments the Congressman has
agreed to implement. We urge this committee to continue to
focus on this issue and pending legislative proposals to
reflect diversion interest, and we have come together to a call
for action. Thank you for allowing me to testify before this
committee.
Ms. Bordallo. Thank you very much, Mr. Barringer. I now
recognize Mr. von Bismarck.
[The prepared statement of Mr. Barringer follows:]
Statement of Victor Clay Barringer, II, Coastal Lumber Company,
Charlottesville, Virginia
Madam Chairman and members of the Subcommittee, thank you very much
for holding this hearing. My name is Victor Barringer and I am
President & CEO of Coastal Lumber Company. As a company and as an
industry we recognize the critical issues related to illegal logging
worldwide and appreciate the Committee's willingness to address those
issues today.
Coastal Lumber operates in nine states, employing 1300 employees at
24-hardwood lumber manufacturing plants nationwide. We are proud to be
one of the largest employers in Chairman Rahall's state of West
Virginia, and collectively with our sister companies, we are the 3rd
largest taxpayer in the state of West Virginia.
In addition, we have extensive business relations in Asia. I have
traveled throughout Southeast Asia in recent decades, and have
personally witnessed the sites of large blocks of deforested
timberland, and have been to the log yards along the Northern Chinese
border-trading illegal logs from Russia. I am here today to inform the
U.S. Congress that the situation is far worse than any report you may
have seen to date. Essentially there exists no enforcement of local
harvesting laws due to the reigning systems of bribes and criminal
conduct.
Joining us in this concern is the Hardwood Federation, the largest
hardwood forest products industry association in the United States,
representing over 14,000 businesses, 30 trade associations and over one
million hardwood families in the United States and Canada. The
Federation represents the majority of organizations engaged in the
manufacturing, wholesaling, or distribution of North American hardwood
lumber, veneer, plywood, flooring, pallets, kitchen cabinets and
related products. As you can imagine, the Federation is challenged to
maintain consensus on a myriad of issues given the breadth and
diversity of the association membership. However the pressing concerns
over illegal logging and the need to seek legislative solutions was
given a unanimous vote of endorsement by the HF Board of Directors
earlier this year and is viewed as a top priority issue for the
association. Coastal Lumber obviously is not alone in having seen
first-hand the devastation caused by corruption in the logging trade.
While we are the largest users of the resource we are also among the
most fervent guardians of these forests as well.
Companies in the hardwood industry are predominantly small, family-
owned businesses, dependent upon a sustainable supply of healthy timber
resources. Many are operated by third, fourth or even fifth generation
family owners. Given this history and legacy, our industry maintains a
long-term view of the valuable forest resources, which are the mainstay
of our business. In fact hardwoods are by definition a long-term raw
material given the decades-long growing cycle required for high valued
wood species. Imagine depending upon a raw material, which takes almost
an adult lifetime to grow to maturity! Hardwood timber is renewable and
sustainable, but not readily replaceable once damage is done.
We do not plan to watch as illegal practices create an unfair
playing field. When we cannot compete fairly opportunities for
providing jobs to our families in generations to come and in our local
communities are lost as well as the wood products prized by consumers
throughout the world as a universal sign of quality in homes,
buildings, furniture and decor Our attention to sustainable forest
practices is a costly element in our business, and as a CEO I can
attest to the fact that abiding by the laws which govern private
business is costly. But we do it, and, in the case of forestry laws we
know that in doing so we are investing in the future of our business.
Since January 1, 2000, there have been 314 furniture plant closures
with massive layoffs affecting some 69,190 workers. Manufacturers with
household names such as Thomasville, Henredon, Broyhill and Century
collectively now have only two or three manufacturing plants left in
the U.S. The hardwood lumber industry, which supplies wood to the
furniture industry, has lost 38% of its existing mills since 2000. One
of the main reasons the furniture industry went to China is cheap wood
to supply these plants. Despite this, we can compete with legally
logged timber from around the world no matter where the plant is
located. We cannot compete with bribes being paid to forestry officials
and others along the Russian/Chinese boarder. These people have no
regard for what this illegal trade is doing to the environment or to
manufacturing jobs in the U.S. The furniture industry, aside, there are
a lot of jobs at stake here. For example, there are about 29 thousand
forest products industry paychecks being generated annually in the
state of West Virginia. Pennsylvania has about 95 thousand industry
related paychecks in the state and I would say that most states have
similar numbers. In short this is an environmental and economic
catastrophe unfolding before this committee.
Earlier this year, the Hardwood Federation issued the first public
statement of support for efforts to end illegal logging, including the
possibility of amending the Lacey Act. Since that time legislation has
been developed which we believe will curb illegal wood imports and help
protect law-abiding forest products industries and employees as well as
forest ecosystems throughout the world. We applaud Rep. Blumenauer's
leadership in introducing H.R. 1497 and the amendments the Congressman
has agreed to implement. We urge the Committee to continue to focus on
this issue and pending legislative proposals to reflect the divergent
interests, which have come together to call for action. On behalf of
Coastal Lumber and the Hardwood Federation we pledge to continue in our
own active role and work to move towards a strong, effective U.S.
statute to curb this alarming threat to our industry and to hardwood
forests throughout the world.
Thank you for allowing me this opportunity to appear before you
today.
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Response to questions submitted for the record by the
Hardwood Federation
Questions from Ms. Bordallo (D-GU)
Do you believe the forestry industry in the United States will respond
favorably to a curtailment in illegal logging worldwide? If so,
how?
Yes. Were there no illegally harvested wood in global market value
of U.S. wood exports could increase by over $460 million each year
based on recent report commissioned by AF&PA.
Can you provide some additional details on the negative impacts that
illegal logging overseas has had on the domestic forest
products industry?
Raw materials, such as logs, typically account for 60-80 percent of
the cost of production for hardwood products. It is estimated that 8-
10% of all wood production globally is due to illegal harvesting
practices. Illegal trade in these materials allows foreign suppliers an
additional means to enter the U.S. market in substantial numbers and at
extremely low prices.
Questions from Mr. Brown (R-SC)
1. In your testimony, you say you have witnessed the sites of large
blocks of deforested timberland. I recognize how ugly clear-
cuts can be as I've traveled throughout the Western part of the
U.S. and have seen this practice first-hand as well. Do you
know if this was clear-cut legally or illegally? And, was it
for land conversion to an agricultural use or do you know?
Only what the farmer told me. The local farmer told me that people
came in, cut this timber and left, and they did not own it. It was not
for conversion to agricultural use.
2. You also mention corruption in the international logging trade.
What are your first-hand experiences? Which laws were broken?
I visited a log yard in Northern China--I don't recall the name of
the town. The people who operated the log yard were very matter-of-fact
regarding the timber that was taken from the Russian Government and
railed into China.
3. Do you support adding an ``innocent owner'' protection for
businesses like yours? Why or why not?
Innocent owners are already protected by the Lacey Act, as the
government must prove intent or negligence to bring any charges against
an individual. It is the government that must prove the illegal
material's chain of custody, not the owner.
4. Do you have documentation that links the loss of jobs to the
importation of illegal raw material?
No, there is not formal documentation. However, for example,
hardwood plywood consumption and wood flooring sales increased by
approximately 20 percent between 2002--2006, but the increase for these
products was supplied by imports. U.S. production of these products
actually declined which in turn impacts the workforce in these areas.
5. We continue to see more automation in U.S. plants. How does this
affect loss of jobs?
Productivity has increased in forestry as well as in wood products
manufacturing as in almost ever sector in the economy. The use of new
technologies and better forest management systems has allowed growth
and yields to increase significantly which should assist U.S.
competitiveness. All of which helps to ensure sustainable forestry as
well as the potential for increased production. Certainly resolving
issues around illegal countries will level the playing field for our
producers and allow our industry to take advantage of technology
improvements which while automating many operations often lead to more
and better jobs in our sector.
6. Would you support certification of chain of custody to ensure that
no domestic supply of wood is tainted by illegally obtained
wood?
No. There is already an array of tools, technologies and resources
(adopted by numerous industry leaders) that make it possible to work
with one's suppliers on due care steps to eliminate illegal wood.
Businesses can practice due care, without a chain of custody, by asking
the right questions of your suppliers and using resources available
from the government and private sources to become aware of marketplace
concerns in country of origin.
______
STATEMENT OF ALEXANDER VON BISMARCK, EXECUTIVE DIRECTOR,
ENVIRONMENTAL INVESTIGATION AGENCY
Mr. von Bismarck. Thank you, Madam Chairwoman Bordallo for
the opportunity to testify before this Subcommittee. We speak
today of a problem that as the composition of this panel
demonstrates unites a diversity of stakeholders in a common
concern.
I am the Executive Director of the Environmental
Investigation Agency, and EIA is honored to present this
testimony as part of a broad coalition of environmental, labor
and industry organizations who all agree that illegal logging
and associated trade is bad business for the environment, for
poor people worldwide and for companies and that the time has
come for the United States government to take action to curb
our role in driving this problem.
The Environmental Investigation Agency is a nonprofit
organization which has worked 23 years to investigate and
expose environmental crimes and advocate for lasting solutions.
EIA's analysis of trade in illegal timber and wildlife have
been globally recognized, and this year we were honored to
receive the U.S. Environmental Protection Agency's award for
our investigations into the chemical trade.
Since 1999 EIA has used undercover techniques in
partnership with local organizations to document the impacts of
illegal logging and the criminal networks that are behind it.
Our experience has shown us unequivocally that illegal logging,
which causes the most serious environmental and social harm, is
driven by international trade and that any solution will
therefore require action from consuming nations such as the
United States.
These findings are collected in our report, No Questions
Asked, which we have prepared for this hearing. In this oral
testimony I want to touch on examples of the environmental and
human cost of illegal logging, point out how we are fighting
the problem currently with one hand tied behind our backs and
how the amendment of the Lacey Act to prohibit the import and
sale of illegally sourced wood and wood products and the
declaration of some basic information is critically needed.
Illegal logging has a devastating impact on our global
environment as pointed out earlier by Representative
Blumenauer, but perhaps some of the most destructive impact of
illegal logging is on human lives and society. Revenue from
illegal logging and export trade supports and perpetuates
corruption and criminal activities and fuels violent conflicts
much like the blood diamonds that funded wars in west Africa.
Honduras is one of many countries where illegal logging is
a crisis for the country's environment and society. For more
than a decade the grassroots environmental movement of Olancho
has opposed logging on their community lands by companies owned
by Lamas, Noriega and other barons. Between 1996 and 2007,
eight members are alleged to have been killed for their
activism.
Last December, Heraldo Zuniga, Roger Ivan Murillo Cartagena
became the latest victims put up against the town hall wall and
shot. At least six members of the organization have fled the
country over the past year fearing for their lives. The
government itself estimated that in 2006 one million board feet
of mahogany were extracted illegally as this slide points to.
EIA has found that one of the recipients of suspect
mahogany was a subcontractor slated to build bullet proof doors
for the Capitol Building. In Indonesia, also, the crimes are
not only against the forest but against people. Among the
world's most infamous timber barons EIA has investigated is
Abdul Rasyid whose company ordered an attack on investigative
journalist Abi Kusno Nachran, shown here, after his information
led to government seizure of three illegal timber shipments.
Abi Kusno was hijacked on the road by a gang of hired thugs
who hacked him with machetes in the back, arms and head and
left him for dead. All cases against Rasyid, the timber baron,
have been dropped, and his empire is building.
Despite the law that makes sawn timber exported from
Indonesia expressly illegal, U.S. trade data shows that over
1,500 shipments declared on Customs forms as Indonesian sawn
timber worth some $30 million entered U.S. ports between
November 2004 and November 2006. That is more than two
shipments a day.
Indonesia's environment minister has publicly pleaded with
consumer nations to stop buying Indonesia's illegal timber. The
trail of this timber, Madam Chair, goes through organized
crime. This is a short excerpt of an undercover meeting with
Frankie Chua, a member of a major Southeast Asian timber
cartel.
[Videotape]
Mr. von Bismarck. Madam Chair, if the volume could not be
heard, he was introduced as timber mafia. He said that timber
smuggling is good, drug smuggling is bad, and he closed with,
no buyer, no smuggling. Currently, Madam Chair, we are the
buyers of this timber. We are the unwitting financiers of this
crime. This is why, Madam Chair, the opportunity of this
legislation is so great.
This legislation will send a powerful signal through the
international markets that the biggest market for wood
products, the United States, does not want to support the
violence and destruction caused by this logging. Thank you.
Ms. Bordallo. Thank you very much, Mr. von Bismarck, for
that very compelling testimony. Finally, the Chair recognizes
Mr. Forester.
[The prepared statement of Mr. von Bismarck follows:]
Statement of Alexander von Bismarck,
Environmental Investigation Agency, Inc.
Introduction
Thank you, Madame Chairperson and Honorable Members of the
Subcommittee, for the opportunity to testify before the Subcommittee
regarding H.R. 1497, the Legal Timber Protection Act, legislation to
amend the Lacey Act Amendments of 1981 to address global illegal
logging and associated trade in illegal timber and wood products. We
speak today of a problem that, as the composition of this panel
demonstrates, unites a diversity of stakeholders in common concern. I
am the Executive Director for the Environmental Investigation Agency.
EIA is honored to present this testimony as part of a broad coalition
of environmental, labor, and industry organizations who all agree that
illegal logging and associated trade is bad business--for the
environment, for poor people worldwide, and for American companies--and
that the time has come for the United States government to take action
to curb our role in driving this problem.
The Environmental Investigation Agency (EIA) is a non-profit
501(c)(3) organization which has worked for 23 years to investigate and
expose environmental crimes, and advocate for creative and effective
solutions. EIA's analyses of the trade in illegal timber, wildlife, and
ozone-depleting substances have been globally recognized.
Since 1999, EIA has used undercover methodologies in partnership
with local organizations to document the environmental and social
impacts of illegal logging, and its context of corruption and criminal
activity, in countries including Indonesia, Malaysia, China and
Honduras. Our experience has shown us unequivocally that the illegal
logging which causes the most serious environmental and social harm is
inextricably linked into international trade, and that any solution
will therefore require action from both producer and consumer nations.
In this testimony we discuss:
(1) The high environmental and human costs of illegal logging and
associated trade worldwide, and the role played by U.S. market demand
in supporting these illegal and criminal activities;
(2) The lack of adequate tools to address this problem from a
demand-side perspective;
(3) The reasons why EIA and our broad coalition believe that
amending the Lacey Act to prohibit the import and sale of illegally-
sourced wood and wood products, and to require the declaration of
certain basic information, is an effective and elegant way to address
the problem.
For a more complete discussion of these points, please see our full
report, ``No Questions Asked: The Global Impacts of U.S. Market Demand
for Illegal Timber--and the Potential for Change,'' available at
www.eia-global.org.
No Questions Asked
Illegal logging and associated trade are criminal activities that
occur in the context of weak and corrupt governance in timber-rich
countries and shipping and manufacturing hubs. These activities are
financed and fueled by ever-growing demand from international markets
that don't discriminate legal from illegal wood products. The profits
that lie in exporting valuable hardwoods or softwoods is staggering:
according to current field data, merbau stolen from Indonesia's Papua
province is worth US$250 per cubic meter in the port, $600 or more upon
arrival to China--and over US$2200 by the time it winds up as solid
wooden flooring in an American store.1
The monetary benefits of timber trafficking are high, and the risks
of any legal or financial penalty are low. Buyers of wood don't ask
questions because they don't have to. No one--neither customers nor
governments--is asking them to do so. Under current U.S. law, with very
few exceptions, wood imports are legal by default--no questions asked.
There is no underlying legal framework, within either domestic law or
trade agreements, that prohibits the import or sale of illegally
sourced wood products from any other nation. As a result, the millions
of dollars invested by the U.S. government, non-governmental
organizations and private companies in anti-illegal logging programs in
supply side nations are being undermined by our own market and legal
system.
The one exception to this lack of legal tools, the Convention on
International Trade in Endangered Species (CITES), is exceedingly
limited for addressing the larger problem of illegal logging: EIA's
analysis of trade data and CITES permits shows that the chief timber
species now regulated under CITES--ramin and mahogany lumber (any
mahogany products are exempt)--account for less than 0.05% of wood
imports to the United States.2
This problem is so pervasive that we find it even here in these
historic rooms. EIA has learned that the U.S. Capitol building itself
came close to hanging Honduran mahogany doors at high risk for illegal
origin. Had sufficient 2007 appropriations come through for this
project, we would be left to wonder whether the doors opening onto the
U.S. House of Representatives were made using endangered trees stolen
from the internationally protected Rio Platano Biosphere Reserve in
Honduras.
The Environmental and Human Costs
``Illegal logging'' refers to the extraction and removal of timber
in contravention of applicable laws. Such activities include a spectrum
of illegalities ranging from cutting within national parks to
transporting without permits, from cutting on steep slopes and
riverbanks to over-harvesting or harvesting protected species. The
extent of these activities in forests around the world has serious
consequences in terms of environmental degradation, social conflict and
the rule of law.
Environmental degradation
Illegal logging activities catalyze a chain reaction with major
consequences for climate change and biodiversity loss. Some of the
greatest damage results precisely from the export-oriented extraction
of valuable timber species from ``frontier forests''--the most pristine
and extensive forests left on earth.
Consumer demand for high-end hardwood products such as flooring,
doors, windows or decks drives the economics of frontier logging. The
prime specimens of large, slow-growing species such as mahogany
(Swietenia macrophylla), merbau (Intsia spp.), ramin (Gonostylus spp.),
Russian oak (Quercus spp.) or okume (Aucoumia klaineana), among others,
remain only in remote and intact forests in Asia, Latin America, and
Africa. Such forests are national parks set aside to protect habitat
for low-density large mammals like jaguars, orangutans or forest
elephants, or the world's few remaining vast tracts ofwilderness in the
Amazon, the boreal forests of Russia, the islands of New Guinea and
Borneo, and the Congo basin. The value of these timber species on
international markets provides sufficient incentive for logging
syndicates to finance trespass in parks and indigenous territories,
falsify harvest and shipping permits, and construct miles of trails or
crude roads into the wilderness to access high density stands or even
individual trees. The extent and modus of such activities has by now
been well documented by EIA and other watchdog organizations, as well
as academic researchers and journalists.
This uncontrolled activity triggers a cascade of subsequent
environmental degradation. Logging trails destroy hundreds of other
trees to reach a few commercially valuable individuals. The creation of
infrastructure and temporary logging camps brings an influx of people
and economic activity into remote regions. In the short term, this
leads to over-hunting of bushmeat or commercial wildlife poaching in
surrounding forests; in the long term, settlements can become permanent
while habitat for wildlife shrinks behind the agricultural frontier.
This chain of events is even more damaging when it occurs in areas
occupied by forest-dependent indigenous peoples.
On the other hand, consumer demand for semi-disposable inexpensive
wood products encourages manufacturers to cut costs and boost
production--driving the large-scale illegal over-harvesting of natural
coniferous and hardwood forests from eastern Russia, Indonesia,
Honduras, Brazil and elsewhere. This type of deforestation contributes
directly to topsoil exposure and subsequent erosion. Intensive illegal
logging has been acknowledged as a contributing factor in floods that
cost thousands of lives in Indonesia, the Philippines, China and
elsewhere in the past decade. It also has the capacity to disturb
hydrological and ecological dynamics enough to cause water shortages
and higher susceptibility to forest fires. The uncontrolled cutting of
Honduras's rich pine forests, for example, has caused what communities
document to be the loss of approximately half the water sources in
populous western Olancho district.3
As the committee is well aware, deforestation and forest fires are
a major cause of global greenhouse gas emissions. The UK's recent Stern
Review on the Economics of Climate Change found that deforestation
accounts for 18.3% of global carbon emissions annually--more than the
entire transport or industrial manufacturing sectors.4
Illegal logging is an integral part of this picture, contributing to
deforestation both through the direct removal of forest cover and
through the chain of land use change triggered by logging described
here. Uncontrolled logging is, in a sense, the `gateway activity' that
leads to a cycle of harm for the forests and the global climate.
The human consequences are no less devastating. Revenue from
illegal logging and export trade supports and perpetuates corruption
and criminal activities, and is reaped in an atmosphere of fear,
intimidation and human rights abuses. Illegal logging in some countries
has been used to finance violent conflicts--much like the ``blood
diamonds'' that funded wars in West Africa--while in others it is
linked with wildlife and drug smuggling operations. The following
examples from around the world hint at the scope of forest crimes both
social and environmental in nature.
Examples: Global illegal logging hotshot, and the links to U.S. demand
Indonesia
In perhaps no other country has illegal logging been destructive on
such a massive scale--or the focus of so much concern. In June 2006,
the U.S. government was spending more than $7 million on initiatives to
combat illegal logging in Indonesia, with the private sector chipping
in another $13 million via 30 different projects throughout the
country.5 And yet a 2007 U.N. Environment Programme (UNEP)
report forecasts that 98% of Indonesia's forests could be lost within
15 years, with lowland forests disappearing even sooner.6
Illegal logging in Indonesia is organized, highly profitable crime
that continues to operate with almost total impunity for the higher
echelons. Despite millions of dollars invested in combating illegal
logging by the national and foreign governments, despite a series of
crackdowns, arrests, policy initiatives and extensive public attention
to an issue that has cost the country over US$20 billion, a recent
survey by EIA and our Indonesian partner organization Telapak confirmed
that almost no high-level financiers, senior military or government
officials have even been prosecuted, much less convicted, of logging-
related crime.7 The country's forestry minister himself
recently proposed Supreme Court review of several judges involved in
handing down not-guilty verdicts, openly questioning a judicial system
that continues to free criminals in the face of strong police
evidence.8
These crimes are not only towards the forest but also towards its
defenders. Among the world's most infamous timber barons are Abdul
Rasyid and his nephews Sugianto, Agustiar and Yadi, whose Tanjung
Lingga suite of companies has reaped hundreds of millions of dollars
from illegal logging or ramin and other species at Tanjung Puting
National Park. In 2000, Rasyid's employees assaulted two EIA and
Telepak investigators with head blows, threatened them with death, and
had them thrown in jail for three days. In November 2001 Rasyid ordered
an attack on investigative journalist Abi Kusno Nachran after his
information led to government seizure of three illegal timber
shipments. Abi Kusno was hijacked on the road by a gang of hired thugs
who hacked him with machetes in the back, arms, and head, and left him
for dead.9 All cases against Rasyid, who until recently was
a member of the Central Kalimantan Parliament, have been dropped due to
``lack of evidence.''
As part of the effort to staunch the illegal flow of its resources,
Indonesia enacted a log export ban in September 2001. Following this,
many syndicates changed their methods by cutting the stolen wood into
sawn timber and concealing it in shipping containers.10 In
response, Indonesia enacted a sawn timber export ban in October 2004,
with further strengthening and elaboration of limited exceptions in
2006.
Yet despite a law that makes most sawn timber exported from
Indonesia expressly illegal, U.S. trade data show that 1,570 shipments
declared on customs forms as Indonesian sawn timber, worth some $30
million, entered U.S. ports between Nov. 2004 and Nov. 2006: more than
2 shipments per day.11 Eleven U.S. ports comprised 89% of
these shipments, with only three ports--Los Angeles, Long Beach and
Tacoma, WA--responsible for 51%. This concentrated flow demonstrates
how increased enforcement in the U.S. could be both relatively feasible
and effective to address an obviously illegal trade stream.
EIA is hopeful that the Memorandum of Understanding signed by the
two countries in November 2006 will facilitate such enforcement. As it
stands, Indonesia is a shining example of the inconsistency of U.S.
policy on illegal logging. The country's environment minister, Rachmat
Witoelar, has publicly pleaded with consumer nations to stop buying
Indonesia's illegal timber.12
Honduras
The United States is Honduras's largest market for wood products,
importing over $47 million in each of the last two years in pine lumber
and secondary products including mop handles and tomato stakes, as well
as valuable hardwood products like mahogany doors and
windows.13
A host of illegal logging and timber trafficking techniques have
been documented by EIA, from fraudulent permits, phony community
``cooperatives'', and bribe-fueled transport to cutting openly in
national parks. The illegal timber trade is used to smuggle narcotics
and launder drug money. Export tax evasion is also rife; EIA
investigations in 2005 found that declarations may represent only
around 50% less of actual timber exported.14
Illegal logging in Honduras is closely linked with social conflict
and human rights abuses. For more than a decade, the grassroots
Environmental Movement of Olancho (MAO) has fought logging on
theircommunity lands by companies owned by Lamas, Noriega, and other
barons. MAO's struggle has earned the group's members death threats,
intimidation and harassment through the judicial system. Between 1996
and 2007, eight members are alleged to have been killed for their
activism; on December 20th, 2006, Heraldo Zuniga and Roger Ivan Murillo
Cartagena became the latest victims, put up against a town hall wall
and shot.15 At least six members of the organization have
fled the country in the past year, fearing for their lives.
International outcry over the killings led to the arrest of four local
policemen. However, there has still been no trial, nor investigation
into possible logging interests behind the crime such as the Sansone
company, whose employees MAO has repeatedly denounced for death
threats.16 Sansone is Honduras's second-largest exporter,
sending broom and mop handles as well as lumber to U.S. retailers as
well as Caribbean markets.
Peru
Peru is the world's principal exporter of mahogany, particularly
since Brazil implemented an export ban in 2001. In 2006, this valuable
wood comprised roughly 20% of the country's total timber exports by
value (a far smaller quantity by volume).17
The extent and impact of illegal mahogany logging in the Peruvian
Amazon is grave. In the southeastern department of Madre de Dios, home
to the world's highest remaining concentration of old growth mahogany,
loggers are penetrating the protected territories of several
voluntarily isolated, 'uncontacted' tribes, resulting in a rise in
violent encounters with casualties on both sides.18
Advocates fear that contact with loggers will end in deadly conflict or
transmission of an infectious disease such as influenza or pneumonia,
which could kill the entire tribe. The risk is so high that in March
2007 the Inter-American Court of Human Rights ordered the Peruvian
government to implement precautionary measures to protect the
uncontacted groups of Madre de Dios.
Local timber barons, increasingly linked with drug traffickers,
take brutal advantage of the poverty and isolation of Amazonian
communities from Iquitos to Puerto Maldonado.19 A study
conducted by the International Labor Organization in 2004 estimated
there to be some 30,000 people living at the time under forced labor
conditions linked to logging in the departments of Madre de Dios and
Ucayali.20 This includes men living in a cycle of debt
slavery and women working as prostitutes in logging camps.21
The Forest Governance Annex to the pending U.S.-Peru trade
bilateral contains important measures aimed at strengthening Peru's
monitoring and enforcement of timber concessions. However, without a
broader commitment to excluding illegal timber from all its trading
partners, the U.S. runs the risk that illegal Peruvian mahogany will be
sent to Mexico or China to become our doors and furniture just the
same.
China
China has become the world's factory for wood products, as with so
much else. Its booming demand for raw wood material to transform into
furniture and plywood for Western markets is driving illegal logging
around the world. China is the world's largest exporter of wood
products, exporting over $17 billion in timber products in 2005. This
represents almost 500% growth in less than a decade22--and
the U.S. is the biggest customer by far. In the last 10 years, the
United States has increased its imports of Chinese wood products 1290%
by value.23 We imported 40% of China's wooden furniture in
2005 (a trade stream worth $US8.8 billion24), and 21% of
China's plywood exports last year.25
All this production is fueled by imports. One expert estimates that
China imports over $US one billion annually in illegally-harvested logs
alone, largely from Russia, trailed by Papua New Guinea, Congo
Brazzaville and Gabon.26 EIA and other organizations'
investigations show systemic disregard for the legality of raw
materials in the Chinese wood imports sector. In 2005, EIA/Telapak
undercover investigators posing as buyers spoke with various Chinese
traders who described their smuggling and document falsification
techniques to evade the Indonesian log ban.27 In 2004, huge
discrepancies between Chinese and Malaysian trade data showed that 58%
of the log imports supposedly arriving from Malaysia were actually
smuggled overseas from Indonesia--2.7 million m\3\ of timber, a total
of almost 30% of Indonesia's entire legal harvest for the same
year.28
As the demand from its wood products industry grows exponentially,
Chinese traders' ask-no-questions ethos is cause for alarm. Beyond
Indonesia and Papua New Guinea, some of the hotspots most affected by
exports to China include:
Burma [Myanmar]: The world's final remaining stands of
old-growth teak (Tectona grandis) are being stripped from Burma's
forests to finance a long-standing war between the repressive military
regime and the ethnic Kachin rebel army along the country's northeast
border with China.29 The cross-border trade in teak and
other valuable tropical hardwoods reached as much as $350 million in
2005, according to Global Witness. It primary ends up in high-end
furniture.
Cambodia: As laid out in devastating detail by Global
Witness in their written testimony submitted for this hearing, timber
barons directly linked to high government officials and military
officers are felling in protected State Forests, cutting protected tree
species upon which local people depend for income, clearing vast areas
of primary forest under dubious permits for large-scale plantations,
establishing illegal factories, and robbing the Cambodian treasury of
millions of dollars in revenues through blatant fraud, tax evasion, and
smuggling.30 Members of this network are also implicated in
cases of at least three murders and two attempted killings of people
working to combat forest crime.
China is the primary recipient of illegal Cambodian timber.
Despite official Cambodian statistics that record no plywood or
sawn timber exports in recent years (most recent statistics
available are from 2003-2004), international trade data show
China importing approximately US$50 million in plywood and sawn
timber between 2003 and early 2007.
The Congo Basin: Large Chinese companies' illegal logging
activities in this region include evading taxes on forest concessions
in Gabon and Cameroon; cutting five times the allowable harvest in
Republic of Congo; and exporting unprocessed logs in violation of
government log export bans.31
Tanzania: The coastal forests and woodlands of Tanzania
are disappearing due to overharvesting of tropical hardwoods, much of
it illegal and destined for export markets. China is the largest and
fastest-growing market: in the second half of 2005, China imported 100%
of the logs exported from Tanzania, and 75% of processed hardwoods.
Furthermore, trade statistics show that China imported ten times more
timber products from Tanzania than what appeared on the country's
official export records--in other words, a loss of 90% of the
government's revenue, estimated at $58 million dollars annually. The
deforestation is having noticeable effects on topsoil erosion and water
quality in the main logging districts.32
Russia: Nowhere has China's wood manufacturing explosion
been felt more strongly than in the forests of Russia's Far East, whose
vast expanses of Korean pine and temperate hardwoods are home to the
world's largest cat species, the Amur tiger. Russia alone supplied
approximately 26.4 million m\3\ in 2005--49% of China's total timber
product imports and fully 80% of its logs.33. Companies
including Wal-Mart, Armstrong and Ikea are supplied by plants located
in this border region.34 The Russian Natural Resources
Minister described the situation in this way on a visit in 2007:
``The impression you get there is that illegal logging has
become an everyday economic affair and common practice.
Everything is covered with slabs of processed timber; there are
saws everywhere with Chinese workers, who as soon as we
approach them forget Russian, and Chinese too. Everybody sees
it and nobody does anything. ``35
Extent of U.S. impact
The United States is the world's single biggest importer and
consumer of wood products. According to FAO data, in 2005 the U.S.
imported 17.2% of global ``forest products'' exports, which include
pulp and paper.36 This figure rises to 20% once furniture is
included.37 In dollar terms we are speaking of some $56
billion, including all logs, timber, furniture, pulp and paper, or $38
billion without pulp and paper.38 These figures have grown
dramatically: according to ITC data, from 2000 to 2006, U.S. wood
product imports overall increased by 58%, with furniture imports
increasing by 78%.
How much of this consumption involves wood material of high-risk
origin39? Of course, nobody declares his product to be
``illegal'' on a customs form. But estimates converge on approximately
10% of our imports. A recent in-depth analysis of global timber trade
statistics, done for the OECD Roundtable on Sustainable Development,
estimates that U.S. imports of high-risk wood in 2006 were
approximately 28 million cubic meters of round-wood equivalent (RWE).
Almost two-thirds of this came from China, followed by Malaysia,
Indonesia, and Latin America (primarily Brazilian and Peruvian
hardwoods).40 See Table 1 for a breakdown of the top wood
product import streams and source countries, which shows that a
substantial portion of U.S. imports come from high-risk sources.
The OECD figure indicates that 10% of the U.S.'s imports, or 2% of
the entire annual global trade in wood-based products, is derived from
material at high-risk of illegal origin. This 10% figure is
corroborated by Seneca Creek Associates' 2004 study for the American
Forest and Paper Association, as well as the World Bank and the Royal
Institute for International Affairs.41
While it is inherently difficult to calculate the amount of illegal
material entering U.S. ports, the impact of our national demand is easy
to see on the ground, as has been described in the case studies above.
Action by American policy makers or American consumers should not
depend on knowing exactly how many dollars worth or board feet of this
wood enter our borders each year. For critically endangered species
like Sumatran rhinos or African lowland gorillas, a few hundred trees
cut in the wrong place can mean the difference between survival and
population crash. For villagers of northern Burma, several hillsides of
old-growth teak support the perpetuation of a bloody military
occupation. For the voluntarily isolated Mashco-Piro people of
Southeastern Peru, loggers' invasion to steal a few dozen mahogany
trees from one riverbank can mean contact with disease that wipes out
their entire tribe. Even where the total board feet are small, the
damage can be great.
Amending the Lacey Act as a Demand-Side Solution
If we understand illegal logging in the context of corruption,
criminal trafficking and international trade as laid out here and in
our report ``No Questions Asked,'' then it follows that in order to
effectively address the problem, we need to change the equation of risk
and return. We need to lower the incentives for illegal trade--through
reducing demand and lowering profit margins--while raising the risks.
Legislative action on illegal logging in consumer countries is not
a replacement for, but a reinforcement of, domestic enforcement in
producer countries. On the demand end, the purpose of an effective law
must be judged by how well it can perform the following broad
functions: (1) close market access for illegal timber and wood products
to the most lucrative, hard-currency destinations for these products,
(2) create the incentive for high standards of due diligence, and (3)
level the playing field for businesses that want to do the right thing,
without unduly burdening them.42 An effective law must also
be feasible to implement.The legislation in question at this hearing
does precisely this. EIA, after extensive analysis based on over 20
years of field experience, believes that amending the Lacey Act is a
powerful and elegant way to address illegal logging and worldwide
associated trade from the demand side. The Lacey Act, in essence,
changes the incentives for wood products companies to ask questions.
And in the complex supply chain that characterizes contemporary
international trade in timber and wood products, these questions will
ripple down the chain: from American companies who intend to abide by
their domestic laws, to the contracts they sign with Chinese
manufacturers, to the inquiries these manufacturers' suppliers make
with their Indonesian or Cameroonian or Russian sources.
Moreover, the Lacey Act does this without being a radical departure
from existing law, or an unduly burdensome trade measure. For one
hundred years it has functioned to catch the worst of the worst, the
serious offenders, and therefore has high burden of proof standards to
prove ``intent'' for any criminal penalties. Further, it does not
require specific proof of legality for each shipment. Rather, an
amendment of Lacey sets up a reasonable set of penalties and
subsequently relies on American companies' essential integrity,
creativity, and desire to comply with the law, to set in motion the
necessary steps that will transform the market for wood products into a
place where questions get asked.
EIA fully supports the intent of the Legal Timber Protection Act
introduced by Congressman Blumenauer, Weller and Wexler. We recommend
the inclusions of several modifications to the language that were
agreed upon through intensive consultation with stakeholders among the
industry, environmental, and enforcement communities, and introduced in
the Senate by Senators Ron Wyden and Senator Lamar Alexander as S.
1930, the Combat Illegal Logging Act of 2007.
These modifications include a provision for basic declaration
requirements that would include the species, country of origin,
quantity and measure, and value of the plant import. These requirements
are modeled after existing regulations for wildlife imports currently
regulated by the Lacey Act, and resemble declarations for many other
imported goods. They provide basic transparency for wood shipments. The
declaration will have critical value for combating illegal logging by:
1) encouraging importers to ask basic questions regarding the origin of
their timber and timber products; 2) providing information at the point
of import that will allow U.S. authorities with limited resources to do
efficient, targeted inspections and enforcement; and 3) helping
enforcement agents to immediately identify ``low-hanging fruit,'' such
as timber expressly prohibited to be exported. The Act's declaration
requirements will not be unduly burdensome to industry, including the
manufacturing sector. Factories manufacturing wood products, in China
or elsewhere, are capable of providing this information to buyers. They
currently don't provide it because they have not been asked to.
Passage of this law will bring the United States in line with
international efforts on this issue. The commitments expressed by G-8
leaders at the 2005 Gleneagles summit crystallized a growing awareness
that demand-side measures are needed to effectively curb the roots
causes of illegal logging. Today the consumer markets of the European
Union, Japan, New Zealand, and Australia are implementing or
considering a variety of policies and initiatives to encourage demand
for legal timber.
As long as the U.S. lacks similar policies to prohibit illegally
sourced wood, our market is an enormous open door for suspicious
material, undermining other countries' attempts to address the problem.
Conversely, if the world's largest wood products market were to signal
that it was closing this door, many people believe this action could
provide the 'tipping point' necessary to bring rapid change in global
logging and tracking practices.
Please see Table 2 for our comparison of the characteristics that
legislation to effectively curb demand for illegally sourced timber and
wood products should ideally possess, and the characteristics possessed
by the amendments to the Lacey Act offered in the current legislation.
The market signal
Passage of U.S. legislation to curb imports of illegal timber would
have a rapid and significant effect on the global market.
The Chinese wood products industry's ability to evolve is a key
piece of the puzzle. By all accounts, the current state of the Chinese
industry presents a considerable challenge to companies and other
stakeholders trying to create supply chains that ensure exports of
legal or sustainable wood. A recent evaluation by Tropical Forest Trust
of the potential for guaranteeing legal supply in Chinese wood products
pointed to various obstacles, but emphasized that Chinese manufacturers
are extremely flexible and quick to adapt to new business models if
they prove successful. The study concludes, ``it only takes a few
examples of 'first-movers' who are seen to be gaining an advantage by
changing the way they operate for more companies to move in that
direction.''43
EIA investigations have shown the untapped potential to improve
timber sourcing in the private sector. The response of retailers,
importers and manufacturers to documented illegalities or penalties
under law demonstrates the capacity for rapid change in the industry.
In 2003, EIA/Telapak documented several firms exporting baby cribs made
of illegal ramin to the U.S. With this illegal flow brought to U.S.
authorities' attention, agents were able to seize several illegal ramin
shipments in 2004. (The U.S. government has authority to take such
action for the few timber species listed on CITES. Unfortunately, these
species in total account for less than 0.05% of total U.S. wood
products imports.) When EIA/Telapak investigators went back to China in
2004 and met with a major producer of baby cribs, he had completely
switched his wood sourcing for baby cribs from endangered ramin wood to
legal New Zealand plantation pine.
Conclusion: the need for Congressional action
``Expecting or asking one country to combat illegal logging while
at the same time receiving or importing illegal logs of course does not
support efforts to combat these forest crimes. In fact ...allowing
import and trade [in] illegally cut timber and associated products
could also be considered as an act to assist or even to conduct forest
crime.''
Mohamad Prakosa, Indonesia's forest minister, 2003
Some people will try to argue that illegal logging is not a problem
of international trade, that illegal logging is done by poor people
trying to find firewood, that little of this wood even enters the
export stream, much less the U.S. market. Without denying that
deforestation is a complex issue linked with poverty, EIA respectfully
submits that these arguments miss the point. The illegal logging which
concerns us today is export-oriented extraction, of a scale that can
only be organized by networks of financiers, brokers, and buyers. To
take just one example from EIA and our partner Telapak's
investigations, in 2005 we documented 300,000 cubic meters of logs of a
species called merbau (Intsia spp.) being smuggled from Indonesia's
Papua province into Hong Kong and China--every month. This is an amount
worth $600 million at western retail prices.
A successful response to this sort of illegal activity must come
from both ends. The international community must support, and demand,
on-the-ground efforts by governments in producing countries to curb
illegal logging and investigate and prosecute the timber barons within
their borders. But countries like Indonesia and Peru and Papua New
Guinea cannot cut off the flow of illegal wood products while the
United States and its market allies continue to nourish it with
billions of dollars and a no-questions-asked import policy. We need to
harmonize our domestic policies with the impacts of our consumption.It
is for this reason that legislation to prohibit the import and sale of
illegal timber is so vital at this juncture. Not only is there
consensus among environmentalists, governments, businesses and public
citizens that illegal logging and timber traffic is a serious problem,
but there is remarkable agreement about what needs to be done. We need
an appropriate demand-side legal framework that will empower
enforcement agencies with new tools and resources, and that will level
the playing field for companies who want to do things right. We need
the largest wood products market in the world to own up to its role in
the illegal logging problem and begin to ask the necessary questions.
Thank you.
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[GRAPHIC] [TIFF OMITTED] T8330.017
STATEMENT OF CRAIG S. FORESTER, VICE PRESIDENT AND GENERAL
MANAGER, REX LUMBER COMPANY, ON BEHALF OF INTERNATIONAL WOOD
PRODUCTS ASSOCIATION
Mr. Forester. Thank you, Madam Chairperson, Representative
Brown and Representative Blumenauer. Good morning. My name is
Craig Forester, Vice President and General Manager of the Rex
Lumber Company. My company is headquartered in Massachusetts,
and we employ more than 350 people in manufacturing operations
in four states. I also serve as Chairman of the International
Wood Products Association Government Affairs Committee.
Today, I speak on behalf of a coalition of American wood
suppliers, distributors and users of legal imported wood. We
are united in condemning illegal logging. The future of our
businesses depends on the legal and sustainable supply of
imported wood.
Members of our coalition include the National Association
of Home Builders, the National Federation of Independent
Business, National Lumber and Building Material Dealers
Association, the American Home Furnishings Alliance, the
National Marine Manufacturers Association and the International
Wood Products Association. As this coalition demonstrates, my
company is not alone. Together we represent nearly 745,000
businesses.
Housing, cabinetry, millwork, recreational vehicles, boats
and furniture industries all use imported wood in their U.S.
manufacturing facilities supporting hundreds of thousands of
skilled U.S. jobs. My family's small business was started by my
grandfather in 1946. From day one, Rex Lumber Company has been
a leading advocate for environmental protection.
We are certified by the Forest Stewardship Council and
share their economic, social and environmental concerns. I give
you this background to let you know that Rex Lumber Company is
playing by the rules. I am proud of our business and our
environmental leadership. We source legally, we trade legally.
I travel regularly to Central and South America to visit our
longstanding suppliers and to interview possible suppliers.
My testimony before you today will show you that while we
share the ideals of H.R. 1497 we are very concerned with the
unintended consequences of this legislation as written. On
behalf of the coalition, I respectfully request the
Subcommittee to amend H.R. 1497 to address three specific
concerns.
First, define any foreign law to address only natural
resources laws and regulations. Second, modify the proposed new
documentation requirement to be consistent with current U.S.
Customs regulations. Third, add an innocent owner provision. My
written testimony goes into greater detail on all three of our
specific concerns. I want to focus on adding an innocent owner
provision.
It is important to note that under the provisions of H.R.
1497 U.S. importers, manufacturers and distributors are all
held responsible for illegal acts overseas, violations that
they would have no reasonable expectation to know about, much
less the underlying laws that exist in all foreign countries.
The problem is this bill provides no protection for innocent
owners in the supply chain who handle imported wood products.
Innocent owner is a simple concept but an important one. In
essence, it puts the burden of proof on the government. It
reinforces the key principle of innocent until proven guilty. I
specifically would like to respond to three comments I have
heard related to innocent owner. First, Lacey never had
protection for innocent owner. Innocent owner had been thought
available in Lacey until a Court case in 2005, the Blue King
Crab case. We just want to put this protection back.
Second, I have heard that I don't have to prove legality to
clear U.S. Customs. This is true, but how do you disprove a
negative should the government seize your goods? That is, how
do you prove no law was violated overseas when you are already
in possession of legal documents? Third, that including
innocent owner would gut this bill. False. Innocent owner does
not prohibit the government from taking goods that violate
foreign laws.
The government can still prosecute with innocent owner
provisions. In fact, the Civil Asset Forfeiture Recovery Act,
or CAFRA, and the Brownfield Revitalization Act both
specifically had given innocent owner provision and neither has
stopped the government from prosecuting cases. I want to
conclude with a caution. To save forests we must face their
biggest threat: land conversion.
The World Bank noted, and I quote, ``that more than 90
percent of the 1.2 billion people living in extreme poverty are
dependent on forests for some part of their livelihoods.''
Without any other incentives they chose to clear cut and burn
their forests for cattle ranching, agricultural purposes and
fuel wood, life's basic necessities.
Forests need to remain forests, and the best way to do that
is to provide economic incentives for countries to harvest them
wisely and sustainably. Let us amend the bill to make sure we
do no harm to legal businesses in the United States, and we
don't give any extra incentive for these developing countries
to convert their forests to farms.
Unintended consequences of well-intentioned legislation are
consequences nonetheless. In addition to making these changes I
urge the U.S. Government to provide more financial and
technical assistance to developing countries to enforce their
laws and to prosecute the offenders. Thank you for this
opportunity to testify and for your consideration. I look
forward to your questions.
Ms. Bordallo. Thank you very much, Mr. Forester.
[The prepared statement of Mr. Forester follows:]
Statement of Craig S. Forester, Vice President and General Manager, Rex
Lumber Company, on behalf of the International Wood Products
Association and America's Imported Wood Suppliers, Distributors, and
Users
On behalf of the member companies of the International Wood
Products Association (IWPA) and the coalition of America's Imported
Wood Suppliers, Distributors, and Users of legal imported wood, we
appreciate the opportunity to submit testimony on H.R. 1497 and its
proposed mark-up to a House companion to S. 1930. Both bills propose
amending the Lacey Act to include imported wood products.
For the record, IWPA and its coalition partners are united in
condemning illegal logging. Our businesses depend on legal, sustainable
trade in wood products in order to build homes, furniture, flooring,
kitchen cabinets, boats, recreational vehicles, and other wood-based
products for American consumers.
We applaud the many efforts Congress has funded to help developing
wood exporting countries that are struggling to enforce their forestry
laws. It is with regret that we cannot support H.R. 1497 or its
probable mark-up companion to S. 1930.
Nearly 745,000 businesses are represented by this coalition of:
National Association of Home Builders
National Federation of Independent Business
National Lumber and Building Material Dealers Association
American Home Furnishings Alliance
National Marine Manufacturers Association
International Wood Products Association
These associations have serious concerns about the unintended
consequences of how H.R. 1497 or a House companion to S.1930 will
affect American importers, manufacturers, and users of imported wood.
The coalition respectfully requests the Natural Resources
Subcommittee on Fisheries, Wildlife, and Oceans address three concerns
in its consideration of this legislation.
1. Define ``Any Foreign Law''
The lack of specificity in the term ``any foreign law'' is
troublesome. Would this allow prosecutions if a sawmill in a foreign
country overloads its trucks when transporting wood to the port? How
would an importer or supply chain member know what is required under
``any'' foreign law?
Would there be a scenario where imported wood from Canada was
subject to Lacey provisions because of a provincial government's
dispute with First Nation citizens over the fishing rights in a
concession?
Courts have interpreted the phrase ``any foreign law'' extremely
broadly in the context of fish and wildlife taken in contravention of
any foreign law. See e.g., United States v. McNab, 331 F. 3d 1228,
1235-39 (11th Cir. 2003), interpreting ``any foreign law'' to include
non-statutory provisions such as foreign regulations, resolutions, or
decrees; United States v. One Afgan Urial Ovis Orientalis Blanfordi
Fully Mounted Sheep, 964 F.2d 474,477-78 (5th Cir. 1992), holding that
``any foreign law'' need not have been enacted for the protection of
wildlife but need only to relate or refer to wildlife and that the
Pakistani Constitution falls within the term.
We need language in this bill that directly relates to natural
resources so we are not at the mercy of overzealous interpretations of
what constitutes the word ``any.''
2. Eliminate Additional Documentation Requirements
Our product comes to the U.S. clearing Customs on both exit and
entrance. Sovereign governments issue documents, permits, and paperwork
that allow products to be traded legally under international and
national laws and regulations. Our government accepts those documents
as legal upon entry at our nation's borders, just as we ask other
governments to accept our country's issued documents.
A requirement to identify the countries where sourcing and
processing occurred should not be included. This requirement goes
beyond the Customs regulations and adds significant complexity to
Country of Origin classifications. Customs officials at the ports are
already overtaxed with national security inspections. There is also
some question as to which government organization is going to collect
the data and manage it a meaningful manner.
Most importantly, how will a database hinder illegal logging in
foreign countries?
There are existing tools both in government and in the private
sector already available to determine trade flows of wood products.
3. Add ``Innocent Owner'' Protection
This legislation provides no protection for ``innocent owners'' in
the supply chain who handle imported wood products. ``Innocent owner''
is a simple concept but an important one. This is a widely acceptable
standard used in other areas of federal and state jurisprudence.
Without an ``innocent owner'' provision, supply chain members are
vulnerable to civil forfeiture which could cause the loss of their
businesses and personal savings. Cleary, such damage is as punitive as
incarceration.
Under Lacey, the entire supply chain handling imported plant
material is held responsible for illegal acts of which they would have
no reasonable expectation to know the violation much less the
underlying laws that exist in all foreign countries. Courts have
expanded the liability and coverage of Lacey to create a situation
where there is ``culpability with no accountability.'' Recent case law
effectively exempts Lacey Act forfeitures from the ``innocent owner''
defense. In United States v. 144,744 Pounds of Blue King Crab, 410 F.3d
1131 (9th Cir. 2005), the Ninth Circuit held that importers of crab
that was transported on a foreign vessel which failed to maintain its
vessel monitoring system in violation of Russian law could not assert
an ``innocent owner'' defense in a forfeiture action.
Adding an ``innocent owner'' provision will not unduly hinder the
United States Department of Justice from prosecuting cases. ``Innocent
owner'' does not prohibit the government from taking goods that violate
foreign laws. The government can still prosecute with ``innocent
owner'' provisions. In fact, the Civil Asset Forfeiture Reform Act of
2000 (CAFRA) and the Brownfields Revitalization Act both specifically
give an ``innocent owner'' defense, and neither has stopped the
government from prosecuting cases.
In essence, ``innocent owner'' puts the burden of proof on the
government. It reinforces the key principle of ``innocent until proven
guilty.''
In an effort to restore the ``innocent owner'' defense in light of
the Ninth Circuit's opinion, any proposed amendment to the Lacey Act
should include language specifically adopting the ``innocent owner''
defense set forth in the CAFRA.
The proponents of this legislation say that legality does not need
to be proven to clear U.S. Customs and to import goods. This is true.
However, how does an importer or a supply chain member disprove a
negative should the government seize his goods? That is, how does he
prove no law was violated overseas when he is already in possession of
legal documents?
In recent weeks, several articles have been published about illegal
logging in Canada and in the U.S. If the Lacey Act were amended, how
would the domestic timber industry prove that no law has been violated
anywhere in their supply chain?
Most of the businesses represented by this coalition are small and
family owned. We are not ``Big Timber'' or ``Big Paper''. We are mom
and pop businesses who hope to someday pass on our customers to the
next generation.
We implore the members of the committee to amend this anti-small
business bill to protect ``innocent owners'' and save U.S. jobs.
Wood Trade is Unique
In our consultations with government officials and Congressional
staff, we have been challenged with the question, ``The Lacey Act works
for animals and fish, why not wood?''
Wood products go through transformations that have no parallel in
animals or fish. We represent commercial industries that have many
steps in the chain for transformation of product, unlike the commercial
fishing industry where commercial boats catch and process at the site
of harvest. Nor can we be compared to the individual hunter or
collector who may personally and knowingly pursue a particular specimen
on the wrong side of the law. Wood products go through many
transformations, in many countries. For example, logs are harvested in
the U.S. and exported to Vietnam for primary processing. The veneer
shipped to China and made into furniture for ultimate export back to
the U.S. Tracking that U.S. log from point of harvest in Pennsylvania
and back to the point of import is incredibly complex.
Illegal Logging Causes and Cures
The International Wood Products Association and its coalition
partners are committed to putting in place comprehensive solutions to
the illegal logging problem. We believe there are already laws in place
to stop the importation of illegal material into the United States.
Solving the illegal logging problem is about stopping the problem
at its source--in the country of origin before the material can enter
into international trade.
The root causes have nothing to do with importers or U.S. trade. A
collaborative report by Seneca Creek Associates and Wood Resources
International states, ``The suspicious volume of round wood that enters
international trade represents on the order of just 1 percent of global
production for both softwood and hardwood.''
Instead of focusing on criminalizing U.S. citizens involved in the
importing and building trades, policy should address issues causing
illegal logging--poverty, forest governance, societal problems, and
civil conflicts.
The World Bank noted that ``more than 90 percent of the 1.2 billion
people living in extreme poverty [are] dependent on forests for some
part of their livelihoods.'' Without any other incentives, they choose
to clear-cut and burn their forests for cattle ranching, agricultural
purposes, and for fuel wood--life's basic necessities.
Enacting H.R. 1497 or a House companion to S. 1930 will not end
deforestation or illegal logging because it does not get to the root of
the problem. These approaches may actually make the problem worse as it
will add costs to forest management. When impoverished communities see
no future in forests, they burn them down to make the land available
for planting crops and ranching.
We strongly feel the best way to combat illegality is by enforcing
the laws in place. By definition, illegal logging is not legal;
therefore, let us work with the foreign governments of most interest
and concern to make sure there is great compliance with existing laws.
If the United States is going to position itself as a partner to
countries that have problems with illegal logging, it must do so as an
honest broker seeking good resolutions and not because it is responding
to some domestic industries that are seeking to exploit illegal logging
issues as a push for protectionist measures to limit competition.
It does no good to create an illegal logging remedy that is in
practice a method to reduce competition from imported goods. Such a
remedy merely becomes an instrument of protectionism that undermines
U.S. competitiveness, hurts millions of American consumers, and
penalizes small businesses.
This bill, as written, does not move us to where we need to be to
end illegal logging around the world. Our coalition believes it is
necessary and appropriate to utilize bilateral, regional, and
multilateral agreements to strengthen commitments in the areas of law
enforcement, judicial capacity building, and technology. The U.S.
should work with foreign governments on the ground through bilateral
trade agreements, such as the Peru Free Trade Agreement with its
illegal logging annex; Memorandums of Understanding, like the current
MOU with Indonesia; the U.S.-China Strategic Economic Dialogue Task
Force to Create Bilateral Agreement Addressing Illegal Logging and
Associated Trade; and the President's Initiative Against Illegal
Logging (PIAIL). If this legislation is an attempt to influence wood
products trade with China, then please propose a trade bill to deal
with China and do not enact legislation that will harm legal businesses
while doing nothing to protect the forests from being converted to
agricultural use.
Conclusion
The International Wood Products Association condemns illegal
logging. This industry's long-standing support for sustainable forest
management is evidenced by IWPA's Code of Conduct and Board-approved
Statement on Illegal Logging developed in 1994 and 2002, respectively--
among the first policy statements adopted about the issue by any
organization.
Despite a desire to be proactive on the issue, IWPA and its
coalition partners oppose H.R. 1497 or a House companion to S. 1930 as
currently drafted to criminalize the otherwise legal importation of
wood products where the imports are found to have been taken in
violation of ``any foreign law.'' These measures would extend civil and
criminal penalties under the Lacey Act to U.S. citizens who are in
possession of plants that violate ``any foreign law,'' even when the
U.S. citizen is an ``innocent owner'' and has relied upon
certifications of the exporting country.
Expansion of the Lacey Act as suggested by H.R. 1497 or a House
companion to S. 1930 would create substantial uncertainty for various
industries lawfully engaged in and reliant on the importation of wood
products and other plant materials. Such uncertainty would result
because of the broad applicability of Lacey Act civil and criminal
penalties to individuals within the chain of custody of plant materials
that, unbeknownst to them, may be in violation of ``any foreign law.''
As discussed previously, U.S. federal courts interpret the term ``any
foreign law'' extremely broadly, in contravention of the original
intent of the Act.
During the 1981 Senate hearing on the Lacey Act Amendments, Dr. F.
Eugene Hester, Acting Director of the U.S. Fish and Wildlife Service,
addressed the intent of the amendments:
``We do not wish to hinder legitimate trade in wildlife or
wildlife products. We believe that healthy, viable, sustaining
wildlife populations should be harvested and trade promoted. It
is the destructive poaching of fish and wildlife that must be
controlled...''
Thus, the current efforts to amend the Lacey Act, which would hinder
legitimate trade in wood products run counter to the intent of the
statute.
The National Stolen Property Act, Cultural Property Implementation
Act, Convention on International Trade in Endangered Species, Customs
laws, and existing money-laundering statues are among the tools readily
available to the U.S. government to prosecute the ``bad actors'' or to
deal with timber species which are actually at risk. In addition,
bilateral arrangements can be designed to provide for enforcement by
the U.S. of other countries' illegal logging laws. Two examples are a
Memorandum of Understanding signed with Indonesia and the illegal
logging annex in the Peru-U.S. Free Trade Agreement.
Forests need to remain forests, and the best way to do that is to
provide economic incentives to countries that sustainably manage their
forests. Using tropical forest products is the best tool in our kit to
promote forest health, encourage legal trade, and promote economic
development in poverty stricken nations.
The benefits will also be seen in the U.S. marketplace and in our
employment numbers. In 2006, over $23 billion worth of legally traded
wood and wood products entered the U.S., a 38-percent increase over
2003. Imported wood products are value-added in the U.S. by U.S.
workers for U.S. consumers. Housing, flooring, decks, cabinetry,
millwork, recreational vehicles, boats, and furniture industries all
use imported wood in their U.S. manufacturing facilities. The demand
for products of a certain look, durability, availability, and price is
at the center of our market economy. As market demand for imported
woods and other goods rises, so do jobs. From port to highway, producer
to distributor, and retailer to end-user, hundreds of thousands of
family incomes are made possible by international trade, including
legally sourced imported woods.
Forest conservation and legal trade are goals that we all share.
Unfair policy pushed by alliances seeking political gains and market
advantage should not supersede them.
Thank you for this opportunity to testify and for your
consideration. We look forward to working with the Subcommittee as it
reviews H.R. 1497.
______
Ms. Bordallo. Now, consistent with Committee Rule 3[c], the
Chairwoman will now recognize members for any questions they
may wish to ask the witnesses allowing five minutes each for
each member. Should the members need more time we will have a
second round of questions. I would like to begin first with Ms.
Sobeck.
In your testimony you note that the Justice Department
believes that existing U.S. laws do not adequately address the
problem of trafficking in illegally logged timber and that
amending the Lacey Act is a sensible way to provide the legal
authority that is needed.
Can you give us some examples where the Department was
aware of illegal timber being imported but you were unable to
prevent it from entering the U.S. due to inadequate legal
authority? How would proposed amendments to the Lacey Act
change that?
Ms. Sobeck. Yes, Madam Chairman. Just I think an easy
hypothetical. If there is a shipment of timber that we have
found out from foreign authorities was harvested illegally in
the foreign country, and it is in the process of being imported
into the United States, if that timber is of a species that is
not listed under CITES it is our view that there is no
provision of U.S. law that would prevent its importation as
long as it was truthfully and appropriately declared upon
entry.
I mean, obviously if somebody lies on their Customs forms
we have a means of going after them, but if it is a CITES
protected species we would not have a Lacey Act enforcement
action, but we could bring an enforcement action under the
Endangered Species Act or the smuggling prohibitions. In the
absence of CITES listing there is no provision of U.S. domestic
law that would prevent the importation of illegally harvested
foreign timber in our view.
Ms. Bordallo. Let me just follow-up here. Would the sawn
timber imports from Indonesia mentioned by Mr. von Bismarck be
an example, would you say?
Ms. Sobeck. If that timber were not a CITES listed species
of timber that would be an example, yes.
Ms. Bordallo. Mr. von Bismarck, would you like to add to
that question, please, in terms of the problems that you are
seeing now?
Mr. von Bismarck. Yes. I think that is what I was referring
to with one hand tied behind our backs. I think that the
efforts by the United States government under the President's
initiative against illegal logging, the efforts by our various
agencies, have been very well-received and very important.
Unfortunately, the monies spent and the efforts spent have
been undermined by the fact that while we are, for example,
training prosecutors in Indonesia, for example, we are on this
end financing unwittingly the crooks that they are supposed to
be going after. It is only with a comprehensive approach that
we can make our hard work on the ground effective, and this is
what is missing.
Ms. Bordallo. Thank you very much. I have a second question
for you, Ms. Sobeck. Opponents of the bill claim that by
amending the Lacey Act as proposed it is placing an unfair
burden on importers of wood and wood products by requiring them
to be accountable for foreign logs. You note in your testimony
that importers of fish and wildlife products have been subject
to similar accountability requirements for more than two
decades.
How are these situations similar, and what new requirements
were placed on fish and wildlife importers in 1981 when the law
was amended? Did it prove so burdensome that they were unable
to continue their imports?
Ms. Sobeck. Well, I can't speak for industry, but I think
that we have found with respect to fish and wildlife that Lacey
has been a good tool and that the burden on the government is
quite high in proving a criminal case. We do have an obligation
to prove knowledge generally of the foreign law or that a
person or entity in the exercise of due care should have known
about a foreign law and that in the absence of that level of
knowledge we would not be imposing or seeking to impose any
sort of criminal sanction.
The standard of due care varies by what line of business
the person or the entity is in, whether they are regularly
engaged in business that relates to importing or commerce in
foreign fish and wildlife, and if this were extended to plants
or timber products that would be the case as well, but the
government has quite a burden in proving a criminal case. So we
from a law enforcement point of view have not seen that this
has been a big problem for the industry.
I defer to my colleagues who were testifying here today
about their views about whether the documentation would be
burdensome for them or not. It is interesting to me that they
said that they did not think that it would be.
Ms. Bordallo. Do any of the other witnesses wish to comment
on that?
Mr. Forester. I would like an opportunity to respond.
Ms. Bordallo. Go ahead.
Mr. Forester. Thank you. I appreciate the point of view of
Justice. I think the Lacey Act as it applies to fish and
wildlife forgets the fact that the supply chain in lumber is
far longer and more complex than the harvesting of fish and the
processing of fish and wildlife at the point of harvesting.
The amendments that we are suggesting to this amendment try
to place culpability on people who knowingly import illegal
lumber. When you talk about foreign laws, we are all united
against illegal logging, and we would like to give you the
tools to use to combat that, but in doing so the burden on
business should not be for any foreign law.
If that is the intent, you know, specifics in the law I
think are very important, and I think the burden of proof
should be high on a criminal case, and I think the Justice
Department would agree. When we ask for innocent owner we are
merely looking for culpability to be placed upon people who
knowingly do so, and for the responsibility for illegal acts to
be placed upon people who are committing those illegal acts.
Providing an innocent owner provision similar to one that
is in CAFRA allows businesses whose business is lumber to not
be subject to foreign laws that they would have no way of
knowing about. I think it is important to understand that there
is a long supply chain in the harvesting of lumber, and I think
with a documentation requirement in place that it is very
difficult to audit that trail that we expect foreign sovereign
governments to audit.
Ms. Bordallo. Thank you. Thank you very much, Mr. Forester.
Mr. Forester. Thank you.
Ms. Bordallo. Ms. Wrobleski or Mr. Barringer, would you
care to comment on that?
Mr. Barringer. As far as the regulation is concerned we can
appreciate that. I have heard the same thing for years in West
Virginia about the regulation on logging. We have a book this
thick in West Virginia of requirements that are placed on us
just to log in West Virginia, but we do it, and we get by with
it and it is OK. This is a dire situation.
We are talking about 69,000 workers to date that have lost
their job because the furniture plants are leaving this country
to chase cheap wood, going after illegally logged timber.
Something has got to be done.
Congressman Brown, in your state in South Carolina they
estimate there were probably 300 small hardwood saw mills.
Unless something is done, those guys, half of them are toast in
10 years. If there is 300 sawmills that is 29,000 paychecks in
the State of South Carolina. We don't know for sure. That is an
estimate of the number of small sawmills in the state.
Ms. Bordallo. All right. Would you care to make a
statement?
Ms. Wrobleski. I think the point that I would make, Madam
Chairman, is that the legislation is fairly specific about what
foreign laws we are talking about, and I think that has been
the critical issue frankly for AF&PA throughout this process is
the requirement for specificity.
Illegal logging is defined as organized efforts to steal
trees or otherwise ignore a country's efforts to control and
preserve its nation's forests such as harvesting without
authority in designated national parks or preserves, logging in
excess of authorized amounts, failing to pay taxes or royalties
on harvested logs and exporting logs in violation of export
limitations.
I think the point that the legislation is directed with
this specificity at those particular laws is frankly something
that AF&PA applauds.
Ms. Bordallo. Thank you very much, Ms. Wrobleski. Now, the
Chair recognizes the Ranking Member, The Honorable Mr. Brown
from South Carolina.
Mr. Brown. Thank you, Madam Chairman, and thank you all.
What an interesting panel. I hope we can come to some good
resolve. It concerns me. Certainly, we don't want any illegal
products coming into this country, whether it is fish, or wood,
or whatever else it might be, but to place the burden of
responsibility on the end user to determine whether it is legal
or not legal I think is a difficult task for me.
With that, let me ask this question to Ms. Sobeck. Ms.
Sobeck, H.R. 1497 requires that U.S. users of imported wood
products comply with all foreign laws, treaties and
international agreements. How many forest laws are there in
Indonesia?
Ms. Sobeck. I don't know, sir.
Mr. Brown. My notes say 900.
Mr. Blumenauer. Madam Chair, just in aid of, that was the
bill as it was originally introduced. As I tried to make clear
in my testimony, we have been working with many of the people
here. The version that is introduced by Senator Wyden reflects
the consensus that we have developed. My testimony was based on
using that amended version.
Mr. Brown. OK.
Mr. Blumenauer. I don't want us to spend a lot of time on
something that isn't what I am proposing.
Mr. Brown. OK, but that was just to get me where I want to
go next, but thanks, Earl. OK. How do we determine whether the
product that we are receiving at the port whether it is legal
or illegal? How do we make that determination, and who makes
the determination?
Ms. Sobeck. Well, that determination is going to depend on
a case by case basis. If we, the United States, are going to be
making a determination that somebody has broken the law the
burden is going to be on us to show that the person or entity
knew or should have known in the exercise of due care in order
to bring a criminal violation.
Mr. Brown. And that is my point is that, you know, looked
like to me the United States government ought to be responsible
for determining what products are legal and what is illegal. I
know that those countries have to comply with their own laws to
I guess credit whether it is legal or not legal.
I would hope that some time or another we could have that
in a manifest that when the product comes in that we could make
that determination and not wait until it becomes a chair or
whether it becomes some other piece of furniture. That is too
far down the supply chain I think to bring some criminal
activity.
I mean, I would hate to see somebody come in to one of
those plants and confiscate some boats, or, you know, some
furniture because somebody missed that checkpoint when it came
into the United States.
Earl, that is my real concern is we can get some
clarification at that level. We don't want it coming in. We
don't want those mills to close down, we don't want all those
furniture plants to close either that buy that lumber from
those hardwood mills, but how do we know when we import
something from China whether it is coming from lumber that is
legal or illegal?
Ms. Sobeck. Well, Congressman, I think that it is going to
partly be the paperwork that is going to be required to
accompany the products upon their import, and then it will be
up to the exercise of due care to importers or others farther
down the line. If there is somebody farther down the consumer
line who has no knowledge, the government would not be bringing
any kind of criminal action under this set of amendments to the
Lacey Act if they were enacted.
Mr. Brown. Then you would support innocent owner provision?
Ms. Sobeck. Well, with respect to the criminal offenses
obviously somebody who had absolutely no knowledge and no duty
to know in the exercise of due care to know that the product
was illegal would not be subject to criminal sanctions. The
forfeiture provisions are not subject to those knowledge
requirements under the Lacey Act at the moment with respect to
the contraband substance itself.
Mr. Brown. OK. Could I get a comment from the rest of the
panel on the innocent owner provision?
Mr. von Bismarck. Thank you, Congressman. I think it is
helpful to distinguish that for prosecution of individuals it
is our understanding that the burden is on the government to
prove intent, so there under this law will be no prosecution of
individuals that did not know or did not follow due care.
The discussion over innocent owner relates to seizure and
forfeiture only, and in that case from our point of view from
working on enforcement and looking at what deterrents would
work would be very important to consider that the comment made
by Mr. Barringer as to the impacts on the economy are largely
driven by the actual shipments of illegal timber making it into
the country.
The problem with the innocent owner and why we say it will
gut the bill is that if we have the information, if we can
prove that a shipment is illegal, we should be allowed to seize
it. That would be so important for the signals that this will
send in the market.
Mr. Brown. Right, and I agree we ought to be able to seize
it, but we ought to be able to seize the original shipment, not
wait until it has been transformed into some other product.
That is the reason I was thinking about the innocent provision
in there. If it goes through Customs, you know, like the normal
standard process and it is all agreed to then why would the
next chain of ownership not be OK?
Mr. von Bismarck. It is actually a critical point,
Congressman, and it is very important to not look at only one
point in the supply chain. It is certainly true that the supply
chain gets very complex in the case of wood products, and I
think that will lead to the fact that it will be more difficult
for the government to prove that something is illegal if it is
highly manufactured, and therefore, somebody dealing in those
kinds of products is less likely to be prosecuted.
If it can be proven it is essential that case can be
brought. Otherwise, if we only look at sawn timber or we only
look at logs the market will simply respond by manufacturing
the products in a country that does not have similar laws and
then shipping all of the illegal material in the form of chairs
into the United States.
Mr. Brown. So you think the proof of legality ought to be
with the receiver or with the government who is actually doing
the inspection as it comes through? I mean, wherever that end
product comes, how can they be responsible for an act that took
place in Indonesia?
Mr. von Bismarck. Well, they won't be responsible, but the
good can be seized if the government can bring evidence that
material is illegal.
Mr. Brown. But shouldn't that be done at a port of entry?
Mr. von Bismarck. If it can it certainly should be. That
would be most efficient, and that is what the on the ground
work that the U.S. Government is doing now would effectively
do, but it needs to be buttressed by this legislation that says
if something gets through you are not going to be able to sell
it in the United States and therefore have the motivation to
try to avoid the efforts in Indonesia to solve the problem
there.
Mr. Brown. Ms. Sobeck, do you agree with that assumption?
Ms. Sobeck. I am sorry. I agree with you, Congressman, that
we should try to get at a violation at the earliest possible
time. In fact, our preferred enforcement mechanism would be to
have the foreign country and the country of origin do their
policing of their own laws to prevent the export of the
material to the United States.
Mr. Brown. Sure. Sure. Right.
Ms. Sobeck. Then of course we would like to catch it at the
border and have the primary importer. I think that is always
our preferred enforcement mode for Lacey Act prosecutions even
if the predicate offense is a state law. We are always going to
go after the main importer, the main supplier, the wholesaler,
but as Mr. von Bismarck noted, sometimes you don't get there.
Sometimes the only thing you have is the illegal product
itself. I agree that if since what we are trying to do is get
to not having us be the consumer nation of this illegal
product, then having an action not against the individual, not
a criminal action, not something that is going to jeopardize
their liberty or result in a criminal fine but to forfeit the
product itself even in the absence of knowledge of the owner
further down the supply chain or ownership chain, that
occasionally may have to occur.
Again, that is the structure that is already in place in
the Lacey Act. We have limited enforcement resources. We are
going to try to target them in an intelligent, appropriate way.
Mr. Brown. Mr. Forester, did you want to respond?
Mr. Forester. Thank you very much. Innocent owner does not
prevent the government from seizing goods. In fact, CAFRA, the
Civil Forfeiture Act, has an innocent owner provision. We were
looking for Lacey to include the innocent owner similar to what
CAFRA does. Listen, people import illegal lumber knowingly.
Criminals should be prosecuted.
You should prosecute them, and I want you to prosecute
them. That makes better business for the rest of us who are
doing it legally. There is no doubt about that. CAFRA, which is
a forfeiture act, has an innocent owner provision in it. We are
looking for Lacey to incorporate an innocent owner provision to
protect people who do not knowingly import illegal timber.
It is to put culpability on people who knowingly are doing
criminal activities from a criminal set. It doesn't affect
forfeiture, and illegal timber should be seized. If the
government can prove that it is illegal timber they should
absolutely seize it.
But from an importer's standpoint, if you have to prove
legality currently through import documents, export documents
from the country of export, import documents, I do my due
diligence with my suppliers to make sure that they are
providing me with legal documents, I expect foreign sovereign
governments to do their due diligence in enforcing their laws
because I cannot substitute for the U.S. Government or more
importantly a foreign sovereign government to audit the trail
of legal documents through the long supply chain that happens.
Lumber is cut, it is sawn, logs travel, people sort their
logs, and this happens in the United States also, and I think
it is done legally. It is a long supply chain. If I have legal
documents from a foreign sovereign country I need to rely on
that because as a small business I don't have the resources
that the U.S. Government nor foreign governments have to police
the activities and the laws in each individual country that I
am dealing with.
I think if you have a criminal and that criminal is
importing lumber, prosecute them. Wonderful. That is the best
thing that we could have.
Ms. Bordallo. Thank you very much, Mr. Forester. We are
going to have a second round of questions here, so I would like
to tell the Ranking Member he has a second round here. At this
time I would like to recognize the author of the legislation,
Mr. Blumenauer of Oregon.
Mr. Blumenauer. Thank you very much, Madam Chair. I really
appreciate the line of inquiry that we had a moment ago because
I think it is starting to get to the focus of what we are
trying to do here.
Mr. Forester, in your introduction, it is not in your
written testimony, but in your introduction, you elaborated
that you visited overseas. You went over and looked at what is
going on, on the ground, repeatedly to assure?
Mr. Forester. Yes.
Mr. Blumenauer. Now, why do you do that instead of just
relying on what the Chinese, or the Indonesian, or the Thai
tell you?
Mr. Forester. Or the Central and South American locations
that I go to.
Mr. Blumenauer. Right. Why do you do that?
Mr. Forester. We do business domestically and
internationally, and I choose suppliers the same way
internationally as I would domestically. You need to meet your
supplier, you need to visit their location, you need to walk in
and look at their yard. You need to look around. Do they have a
neat yard or is there things piled up everywhere?
You need to meet the people that you are dealing with and
get a feeling about them. Then you need to work through
documents and whatever else to determine whether they are doing
something----
Mr. Blumenauer. Right, but you just don't rely on
representation from foreign brokers or for foreign governments.
You do it yourself on the ground.
Mr. Forester. As a small business we do directly import out
of certain Central and South American countries. I do not do
any business in Asia, so I cannot speak to Asia. We do buy from
U.S. companies and brokers that have brought product through
Customs, and many of the IWPA members do that, and I think they
are relying and I rely on the documentation.
Mr. Blumenauer. I guess the point I am trying to make is
that you go to extraordinary lengths to guarantee that those
areas that you are involved with meet your standards.
Mr. Forester. To the best extent possible.
Mr. Blumenauer. Yes, and I guess this to me is an
illustration, Madam Chair, of why I think we need this
legislation, because somebody who chooses not to go to that
length, who just gets a good price, wants to take it, looks the
other way, is on the same footing. We wouldn't have an illegal
logging business thriving worldwide if we had higher standards
in the United States.
Your mills wouldn't be at risk, or at least as many of
them, in South Carolina if everybody did what Mr. Forester
does. The notion that people just kind of can sort of take what
is thrown over the transom. It is common knowledge to people in
the industry that these are illegally harvested lumber, that
they are not all done according to the standards that are in
place technically but not enforced.
Mr. Brown. Would the gentleman yield real quick?
Mr. Blumenauer. Surely.
Mr. Brown. Earl, I know that he goes and looks at the yard,
and it looks clean and all that stuff, but legally who has the
stamp to say whether that is legal timber harvesting or illegal
timber harvesting? Looked like to me if the country would give
some kind of a stamp to say that this mill is shipping, or that
is a legitimate mill, or nonlegitimate mill, the country of
origin should have some legal responsibility to certify it.
I would think the United States, as we ship products abroad
we have some certification to say that, you know, these are
legal timber products or whatever.
Mr. Blumenauer. I agree, and I think as you go overseas and
you look at what is happening. For example, there has been a
big brouhaha about sweat shop provisions, and you understand
that again in South Carolina, and what has happened is that the
industry has created protocols. They have standards for what
they purchase. Whether it is Adidas or Nike, they have
protocols. They have things that their mill, the people they
supply from, their suppliers, that they look for, that they
agree to a code of conduct.
Occasionally mistakes will be made, but if a company has in
place procedures, if these are in fact represented to them, and
they follow through in a reasonable fashion, and they make
reasonable effort and they have standards, as I read the bill
as we have attempted to understand it, that there would be no
criminal penalty unless--and the Department of Justice has more
than what they can do, and I appreciate Ms. Sobeck being here,
but correct me if I am wrong--the criminal liability would not
kick in unless you could prove that they knowingly accepted
illegal.
The civil penalties are, people, they either need to know
or should have known that due care exercised before they are
even subjected to civil penalty. Under this legislation there
would be an additional disincentive, which is an illegal log or
illegal piece of furniture if it is found out would be
forfeited so that there is an incentive up and down the chain
to do what responsible manufacturers are already doing, what
Mr. Forester is already doing. Isn't that correct? Do I have
that right?
Ms. Sobeck. That is correct with respect to criminal
culpability. There is no innocent owner without any knowledge,
or a responsibility, a duty to exercise due care, no innocent
owner will be found guilty of a criminal offense. They will be
subject to forfeiture of the product. There has been a little
discussion of CAFRA, and I did want to note that the case that
you have been mentioning, the crab case, actually found that
the Lacey Act forfeiture provisions were consistent, were OK
under that statute, and so they are not inconsistent.
So to the extent that CAFRA has an innocent owner provision
that is supposed to apply across the board to civil forfeiture
statutes Lacey has been found by at least one Court of Appeals
to be consistent with that standard.
Mr. Forester. And that is wonderful. That is why I am here
today. I try to do and do the best job possible, but that said,
if Lacey is not tied to the innocent owner provisions in CAFRA,
if there is not a specific tie to it, all the good things that
I try to do to import legal lumber, which I do--I am here not
to defend illegal lumber----
Mr. Blumenauer. I am asking the questions. Excuse me, Mr.
Forester.
Mr. Forester. OK. Yes, sir.
Mr. Blumenauer. I mean, you are debating the Lacey Act. You
are not debating what we are proposing here. If people want to
come back and change the Lacey Act to clarify that there is an
innocent owner provision, so be it. What we have here in this
legislation is simply extending it to the Lacey Act.
If your segment of the industry wants to take exception to
the Lacey Act, go do that. What we are doing is trying to, and
I really appreciate the broad industry support, the broad labor
and environmental support, to try and root out of the chain of
commerce illegally logged timber which is occurring now, which
is widespread, which is why, Mr. Forester, I hope that you are
looking on the ground in Latin America to make sure because you
are representing to your customers that they can count on what
is going on.
What the other and I appreciate the majority of the people
in the industry are here arguing is that everybody ought to be
able to rely on that under the force of law. The Lacey Act is
the simplest, most direct way I think to accomplish that. If
people want to change the Lacey Act, that is a separate issue.
We are just proposing that the Lacey Act protection apply to
illegally harvested timber. Thank you, Madam Chair.
Ms. Bordallo. Thank you very much. I have a couple of
questions on the second round for Ms. Wrobleski and Mr.
Barringer. Both of you, the two of you, you know it is very
unusual for the Congress to be asked by U.S. businesses for any
expansion of U.S. laws or regulations which may affect their
particular business. Are you not concerned that your own
companies may be inadvertently caught up in the Lacey Act and
forced to prove your own innocence?
I will ask you, Ms. Wrobleski, first to answer that.
Ms. Wrobleski. Thank you, Madam Chairman. I think that over
the course of the last several months of negotiations between
the many stakeholders who care deeply about the issue of
illegal logging, the members of AF&PA and certainly
International Paper have come to the realization and the
understanding that the current proposal which Mr. Blumenauer
has proposed is one that we think is the most effective.
At International Paper we have complete confidence in our
supply chain. We pay great attention to CITES. We don't log
anyplace where Conservation international has declared a hot
spot, we are very careful about tropical forests. I mean, we
have a long legacy of good stewardship of the forests, and we
protect that legacy and frankly it is an important part of who
we are as a company.
As I say, I think that on behalf of the association and the
industry the proposal that we have before us we think is
workable and will be effective.
Ms. Bordallo. Mr. Barringer?
Mr. Barringer. Yes. No, I am not concerned. From Coastal
Lumber Company's standpoint we just do the right thing. Just
from that standpoint, that doesn't concern me. I have been to
hundreds of furniture plants in China, and Vietnam, and
Southeast Asia and so forth, and they all know it is illegally
logged. They laugh about it. They all know that the wood that
is sitting in that furniture plant that is going to the United
States has been illegally logged along the Russian border, and
they have paid bribes to get it.
Now, I am not saying that everybody is, you know, perfect
on this, but something has got to be done. Something has got to
be done now. Like I have pointed out, in Congressman Brown's
state you have a lot of jobs at stake right now. You can talk
to Sumter Furniture in South Carolina where my grandfather
worked as a forester 75, 50 years ago. Well, they are in China
now. They are in China.
Ms. Bordallo. Well, I have been a member of the Small
Business Committee here in the U.S. Congress, and I know the
tales of the small businesses. It is really very sad.
I have a question for you, Mr. von Bismarck. Some have
questioned whether international trade and U.S. demand is
really a driver of illegal logging in foreign countries arguing
that most illegal wood is sold domestically. Given your
experience on the ground in these countries, how do you respond
to that assessment?
Mr. von Bismarck. Thank you. Yes. The current estimates are
that the illegal portion of international trade is about 10
percent, and the estimates that we have pulled together in the
report that we prepared for this hearing we also found that
best estimates are that about 10 percent of imports into the
United States are from high risk material which would go to
about 3.8 billion a year.
Those are obviously difficult statistics to pull together.
We are talking about smuggling. They are difficult in any
smuggling to pull together exact statistics. They also in a way
miss the point of what we are trying to do here.
What we are absolutely certain about is that from the point
of view of uncontacted, indigenous peoples in Peru, or from the
point of view of the last national parks available remaining in
the world, and from the point of view of those impacted by
illegal imports, it doesn't matter what the proportion is
relative to legal forests, it matters how it is impacting
things on the ground.
So even a small proportion coming into the United States
can have an enormous impact on a national park that is being
entered by a criminal elements in Honduras, for example. I
think in terms of the driver it is clear that often illegal
logging is a first step that begins a chain of events that
includes the other complex issues as have been rightfully point
out that determine deforestation.
Often, illegal logging is one of the first gateway
activities that occurs in those stories.
Ms. Bordallo. I have a further question for you. The IWPA
argues that the best way to combat illegal logging is to
enforce the laws that are in place in foreign countries. What
is your response to that?
Mr. von Bismarck. It is absolutely correct that enforcing
foreign laws and working on the ground in foreign countries is
extremely important. What is just missing from the comment is
that it is currently being undermined by the fact that we are
in essence unwittingly financing the criminals that we are
spending money overseas to combat, and it just doesn't make
sense.
I think that every approach that we have had to try to deal
with an illegal trade problem understands that there is a
demand and a supply side to the problem, and it requires a
comprehensive approach. This demand side has been missing.
So specifically, the Lacey Act in its inception 100 years
ago interestingly was created to support laws in other states,
so it is precisely for that objective that is pointed out, that
we need to support the efforts in foreign countries to enforce
their own laws. That is precisely the objective of this
legislation.
Ms. Bordallo. Thank you very much. Now, the Chair
recognizes for a second round Mr. Brown, our Ranking Member.
Mr. Brown. Thank you, Madam Chair. With that in mind, how
can we as an end user of a produce enforce the laws in another
country?
Mr. von Bismarck. This legislation is not requiring any
business to enforce laws in another country.
Mr. Brown. But to comply with them, right?
Mr. von Bismarck. Right, and I think enforcement officials
here will point out that in any prosecution to date in the
Lacey Act much of the success of that prosecution depends on
communication with the source country and support from the
source country in clarifying those issues. I think your point,
Congressman, of clarification of laws is a very important one,
and again, is the kind of measure that this legislation will
instigate and support.
There are efforts in Indonesia as we speak, very successful
ones, to condense the 900 laws to a much more compact
collection of laws that the Indonesian government considers as
illegal timber. That was precisely driven by initiatives in the
consuming markets to ask Indonesia, we need clarification.
This legislation would have the effect of allowing the U.S.
market to make that same request and result in clearer laws
overseas.
Mr. Brown. But don't you agree, and Ms. Sobeck, I guess you
can chime in on this, that part of the responsibility of the
United States government is to protect the interests of our
small businesses to be absolutely sure that they aren't being
victimized by some criminal element in some foreign country?
Mr. von Bismarck. Absolutely, Congressman. I think it is
understandable that with these kind of measures there is
trepidation on the part of small business. I certainly cannot
speak for small businesses, but I would say that it is
certainly our take that this legislation would be an enormous
boon for businesses such as Mr. Forester's in the United States
who are taking those measures as were described today.
Mr. Brown. I don't think Mr. Forester is taking any level
of precaution that other manufacturers aren't unless there is
some illegal intent within some of the other, you know,
manufacturers in the United States. I don't think he is going
over there looking and see if they are legal. I don't know how
you can determine that.
As far as when you go to these other countries, how can you
tell whether the product is legal or illegal?
Mr. Forester. When we go to foreign countries we do as much
investigation as we can, but ultimately, we are still relying
on the National Forest Service of these foreign countries and
the national governments of these foreign countries to
ultimately certify that this lumber is legal. I think I
misspoke. If I did, I am sorry.
I am not looking to amend the Lacey Act or make any changes
to it. This amendment to the Lacey Act is addressing an
industry with a very long supply chain, and it is different
from the supply chains that the Lacey Act currently covers. I
think when you make such an amendment it is necessary to
understand that long supply chain and the fact that there are
many people along that supply chain that are responsible for
the lumber as it moves through the supply chain.
Somewhere along the line as a business owner I have to rely
on somebody to say that this is legal. I can do lots of things.
I can have documents issued by foreign countries, I can have
CITES documentation, I can have other third-party certifiers
certify lumber, but ultimately, certification is a standard.
Laws are a standard. It comes down to enforcement of those laws
to ensure legality.
That is true in the United States. When I do business with
other companies in the United States and they ship me product I
expect that to be legal. I rely on them to provide me with
legal documentation, and I rely on the United States government
to address any illegality that may happen further down the
chain. I expect foreign governments to do the same.
I think the United States government, along with USAID and
many other free trade agreements that they have, need to help
foreign governments enforce their laws because ultimately that
is the only true barometer of legality. Because how do I prove
legality? I mean, how far back should a business go in proving
legality?
I cannot audit the entire supply chain, and I cannot audit
the entire documentation. Criminal behavior is criminal
behavior. All I can do is work with the best of my knowledge,
and work with the export documents from foreign countries and
expect the government to do their due diligence.
Mr. Brown. Have you ever been subject to illegal products
coming in to your operation?
Mr. Forester. No.
Mr. Brown. When you make an order, do you pay in advance?
When does the money transfer?
Mr. Forester. Well, it depends. There are times when we pay
when lumber hits the docks or at times when we have paid when
lumber is at a port in a foreign country. In some Central
American countries we have gone so far as to advance money to
developing businesses down there to develop--it is within a
certification system that we are very happy with, but we have
advanced money before trees have even been cut in an attempt to
help develop that thing.
Frankly, we were doing something in parallel with basically
what USAID was doing in the country. As a private business we
were doing a very similar action. So it runs along the gamut.
Mr. Brown. Ms. Sobeck, are you familiar with some cases
where there has been illegal lumber, illegal logs coming into
the United States? Have you had any personal cases that you
have had to deal with?
Ms. Sobeck. Not that I personally have dealt with. I
believe there has been one case involving CITES listed timber,
but that would not have been a Lacey Act case, and other
illegal logs in the sense that they were harvested illegally in
a foreign country. Other than CITES species that would not come
to the Justice Department's attention because it would not be a
crime under U.S. law.
Could I just make a couple of points? I want to make clear
that in a criminal case the burden is never on the defendant to
prove that imported product was legal. The burden is always on
the government to prove that it is illegal. Much of the
discussion today from various industry representatives about
what they do in terms of looking at the certification or making
site visits and understanding the supply chain would qualify as
due diligence and that we wouldn't expect them to go beyond
that kind of behavior.
I am not talking in any specific case, but we would not
prosecute somebody criminally if they had exercised due care. A
lot of what we have been hearing is the kind of due care that
would benefit small business. What we don't want is when a
small business owner knows that the certification from a
foreign country is false.
We have heard some discussion of it is well-known that
there is timber that is illegally logged elsewhere and that
perhaps because of corrupt practices in foreign governments
there is a patently illegal or invalid certification. The
burden would be on the government, but if the government could
prove that an individual knew that the product was illegally
logged then we would initiate a criminal case.
Mr. Brown. Do you know how many cases we have made this
year? Didn't you say it is like a billion dollars that is
coming in illegal?
Ms. Sobeck. We aren't making any cases except in CITES
listed timber because it is not currently illegal. So in terms
of how much product is coming in that was taken illegally
abroad, the Justice Department, we do not deal with that. My
colleagues here on the panel have some information statistics,
but none of that timber is illegal under United States law at
the moment unless it is listed on CITES.
Just one more thing. I just wanted to let you know that the
United States, we are training prosecutors abroad and working
with foreign enforcement officials. That is one of the
principal things we are doing under the MOU with Indonesia
because we do want primary enforcement to be in the country of
origin.
Mr. Brown. Sure. Sure.
Ms. Sobeck. We don't want this to be a United States
problem.
Mr. Brown. Well, when do you think we would be able to get
some kind of a certification that when that manifest comes into
the port, if it has a proper certification on it, it is OK? You
think we will ever get that standard?
Ms. Sobeck. It is always going to be relevant to the
Justice Department in assessing a case what the certification
says, and depending on whether or not that is adequate is going
to depend on the circumstances.
Ms. Bordallo. I think, Ms. Wrobleski, you wanted to
comment, right, or Mr. Barringer? Yes?
Mr. Barringer. To answer that question, just in regards to
the furniture industry segment the market will take care of a
lot of that. Let us just say you are importing illegal log wood
product. You go to the plant in China and you say, you know
what, guys, you have to make that furniture with legally logged
sustainable timber. OK, fine. They start buying it from the
United States or they start buying it from some FSC certified
wood somewhere else.
That will take care of a lot of it. The price isn't that
much different. Again, like I said in my earlier statement, the
saw mills in the United States can be competitive with any
plant in the world if we just have a level playing field. It is
difficult for us to compete against illegally logged timber,
but the market will take care of a lot of this by forcing it
back on the Chinese furniture plant.
Ms. Bordallo. Thank you very much. I have one wrap up
question here for Mr. Forester. I have been listening, and do
we understand you correctly? You are not opposed to amending
the Lacey Act to preclude the import to allow the seizure of
illegal timber at the point of entry? Is that correct?
Mr. Forester. Could you read that again? You are asking me
a very specific question.
Ms. Bordallo. You are not opposed to amending the Lacey Act
to preclude the import and allow the seizure of illegal timber
at the point of entry?
Mr. Brown. Madam Chairman, that is the reason I asked him
when did he pay.
Ms. Bordallo. That is correct. Would you want me to read it
again?
Mr. Forester. No, no, no, no. I understand. I think it is a
little bit more than a yes or no question, but yes, if the
government proves that someone brought illegal timber into the
United States that timber should be seized. However, if the
importer did not knowingly import that and is innocent, in this
amendment because of the supply chain I think there should be
protection for the innocent purchaser.
Ms. Bordallo. Protection from what?
Mr. Forester. From criminal prosecution and civil
prosecution for that timber coming in if they did not knowingly
do that. That is my issue with this bill is that as a legal
importer and doing the right things, if someone further down
the supply chain does something illegal, yes, that timber is
illegal, yes, I don't have a problem with that being seized,
but I don't want to be criminally or civilly liable as a
business----
Ms. Bordallo. I am just rather concerned because wouldn't
everybody say they are innocent?
Mr. Forester. And I think it is the government has the
resources to prove that I knowingly imported it? I think that
is something the government should do. Absolutely. I find it
difficult with legal documents to determine how I would prove
my innocence, but I think I can defend my innocence.
Ms. Bordallo. Would anyone else like to comment on that?
Yes. Please go ahead.
Ms. Wrobleski. Thank you, Madam Chairman. I don't want to
pretend that International Paper is a small business, but I did
want to pick up on something that Mr. Barringer said and that
is the pressure of the marketplace. It is not just the pressure
of suppliers and our supply chain, but frankly it is the
pressure of our customers.
Our customers want to know that what they are buying has
been sustainably produced and is legal. To the extent that we
can work with Congress, and the government and the
environmental community to get some legislation on the books
that helps us reassure our customers, and again, Mr.
Barringer's point that the market will take us further than
that, and so I just wanted to say that I think that what we
have here is a good compromise.
Everybody has given up a little bit. Nobody is, you know,
perfectly 100 percent. Everybody has given some. I think that
the legislation that we have is legislation that needs to go
forward. Thank you.
Ms. Bordallo. I thank you all. I thank all of the witnesses
for their testimony and their informative answers. Members of
the Subcommittee may have some additional questions for the
witnesses, and we will ask you to respond to these in writing.
Yes. Go ahead.
Mr. Brown. Madam Chair, I hate to interrupt you, but I have
some letters that support, or do not support this bill, I
guess. For the record if I could submit them?
Ms. Bordallo. No objection. So ordered. The hearing record
will be open, I would like to remind the witnesses, for 10 days
for these responses, so if you are questioned you have a 10-day
period to answer. If there is no further business before the
Subcommittee the Chairwoman again thanks the members of the
Subcommittee and our witnesses. The Subcommittee now stands
adjourned.
[Whereupon, at 11:43 a.m. the Subcommittee was adjourned.]
[Additional material submitted for the record follows:]
[A statement submitted for the record by Patrick Alley,
Director, Global Witness, follows:]
Statement submitted for the record by Patrick Alley,
Director, Global Witness
Chairwoman Bordallo and members of the Subcommittee, thank you for
the opportunity to share our experience of illegal logging i
in Cambodia and its impact on the country and its people.
---------------------------------------------------------------------------
\i\ Throughout this document, illegally logged timber is defined as
any timber which is in violation of provisions of Cambodian law and
regulations relating to the acquisition of exploitation rights,
logging, means of harvesting, sale, purchase, transportation, import or
export of timber.
---------------------------------------------------------------------------
Global Witness ii first began exposing illegal logging
in Cambodia and its links with conflict, corruption and human rights
abuses in 1995. Over the past 12 years we have documented numerous
cases of illegal logging across the country, and the resulting social,
economic and environmental consequences.
---------------------------------------------------------------------------
\ii\ Global Witness is an advocacy organisation which exposes the
corrupt exploitation of natural resources in order to drive campaigns
that end impunity, resource-linked conflict, and human rights and
environmental abuses. In 2003, it was co-nominated for the Nobel Peace
Prize for its leading work on ``conflict diamonds'.
---------------------------------------------------------------------------
In the time that we have been working on this issue the modus
operandi employed by illegal loggers has changed but the power
relationships underlying the crime remain the same. Today, as it was
twelve years ago, the individuals behind the major illegal logging
operations in Cambodia are those with business or familial links to
powerful political figures. In other words, the bulk of illegal logging
in Cambodia is not carried out by poor people in desperate search of
supplementary income. It is an organised criminal activity which
enables politically well-connected individuals to generate large
amounts of money at the expense of the rural poor. They are assisted in
doing so by those elements of the state nominally responsible for
protecting the forests and upholding the rule of law: politicians,
police and military included.
Whilst our long involvement in Cambodia has given us a detailed
insight and knowledge of the country's illegal logging industry, the
patterns of abuse observed there are not unique. In many countries
where Global Witness works, government and state agents are predatory
and civil society is correspondingly weak. In such states, forest
resources are particularly vulnerable and illegal logging can become
embedded and thrive. This in turn contributes to patterns of
exploitation that are inequitable and geared more towards the profits
of individual officials and companies rather than poverty reduction and
environmental conservation.
Global Witness views the Legal Timber Protection Act's proposed
amendment to the Lacey Act as an important first step towards combating
these practices. Taken on its own, the proposed legislation will not
completely shut down demand for all illegal timber. However, its effect
would certainly be felt by those carrying out the logging by decreasing
demand for their product and, ultimately, reducing their profits.
Perhaps more importantly though, the proposed changes to the Lacey Act
would set a precedent for other countries to follow, and thus help fill
the current legal vacuum which provides illegal loggers and their
political allies with unfettered access to global markets.
The Loss of Cambodia's ``Most Developmentally Important Natural
Resource''
Illegal logging and human rights abuse have a long history of
association in Cambodia. Global Witness' early work revealed how, in
the last years of Cambodia's civil war, both the Khmer Rouge and the
Phnom Penh government used logging to fund military campaigns which
resulted in massive loss of life and livelihoods. Our investigations
revealed a cross-border timber trade with Thailand worth US$10-20
million per month. Following our expose, the Thai border was closed to
Cambodian timber--cutting off a critical source of military funding for
the civil war. This did not spell the end for the illegal logging of
Cambodia's forests, however.
Since the war ended in 1998 Cambodia's leaders have found it hard
to kick the habit of treating the country's forests as a personal slush
fund for political campaigns, personal enrichment and rewarding key
clients. The cumulative impact of this epic mismanagement is that the
country's forests--termed by the World Bank as Cambodia's ``most
developmentally important natural resource'' 1--have
contributed very little towards the post-conflict economy. 2
Instead, funds which should have gone towards the development of this
damaged state have been siphoned off via illegal or exploitative
logging practices into the bank accounts of the political elite and
their cronies.
The Role of the Concessionaires
In the mid-1990s, senior government ministers secretly awarded
between 30 and 40 logging concessions to Cambodian and foreign-owned
companies. The contracts signed away over seven million hectares of
forest, i.e. 39% of Cambodia's land area, on terms that greatly
favoured the interests of the concessionaires over those of Cambodia.
3 All the concessionaires proceeded to break the law or the
terms of their contracts or both in order to reap a fast profit (see
appendix 1 for further details). Throughout the late 1990s and up until
2002, they were responsible for most of the illegal logging in
Cambodia.
During this time, employees of the concessionaires violated the
rights of people living inside or adjacent to forest concessions on any
number of occasions. Abuses committed by company staff included denial
of access to forest areas, intimidation, rape and, in at least one
case, murder. 4
The environmental impacts of widespread illegal logging were felt
both locally and nationally. At a local level, these typically included
obstruction of streams that form people's water supply as a result of
poor road and bridge construction. At a national level, the overall
impacts of the concessionaires' logging were also apparent. Agriculture
and fisheries are the Cambodian population's main sources of food. Both
are sustained through natural systems of water management within which
the forests play an important role. UN agencies cited deforestation as
a cause of the severe floods in 2000 that cost Cambodia an estimated
US$156 million. 5
International donor and NGO pressure did eventually lead the
Cambodian government to suspend the concessionaires' logging operations
in early 2002. This was followed by a period of donor-government
consultations, culminating in a ``road map'' for forest sector reform.
6 However, despite public commitments to these reform
processes, Cambodia's shadow state has continued to illegally generate
money from the timber sector. The same officials charged with
implementing reforms have actively subverted them, with the result that
illegal logging has continued in a variety of forms and is causing
severe damage to Cambodia's remaining forests. The last global forest
cover survey by the Food and Agriculture Organization (FAO) found that
Cambodia had lost 29% of its primary tropical forest over a five year
period. 7
The New Face of Illegal Logging in Cambodia
In June of this year, Global Witness published its latest report on
illegal logging in Cambodia which exposed some of the scams used by
illegal loggers in recent times. The report, ``Cambodia's Family
Trees'', is the result of several years research and details the
activities of a group of timber barons who together constitute
Cambodia's most powerful logging syndicate. With familial links to some
of the country's key political figures, their careers illustrate how
the country's political elite has successfully subverted forest
management reforms and continued looting a valuable public asset.
The individuals behind the Seng Keang Company logging syndicate
featured in our report, although undoubtedly major players in the
illegal logging industry, are not the only timber barons in Cambodia.
However, their activities and the way in which the group has conducted
its business are illustrative of the deleterious impact of illegal
logging across Cambodia as a whole. Global Witness investigations into
the group's activities over a number of years have charted just how
damaging their ``business'' has been to local communities, the
environment, rule of law and the national economy.Their behaviour has
encompassed not only illegal logging but also acts more normally
associated with a Mafiosi organized-crime mob, including extortion,
bribery, kidnapping, forced imprisonment and attempted murder. The
findings of our investigations are summarized below. Further detail and
references for the points covered in this document can be found in the
main body of ``Cambodia's Family Trees''. iii
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\iii\ The report can be downloaded from http://
www.globalwitness.org/media_library_detail.php/546/en/
cambodias_family_trees
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Introducing the Seng Keang Company: Cambodia's Premiere Logging
Syndicate
The syndicate is led by Dy Chouch, also known as Hun Chouch, his
ex-wife Seng Keang, and their business partner Khun Thong. Seng Kok
Heang, the brother of Seng Keang, also works for the syndicate. Dy
Chouch is the first cousin of Prime Minister Hun Sen. Seng Keang is a
friend of the Prime Minister's wife, Bun Rany. Khun Thong is the
brother-in-law of Minister for Agriculture, Forestry and Fisheries,
Chan Sarun, and father-in-law of the Director General of the Forest
Administration, Ty Sokhun. While this syndicate has operated under
various different labels over the years, most recently it has been
known as the ``Seng Keang Import Export Company Ltd.''
Members of the Seng Keang Company iv first came to
Global Witness' attention as logging subcontractors for some of the
leading concessionaire companies operating in Cambodia in the 1990s.
One of their key customers was a logging concessionaire company called
Kingwood Industry.
---------------------------------------------------------------------------
\iv\ For the purposes of this document, members of the Seng Keang
Company are understood to be Dy Chouch, Seng Keang, Khun Thong and Seng
Kok Heang.
---------------------------------------------------------------------------
Despite generating large profits from illegally logging within and
outside its concession area, Kingwood underwrote its activities by
borrowing money from a number of banks and individuals--including from
Seng Keang. A source close to the company claimed that it needed to
borrow because its directors were laundering sales revenue through
affiliated companies in Indonesia, Singapore and Taiwan. 8
By late 2001, Kingwood owed Seng Keang US$1.9 million. The government
suspension on concession logging in early 2002 effectively shut down
Kingwood's operation and destroyed the company's chances of keeping up
with debt repayments.
A source close to the Kingwood operation informed Global Witness
that, in August 2002, Kingwood's Managing Director--a Taiwanese
national named Lia Chhun Hua--attempted to cut his losses and leave
Cambodia for good. According to this source, he was prevented from
doing so by Seng Keang, whose entourage abducted Lia, confiscated his
passport and held him hostage in the factory. At this point, the Seng
Keang syndicate took control of the Kingwood timber processing factory
and all of its equipment. The last confirmed sighting of Lia Chhun Hua
was in 2005. Global Witness does not know his current whereabouts.
9
With the imposition of the logging moratorium in concession areas,
the Seng Keang Company needed to look elsewhere to continue sourcing
timber for processing at the Kingwood factory. An opportunity presented
itself in the shape of the government-mandated rubber plantation in
Tumring, Kompong Thom Province. The Tumring Rubber Plantation is
situated in the heart of Prey Long Forest--mainland Southeast Asia's
largest lowland evergreen forest and an important part of Cambodia's
natural heritage.
In October 2002 Chan Sarun's Ministry of Agriculture, Forestry and
Fisheries gave permission to the Seng Keang Company to collect wood
within the rubber plantation's boundaries. 10 The syndicate
soon proved itself uninhibited by the plantation's perimeters, and went
on to illegally log in the surrounding Prey Long Forest. The trees
felled in the forest were then laundered via the rubber plantation.
This formula--officially-sanctioned clear-felling within a valuable
forest--provided almost unlimited scope for laundering illegally-logged
timber between 2002 and 2006.
Anatomy of an Illegal Logging Operation
Damage to the local economy
With the rubber plantation project enjoying political support from
the highest level, the syndicate were able to log outside the
plantation boundaries with impunity.
Employees concentrated on logging Dipterocarp trees as the most
suitable throughput for the syndicate's processing plants.
Unfortunately for those people living in and around Prey Long forest,
liquid resin collected from the Dipterocarp tree is a key source of
additional income.
In recognition of the centrality of resin trees to rural incomes,
Cambodia's 2002 Forest Law made it illegal to cut ``trees of species
that people tap for resin''. Between 2002 and 2006 the company's
illegal targeting of resin trees seriously damaged the livelihoods of
hundreds, if not thousands of families living in the area.
Interviews with loggers and visits to cutting sites in Prey Long
suggest that resin-producing trees accounted for at least 50% of the
wood processed in the Seng Keang Company factory in its local factory.
11 Resin tappers in Tum Ar village on the edge of the
plantation told Global Witness in 2006 that in the past all of the 100
families living there had owned 200-300 resin trees each. In 2006, only
5-6 families had any trees left at all. 12 In Rumchek
village in Sokchet Commune villagers reported losing 800 resin trees to
representatives of the Seng Keang Company in mid-2005 alone.
13
According to resin tappers, Seng Keang Company employees would
sometimes pay them compensation for cutting their trees. The sums
involved were derisory however--US$1.25-US$12.5 for a tree whose timber
might sell for as much as US$1,000 in Phnom Penh. 14 These
payments were made on a ``take it or leave it'' basis.
Intimidation and threats of violence against the local population
The syndicate was able to maintain their control over the local
population through a combination of familial connections, bribery and
threats of violence. Their representative in Tumring, Seng Kok Heang,
used this technique to establish his own personal fiefdom in the area.
A report on plantations published in November 2004 by the UN Office of
the High Commissioner for Human Rights made a clear link between this
intimidation and the presence in Tumring of Seng Kok Heang, alias Mr
95:
``A man who goes by the name of ``Kae Pram'' [meaning 95 in Khmer]
(his radio call sign is 95) heads the security guards of Mieng Ly Heng
Company, and has a particularly brutal reputation. He is the brother of
Seng Keang, the director of Seng Keang Company, the main subcontractor
of Mieng Ly Heng. In Roniem village, people reported that they have
been frequently threatened with death for their attempts to block
illegal logging and illegal transport.'' 15
Persistent intimidation of this sort gave way to outright violence
on 10 July 2005, when Seng Kok Heang is reported to have tried to kill
two local men who had played a leading role in protecting villagers'
resin trees.
In March 2006 Minister Chan Sarun issued a decree revoking his
earlier authorisations for Seng Keang Company operations, and by
September 2006 practically all traces of the Seng Keang Company
operation were gone. 16 The precise rationale behind the
decision to close the company's operations is unclear. However, it
seems likely that the attempted shooting of two community forest
activists in 2005, and the international attention this generated,
played a role.
Loss to the National Economy
The loss of income and violence suffered by the local population at
the hands of Seng Kok Heang and his cohorts stands in stark contrast to
the profits reaped by the company during its reign in Tumring. Because
of the illegal nature of Seng Keang Company's activities, there are no
credible official statistics on the amount of timber the firm has cut
in Prey Long. Nonetheless, from interviews and Global Witness
observations, it is clear that the returns on its logging and timber
processing operation have been considerable. Calculated at the 2006
Phnom Penh price for sawn grade II wood of US$235 per cubic metre,
Global Witness estimates that the Seng Keang Company's minimum yearly
output of processed timber from Tumring would be worth over US$13
million. 17
According to Minister Chan Sarun, between the point at which it
officially commenced operations in Tumring and the end of 2005, the
Seng Keang Company paid just short of US$600,000. In a sense questions
regarding the amount Seng Keang Company paid in taxes are academic,
given that the vast numbers of trees it cut illegally should not have
been felled in the first place. Nevertheless, it is indicative of the
overall loss to Cambodia, if only in financial terms, when one
considers that taxing the syndicate's 100,000 m\3\ annual round log
consumption at the royalty levels applied to grade II wood--US$54 per
cubic metre--would have netted the treasury US$5.4 million per year.
Whilst Cambodian government timber export figures nosedived after
the imposition of a logging moratorium, 18 international
trade figures paint a rather different picture of the volume of the
country's timber exports. 19 These figures show that,
between 2003 and the end of 2006, China imported from Cambodia a total
of 28,000 m\3\ of plywood worth US$16 million. Both plywood and sawn
timber exports from Cambodia are taxed at 10% of their value and the
total loss to the Cambodian government on untaxed plywood shipments to
China between 2003 and 2006 may have amounted to US$1.5 million.
20 Losses on un-registered sawn timber appear to be double
that figure.21 Global Witness is unable to say with certainty what
percentage of these exports involved the Seng Keang Company. However,
as the only known industrial-scale producer of plywood and veneer
active in Cambodia at the time, it is highly likely that the firm
played a significant role in the multi-million dollar trade in plywood.
As perhaps the largest sawmill operator in the country, there is a
strong possibility that it accounted for a sizeable share of the sawn
wood trade as well.
Impunity in Cambodia's Forest Sector
Legal Protection
The prevalence of widespread illegal logging in Cambodia stands in
stark contrast to the legal protections offered to the country's
forests and forest-dependent people. Over the past seven years, the
Cambodian government has passed a plethora of different laws geared
towards clarifying the ownership and governance of forested land. Legal
provisions relating to Cambodia's forests include a Land Law, Forest
Law and a Community Forestry Sub-Decree.
In spite of these laws, prosecutions for illegal logging in
Cambodia are rare and convictions rarer. The impunity offered to the
Seng Keang Company over the years offers an insight into how those with
high-level political connections have been able to bypass the legal
protections afforded to the country's forests and forest-dependent
people, thus undermining the rule of law. Appendix 2 of this paper
provides a table documenting issues that Cambodia's judicial authority
should investigate relating to the activities of the Seng Keang
Company.
So far, Global Witness' calls for a credible investigation into
evidence of illegal logging presented in ``Cambodia's Family Trees''
appear to have been ignored. Instead, the Cambodian government has
banned the report and confiscated copies, the Prime Minister's brother
is reported to have issued a death threat against Global Witness staff
entering Cambodia, 21 and the Cambodian Embassy in London
issued a press release demanding a change in Global Witness' leadership
and a call to the organisation's donors to cut funding. 22
How U.S. Legislation to Amend the Lacey Act will Help to Combat Illegal
Logging and Associated Human Rights Abuse in Cambodia
Despite the Cambodian government's reluctance to investigate the
evidence of widespread and systemic illegal logging and high-level
corruption presented in the Global Witness report, it seems other
governments may be more willing to take action. Global Witness welcomes
the leadership that has been demonstrated by the U.S. in this regard.
The recently passed 2008 U.S. Senate Foreign Operations
contains a provision that the Secretary of State shall send a list to
the appropriate congressional committees of Cambodian officials, and
their immediate family members, who he has credible evidence to believe
are involved in corruption relating to the extraction of natural
resources. The following restrictions will then apply:
A ban on visas to enter the US.
A ban on ownership of property within the U.S. and
confiscation of any existing property.
A ban on any U.S. citizen engaging in financial
transactions to benefit the named officials.
The proposed amendment to the Lacey Act to help combat
illegal logging will help to take this message one step further in a
move which would be felt not only by the corrupt officials who enable
illegal logging in Cambodia, but also by the loggers themselves.
The Lacey Act currently regulates trade in fish, wildlife and a
limited subset of plants by making it unlawful to import, export,
transport or purchase any that are taken, possessed, transported or
sold in violation of any U.S. State or, with respect to fish and
wildlife only, any foreign law. The new Act would expand the Lacey Act
so that violations of foreign law that apply to plants and plant
products (and hence trees) fall within its domain.
If implemented effectively, the proposed amendments would help to
address the problem of illegal logging in Cambodia in the following
ways:
1. Cutting the Demand from Manufacturers: Addressing Regional Timber
Flows
Cambodia's illegal loggers are driven by a strong economic
incentive to export their products to overseas markets. Past Global
Witness investigations have revealed that much of the logged Cambodian
timber is illegally exported to China, Thailand or Vietnam. Statistics
suggest that a large proportion of that timber is then processed and
re-exported to other markets. 23 The U.S. has been the
single largest importer of Chinese goods since 2000 and its share of
total imports of wooden furniture, flooring and plywood reached 43
percent of Chinese exports in 2006. 24 It is also a major
importer of timber products from Vietnam and Thailand. In 2006, the
U.S. imported just short of US$881 million of timber products from
Vietnam and US$514 million from Thailand. 25 It follows that
some of the illegally-sourced timber flowing through China, Thailand
and Vietnam could well end up on the U.S. market. By making it illegal
to import or sell illegally logged timber, the legislation will
increase pressure on Chinese, Thai and Vietnamese buyers to carefully
source their products and to avoid the current practice of purchasing
illegally logged Cambodian timber. With a reduced income stream flowing
from these countries, the economic incentive for illegal logging in
Cambodia could be significantly curtailed.
2. Cutting the Demand from Consumers: Red Flags for Cambodian Timber
Products entering the US
Proposed changes to the Lacey Act would also expose imports of
Cambodian timber to greater scrutiny. Cambodia's laws protecting
forested land, combined with a government moratorium on industrial
logging in concession areas, make legal, large-scale export-based
logging in Cambodia almost impossible. It is worth noting that the only
current form of large-scale legal logging in Cambodia--known as the
``annual cutting coupe''--is explicitly designed to provide for
domestic timber demand only. 26 The proposed changes to the
Lacey Act to include a requirement for basic information on the country
where the timber was harvested and species of timber on all timber
products would immediately allow U.S. law enforcement officials to
identify products manufactured using timber taken from Cambodia as
suspect and encourage greater caution on the part of U.S. purchasers.
If the proposed amendments to the Lacey Act had been in place at
the time of our report's publication, or indeed a over a decade ago,
U.S. law enforcement agencies could have been empowered to seize
suspect timber products from Cambodia and would have helped to prevent
imports such as the special brand of plywood veneer produced by the
Seng Keang Company, produced at such a high cost to the Cambodian
population, from entering the U.S. market.
3. Setting an international precedent to combat illegal logging
The global lack of legislation to prevent illegally logged timber
from entering consumer markets has inevitably meant that over the
years, the US, together with every timber importing country, has
unwittingly purchased illegally logged timber from large-scale
organized crime networks, similar to the Seng Keang Company. By doing
so, U.S. markets will have helped to fund the activities of money
launderers, corrupt officials and human rights abusers.
US leadership on this issue would provide impetus for proactive
actions in other markets such as the EU and other G8 countries. The
logical next step for the U.S. would be to take leadership in this
field one stage further, and encourage other importers of timber
products to adopt similar legislation to put a stop to the unregulated
trade in illegal timber. Such leadership is sorely needed. Only when we
have strong international action of this nature, will we able to crack
down on the activities of ruthless, organized crime networks and their
political patrons, who have historically been able to exploit the
global gaps in legislation to their advantage.
Thank you.
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REFERENCES
____
1 World Bank, ``Structural Adjustment Credit to Cambodia'',
2000.
2 Global Witness, ``Deforestation without limits'', July
2002, p.3. Between 1994 and 2000, the Cambodian government
collected US$92 million in timber royalties.
3 The World Bank, Cambodia--A Vision for Forestry Sector
Development, 1999, p.i; Asian Development Bank Sustainable
Forest Management Project, Cambodian Forest Concession Review
Report, 2000, p.20.
4 Global Witness interviews with local residents, 2000; UN
Cambodia Office of the High Commissioner for Human Rights, Land
Concessions for Economic Purposes in Cambodia, November 2004.
5 Cited in Global Witness, ``Deforestation without Limits'',
July 2002, p.3.
6 The ``road map'' for forest sector reform is also known as
the Independent Forest Sector Review. It can be downloaded from
http://www.cambodia-forest-sector.net/.
7 FAO, Global Forest Resource Assessment 2005, Annex 3--
Global Tables, p. 233, ftp://ftp.fao.org/docrep/fao/008/A0400E/
A0400E14.pdf. (Last downloaded 18 March 2007)
8 Interviews with a confidential source, 2003 and 2004.
9 In February 2007 Global Witness wrote letters to Lia Chun
Hua as well as Seng Keang, Dy Chouch and Khun Thong and other
Kingwood shareholders to ask about Lia's current whereabouts.
At the time of publishing, Global Witness has not received any
responses to these letters.
10 This authorisation is referred to in Ministry of
Agriculture, Forestry and Fisheries ``Permission to Establish a
Veneer Factory Granted to Seng Keang Import Export Co. Ltd'',
September 2004.
11 Interviews with loggers 2005; field observations 2005 and
2006.
12 Interviews with resin tappers, 2006.
13 Interviews with local residents, 2005.
14 Interviews with villagers and loggers, 2005.
15 UN Cambodia Office of the High Commissioner for Human
Rights, Land Concessions for Economic Purposes in Cambodia, A
Human Rights Perspective, Annex 1, November 2004.
16 Global Witness field observations, September 2006.
17 Interviews with timber traders, 2006.
18 Forest Administration, ``Cambodia: Forestry Statistics
2004'', May 2005.
19 World Trade Atlas (for 2003 and 2004), http://
comtrade.un.org/; China Customs Statistics Yearbook (for 2005)
and China Customs (for January to November 2006).
20 UNESCAP, ``Trader's Manual for Least Developed Countries:
Cambodia'', 2003, http://www.unescap.org/tid/publication/
t&ipub2320_part3.pdf. (Last downloaded 10 April 2007); National
Bank of Cambodia, ``Stock Taking on Restrictions of Capital
Flows'', August 2006, http://www.aseansec.org/carh/
Capital%20Account%
20regime%20files/Cambodia%20Capital%20Account%20Regime.pdf.
(Last downloaded 10 April 2007).
21 References to this threat are drawn from an article by
Douglas Gillison and Yun Samean, published in the Cambodia
Daily on June 5 2007. In it, the Prime Minister's brother and
Kompong Cham provincial governor Hun Neng is quoted as saying:
``If they (Global Witness staff) come to Cambodia, I will hit
them until their heads are broken.''
22 The press release can be viewed at http://
www.globalwitness.org/media_library_
detail.php/566/en/global_witness_must_stop_
activities_and_defamation_to_
discredit_the_image_of_the_royal_
government_of_cambodia_from_now_
and_for_good.
23 See for example http://assets.panda.org/downloads/G8_
meeting_June2002.pdf; http://www.globaltimber.org.uk/china.htm;
http://www.globaltimber.org.uk/indochina.htm; Deutsche Press
Agency, Vietnam's furniture exporters running out of wood, June
11, 2007; in its Tropical Timber Market Report of 1-15 November
2006, the ITTO states that roughly 70% of timber which China
imports is subsequently exported.
24 Forest Trends, China and the Global Market for Forest
Products: Transforming Trade to Benefit Forests and
Livelihoods, March 2006, p.11; Peter Goodman and Peter Finn,
``Corruption Stains Timber Trade--Forests Destroyed in China's
Race to Feed Global Wood-Processing Industry'', April 2007.
25 United States International Trade Commission, ITC Trade
Dataweb, http://dataweb.usitc.gov/.
26 Statement on Agriculture Sector Development, Delivered by
H.E. Dr. Chan Sarun, Minister of Agriculture, Forestry and
Fisheries at Cambodia Development Cooperation Forum, June 19-
20, 2007, http://www.cdc-crdb.gov.kh/cdc/first_cdcf/session1/
statement_chansarun_eng.htm (last downloaded on September 7,
2007).
______
[A letter submitted for the record by America's Imported
Wood Suppliers, Distributors, and Users follows:]
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.eps[A statement submitted for the record by Barry
Gardiner, MP, The Prime Minister's Special Envoy for Forestry,
follows:]
Statement submitted for the record by The Honorable Barry Gardiner,
Member of Parliament, The Prime Minister's Special Envoy for Forestry
My name is Barry Gardiner. I am a Member of Parliament in the
United Kingdom and I welcome the opportunity to give evidence to the
committee hearing in my capacity as the United Kingdom Prime Minister's
Special Envoy for Forestry and also as the Co-Chair of the Illegal
Logging Dialogue of the GLOBE Legislators Forum.
In my evidence I wish to suggest to the Committee that the eyes of
the world are fixed on the leadership role that the United States has
taken on the need to combat illegal logging. Your recognition that
illegally harvested timber imports are undercutting domestic timber
producers is one that resonates around the globe. A recent study by the
American Forest and Paper Association has suggested that such imports
depress prices of wood products by between 7 and 16%. This is a
substantial loss to domestic producers.
This finds its counterpart in producer countries where losses from
illegal logging are estimated to cost governments in the region of
$15--20 billion per year in lost revenues. These are revenues that
could be utilised for education, healthcare and other social programmes
in some of the poorest regions of the world. This suggests that illegal
logging not only distorts free and fair trade, but is also a
significant contributor to global poverty and the need for aid.
It is not my purpose in this evidence, however, to reiterate the
powerful economic, environmental and ethical reasons for taking strong
legislative action against the illegal logging trade. I am confident
that these will be made more appropriately by other individuals and
organisations from within the United States. Rather, I wish to provide
information to the Committee about the debate and actions being taken
elsewhere in the international community that may be seen to complement
and anticipate your country's decision.
International efforts over the last two decades as part of donor
development programmes have largely focussed on supply-side measures by
seeking to tackle forest governance. Their success has been limited.
Private sector forest certification schemes which aimed to improve
forest management by creating market incentives were adopted primarily
by producers in temperate regions and even then did not always see the
premium return on investment they anticipated.
The result is that there has been little impact on reducing illegal
logging. Timber from illegal harvests, worth billions of dollars
annually, has continued to pour into western consumer markets. This has
led to the conclusion in certain countries that demand side, as well as
supply side measures were essential if we were to succeed in tackling
the problem.
Government Procurement Programmes are one way in which European and
other national governments have sought to give a lead to the market. By
insisting that timber and timber products used in any contract of
public works must be legally sourced and sustainably managed,
governments have sought to encourage major contractors to develop
supply chains where timber and timber products are both legal and
sustainable. Whilst such schemes play an important role in providing
leadership, the fact that government procurement covers only a
relatively small percentage of construction projects has meant that
they have not proven effective in transforming market practice.
European Union Member States have adopted a Forest Law Enforcement,
Governance and Trade (FLEGT) process whereby producer countries receive
assistance to improve governance under a Voluntary Partnership
Agreement (VPA). These VPAs enable countries to improve their capacity
and due diligence through aid whilst developing credible licensing
systems to verify that timber imported to the European Union has been
legally produced.
VPAs are presently being negotiated with Malaysia, Indonesia, Ghana
and Cameroon. Other African countries have indicated their interest in
developing such partnerships under which border agencies in the EU
would be able to deny entry to shipments of timber from partner
countries unless they were covered by a FLEGT license.
Whilst FLEGT voluntary partnership agreements may prove a
significant step in combating illegal logging it is important to note
that the first VPA is not expected to become operational before 2009.
The GLOBE Legislators dialogue on Illegal Logging, which I co-chair,
has examined the potential for a wider licensing scheme at a recent
conference in Berlin. Here representative legislators from a range of
G8, as well as producer countries such as Indonesia, Brazil, Malaysia,
DRC, Congo Brazzaville, Gabon, Cameroon and Ghana, indicated that a
global licensing scheme might provide a strong measure to combat
illegal logging. It is highly likely that such a scheme may form part
of the recommendations made by the Globe dialogue to the G8 summit in
Japan in June 2008.
Were a global licensing scheme to be adopted by the G8, it is
important to appreciate the very real limitations that even such a
comprehensive measure might suffer. Certain countries might still
choose not to enter into the requisite voluntary partnership
agreements. Furthermore, it is possible for illegally harvested timber
from a voluntary partner country to circumvent the regime via trade
through third (non-VPA) countries.
It is for this reason that the EU is currently examining a range of
additional options which would be able to close off such loopholes.
Chief amongst these is an option modelled upon the U.S. Lacey Act that
effectively mirrors the provisions of the Combatting Illegal Logging
Act 2007. The European Commission has completed a public consultation
on these options and is currently undertaking an impact analysis which
is expected to report in early 2008.
The G8 plus 5 dialogue on Illegal Logging that was launched at the
Gleneagles Summit in 2005 is due to conclude under the Japanese
presidency next June. The US, therefore could not be considering this
legislation at a more important time. It is not too strong to suggest
that decisive action by the U.S. to combat illegal logging through this
legislation could set a precedent that would be followed, not only by
the European Union, but by much of the rest of the world.
In a telephone conversation with the Japanese forestry Minister
earlier this year, before his untimely death, Minister Matsuoka stated
to me that he considered the possibility that the United States might
pass the Combatting Illegal Logging Bill as ``Epoch Making''. Minister
Matsuoka was a personal friend and long standing champion of the battle
against illegal logging. I knew him not to be a man of grandiloquent
statement. I therefore asked the translator whether she was sure that
she had translated him correctly in saying this. She spoke with him
again and confirmed that these were indeed the words he intended.
I believe that Minister Matsuoka was right. The United States has
the capacity to precipitate a global fightback against illegal logging.
The legislation proposed is elegant and non-bureaucratic. It applies
Occam's razor to the problem by forcing due diligence back down the
supply chain, rather than by insisting on specific burdensome
documentation. It encourages suppliers to take the trouble to do things
properly from the very beginning.
It is my firm view that both supply side and demand side measures
must be employed in our determination to end this unfair and illegal
trade. It is a trade that undercuts legitimate businesses and
impoverishes still further some of the poorest communities in the
world. If we examine the different ways of tackling the problem, we
find:
Governance reform in producer countries through donor
assistance.
Systems of forest certification.
Procurement regimes that favour legally harvested and
sustainable timber in consumer countries.
Licensing schemes.
All of these have a role to play in the fight against illegal
logging. But the Combatting Illegal Logging Act 2007 is far and away
the least cumbersome, and most elegant weapon in our armoury. It adds
no burden to the people who are already getting it right and it
incentivises those who know they are currently getting it wrong,
prompting them to do the right thing. That is what good law should be
all about.
______
[A letter submitted for the record by Brad Gilman,
Robertson, Monagle & Eastaugh, on behalf of Trinity Yachts,
Inc., follows:
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[A statement submitted for the record by Dr. James
Grogan, Yale University School of Forestry & Environmental
Studies, New Haven, Connecticut, follows:]
Statement submitted for the record by Dr. James Grogan, Yale University
School of Forestry & Environmental Studies, New Haven, Connecticut, &
Instituto do Homem e Meio Ambiente da Amazonia (IMAZON), Belem, Para,
Brazil
I welcome this opportunity to provide a statement supporting H.R.
1497, Legal Timber Protection Act, legislation that would amend the
Lacey Act Amendments of 1981 to prohibit trade in the United States in
timber harvested illegally from any domestic or international source.
I received a PhD in Forest Ecology from Yale University's School of
Forestry & Environmental Studies in 2001. I have spent a total of 12
years conducting fieldwork in the Brazilian Amazon, five of those years
researching my doctoral dissertation, ``Bigleaf Mahogany (Swietenia
macrophylla King) in Southeast Para, Brazil: A Life History Study with
Management Guidelines for Sustained Production from Natural Forests.''
I have also participated in the policy debate about mahogany's
commercial and conservation status by providing technical advice to the
forest products industry, the Brazilian government, and the
international community through CITES Working Groups on Mahogany.
In my view, the proposed amendment to the Lacey Act would provide a
powerful mechanism for preventing illegally sourced supplies of high-
value Amazonian timber from entering the U.S. market. This would: 1)
protect highly vulnerable natural timber populations from commercial
extirpation and encourage the transition to sustainable forest
management systems; 2) reduce pressure on unlogged primary forests,
thereby slowing rates of deforestation and associated emissions of
greenhouse gases; and 3) reduce conflict between loggers and indigenous
peoples facing illegal incursions into their territories.
I began my study of mahogany after the unsuccessful 1994 proposal
to list mahogany on CITES Appendix II. While relatively little was
known at that time about the natural history of mahogany or its
ecology, there was agreement in the field that an accurate assessment
of the commercial and conservation status of mahogany would require
this information. Consequently, I went to Brazil looking for field
sites to study mahogany. The USDA Forest Service's International
Institute of Tropical Forestry was the principal funder for my doctoral
research. Since beginning this work I have published numerous
scientific and technical articles on mahogany and related topics. A
copy of my curriculum vita is attached to this statement.
International demand for high-value tropical timbers like mahogany,
Spanish cedar (Cedrela odorata), ipe (Tabebuia spp.), and ramin
(Gonystylus spp.) is the root cause of continued illegal exploitation
of these species from ever more remote American, African, and Asian
tropical forests. But illegal logging contravenes forest laws in all
producer nations meant to protect renewable natural resources from
uncontrolled, unsustainable exploitation. Further, by allowing illegal
supplies into our markets, we undermine the business model of legal
producers by sustaining demand for cheaper, destructively harvested
supplies.
The impact of illegal logging on natural populations
Being highly sedentary creatures, timber trees are especially
vulnerable to illegal exploitation--there is little hiding a mahogany
tree worth thousands or even tens of thousands of dollars in finished
lumber, no matter how remote its forest habitat. Plants are at least as
vulnerable to population collapse after illegal harvests as animals and
fish, and in my view should be afforded the same protections under the
Lacey Act.
Tropical trees typically occur at extremely low densities across
large areas. In the densest commercial stands of big-leaf mahogany
recorded in Brazil, one commercial tree occurred in every five acres of
forest, while more common densities were one commercial tree in 20
acres. Facing no constraints on harvest intensity or methods, illegal
loggers locate and fell 95% or more of trees that can pay their way out
of the forest, including trees smaller than legal minimum diameter
felling limits. While adult and sub-adult populations are removed at
extremely high rates, seedlings and saplings are rarely in place in
closed forest at the time of logging to replace harvested trees. In
combination, this means that population recovery after logging will
take a century or more, if it will be possible at all, assuming that
logged forests can be left to recover without further intervention.
As timber species become commercially extirpated at local scales,
illegal loggers shift their activities deeper into unlogged primary
forests in search of fresh supplies, and local zones of commercial
exhaustion coalesce into regional and then national zones where future
harvests are imperiled. This has been the pattern for big-leaf mahogany
in Latin America for over two hundred years now, but especially in
recent decades in South America. This pattern currently continues in
Peru in spite of mahogany's 2002 listing on CITES Appendix II, and is
being repeated for other high-value species in the Amazon such as
Spanish cedar, ipe, and jatoba (Hymenaea courbaril).
The impact of illegal logging on forests
Illegal logging is driven by market demand creating prices high
enough to offset risk associated with unlawful activities in remote
forest regions. Illegal loggers open roads extending hundreds of miles
from frontier sawmill processing centers into unlogged forests.
Researchers at the Instituto do Homem e Meio Ambiente da Amazonia
(IMAZON), my institutional affiliation in Brazil, estimate that
mahogany could be profitably--if currently illegally--logged within up
to 99% of its natural range in Brazil, including some of the most
remote southwestern Amazon forests remaining in the states of Amazonas
and Acre. As has been well documented, these roads open previously
inaccessible regions, including Indigenous Lands and protected areas,
to agribusiness, cattle ranchers, and small-holder agriculturists,
initiating large-scale deforestation and land-use transformation. By
occurring rapidly and without planning, this process is generally
chaotic, destructive, and frequently marred by violence.
The impact of illegal logging on people
Illegal logging brings with it a host of unavoidable negative
consequences for forest communities. In the Amazon, indigenous peoples
generally have few resources to defend against loggers illegally
extracting high-value timbers from their territories. Indigenous Lands
were exploited throughout Brazil during the 1980s and 1990s for
mahogany, with or without consent from indigenous communities, often by
violent means costing indigenous lives. This occurred as well in
Bolivia and Ecuador, and continues today in Peru. As logging fronts
penetrate deeper into primary rainforests, bringing land-use changes
and market centers with them, indigenous communities must cope with
deforested border areas prone to frequent fires, and with repeated
incursions by loggers, ranchers and settlers into their territories.
Rather than building a trained labor force capable of planned,
best-practices forest management in regions with vast potential for
long-term sustainable timber production, illegal loggers provide low-
wage employment for unskilled workers under extreme and exploitative
working conditions. I have seen many of these operations in the field;
disease, injury, and even fatality from logging accidents are common,
in sharp contrast with legal logging outfits that comply with forest
and labor laws, producing timber under current best-practices
management systems.
How H.R. 1497 would help curtail illegal logging
Big-leaf mahogany's eventual listing on CITES Appendix II in 2002
was in large measure an international response to widespread illegal
logging in Brazil during the 1990s. But this response came very slowly,
after nearly a decade of wrangling among nations, and only after the
Brazilian timber sector specializing in mahogany--and its principally
North American clients who underwrote their activities--essentially got
what it wanted, which was time enough to exploit Brazil's remaining
high-density stands before the gates closed against illegal supplies.
No legal mechanism existed in the US, destination for more than 90% of
internationally traded volumes of mahogany during that period, to
address widespread illegality in the trade that was acknowledged by
industry and government sources alike. This problem has persisted with
Peruvian mahogany even after the 2002 CITES listing.
H.R. 1497, the Legal Timber Protection Act, the proposed amendment
to the Lacey Act, would combat and curtail illegal logging by creating
a powerful mechanism to challenge the legal status of timber supplies
arriving in the US, the largest market in the world for timber
products, where demand for high-value timber drives illegal and
unsustainable logging practices in many tropical regions. Such a
mechanism could have been used to halt imports of illegally harvested
mahogany from Brazil during the 1990s, to the benefit of natural
populations that would today be available for sustained-yield
management, of vast forested regions where deforestation rates would
have been much slower (and greenhouse gas emissions from burned forests
much lower), and of forest communities for having fewer conflicts and
high-value forest resources preserved for future use.
The Legal Timber Protection Act could halt the entry of illegal
timber supplies into the U.S. market. By doing so, it could as well
slow the current rapid loss of high-value timber populations, reduce
rates of deforestation in the tropical world with associated greenhouse
gas emissions, and prevent conflicts between loggers and indigenous
peoples.
I thank the Subcommittee on Fisheries, Wildlife, and Oceans for
this opportunity to comment on the proposed change in U.S. federal
legislation.
______
A statement submitted for the record by Ari Hershowitz,
Director, Biogems Project, Latin America, Natural Resources
Defense Council, follows:]
Statement submitted for the record by Ari Hershowitz, Director,
Biogems Project, Latin America, Natural Resources Defense Council
I am pleased to submit this statement for the record regarding H.R.
1497, the Legal Timber Protection Act on behalf of the Natural
Resources Defense Council and our more than one million members and
activists. We strongly support this bill and its simple goal to make it
illegal to import and trade in illegal timber.
As the Subcommittee has heard, the trade in illegal timber supports
a worldwide network of criminal activities that devastates forests and
wildlife, contributes to global warming, and causes more than a billion
dollars in yearly losses to U.S. industry. NRDC can provide additional
information, from our direct experiences in Peru, on the impacts of
this illegal trade.
This statement, however, focuses on the forfeiture provisions of
the bill, and clarifies some of the misleading information presented by
the bill's opponents. This bill would authorize the forfeiture of
timber and timber products when U.S. authorities can prove that these
items were taken illegally. This is consistent with decades of U.S.
precedent for other stolen or illegal goods, including natural resource
products such as wildlife and plants.
ILLEGAL PROPERTY HAS BEEN SUBJECT TO FORFEITURE UNDER LONGSTANDING U.S.
LAW
Whether the subject is protected parrots, illegally imported
salmon, pilfered Inca artifacts, or stolen art, U.S. law has
consistently provided for in rem forfeiture, regardless of the
knowledge of the person in possession of the items. To do otherwise, as
opponents of this bill recommend, would allow illegal goods to continue
in commerce even after the government had proven that they were
illegal. This is a brazen proposition. It would be a radical departure
from existing law and longstanding practice.
Contrary to the claims of this bill's opponents, the Lacey Act has
consistently and repeatedly been interpreted to provide for forfeiture
of illegal wildlife regardless of the knowledge of the importer. In a
case involving the imports of parakeets from Peru, the court held that
``the legislative history of the applicable amendments of the Lacey Act
unequivocally establishes that the defense of ``innocent owner'' is not
available in forfeiture actions of wildlife brought pursuant to this
Act.'' U.S. v. 2,507 Live Canary Winged Parakeets, 689 F. Supp. 1106
(S.D. Fla., 1988) (emphasis added). In an even earlier decision, the
Ninth Circuit Court of Appeals upheld forfeiture of Indonesian parrots
that were imported through Singapore, although the importer did not
know that the original export from Indonesia was illegal. The court
held that ``[t]he conservation purpose of the statute could be
undermined significantly by permitting such importers to avoid the
application of the statute by trading through intermediary countries.''
685 F.2d at 1134 (emphasis added).
This is no less true for timber: allowing anyone to maintain
possession and profit from illegal property, as opponents of the bill
recommend, creates a perverse incentive for foreign timber mafia to
pass off their merchandise through unsuspecting intermediaries.
Indeed, the Civil Asset Forfeiture Reform Act (CAFRA), which
opponents of H.R. 1497 hold up as their model, makes it clear that ``no
person may assert an ownership interest under [CAFRA] in contraband or
other property that it is illegal to possess.'' 18 USC Sec. 983(d)(4).
This simply restates the traditional U.S. rule that a purchaser of
stolen or otherwise illegal property--even a good faith purchaser--does
not get good title to the property. The courts have consistently
applied this rule to wildlife trade, both before and after CAFRA. Deep
Sea Fisheries, Inc. v. 144,774 Pounds of Blue King Crab, 410 F.3d 1131
(9th Cir. 2005). (Rejecting an importer's ownership claim to 600,000
pounds of salmon exported from Taiwan without the necessary permits and
finding that, by violating the Lacey Act, the salmon constitutes
``contraband or other property that it is illegal to possess.'')
The Lacey Act's forfeiture provisions are also consistent with the
treatment of other kinds of illegally obtained property under U.S. law.
For example, imported cultural artifacts are subject to forfeiture
regardless of the knowledge or culpability of the importer. See David
N. Chang, Stealing Beauty: Stopping the Madness of Illicit Art
Importation, 28 Hous. J. Int'l L. 829, 857 (2006). The Convention on
Cultural Property Implementation Act (CPIA) empowers U.S. officials to
seize illegally imported foreign cultural property and restrict its
importation. Under the CPIA even a ``good faith purchaser''--while
immune from criminal prosecution--must still give up the pieces,
usually to be turned over to the country of origin. Some foreign
jurisdictions, like Switzerland, previously allowed good faith
purchasers to keep stolen goods, but ``U.S. courts have generally
rejected application of the Swiss rule. See, e.g., Autocephalous Greek-
Orthodox Church of Cyprus v. Goldberg & Feldman Fine Arts, Inc., 917
F.2d 278 (7th Cir. 1990)(rejecting defendant's claim to have acquired
good title to stolen Byzantine mosaics and applying Indiana's rule that
a thief cannot transfer good title even to a good-faith purchaser).''
Patty Gerstenblith & Bonnie Czegledi, International Cultural Property,
40 Int'l Lawyer 441, 445 n.25 (2006). See also U.S. v. An Antique
Platter of Gold, 184 F.3d 131 (2d Cir. 1999) (Holding that there is no
``innocent owner'' defense to forfeiture of an item of ``classic
contraband, an item imported into the United States in violation of
law.'')
Opponents of this bill do not present a single example of illegally
sourced property that is not subject to forfeiture under U.S. law. Yet
they say that timber should be treated differently--that the chain-of-
custody of timber is too hard to trace. This claim simply does not
stand up to decades of experience with stolen cultural artifacts, World
War II era paintings or wildlife. Timber is far more massive than any
of these items; in many cases, timber-bearing trucks can be seen from
satellite imagery. And timber has a single, identifiable geographic
source: a tree. If any item in commercial trade could be traced, it is
timber. The fact that the chain-of-custody of timber generally cannot
be traced today points precisely to the need for this legislation.
It is the nature of an illegal trade network that the origins of
its products are hard to trace, and this makes it harder for honest
people to do business. It is the job of governments to create
incentives to bring such trade into the open.
H.R. 1497, with the amendments introduced by Congressman
Blumenauer, will create these necessary incentives. That is why we
proudly join a broad coalition of industry, labor and environmental
groups to support this bill, and we thank the Subcommittee again for
the opportunity to submit these comments.
______
[A letter submitted for the record by Jane Hogan,
Secretary-Treasurer, Ontario Hardwood Co., Inc., follows:
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[A letter submitted for the record by Lawrence Q.
Hutchins, President, Quail's Nest Industries, follows:]
[GRAPHIC] [TIFF OMITTED] T8330.014
A statement submitted for the record by Peter T.
Jenkins, Director, International Conservation, Defenders of
Wildlife, follows:]
Statement submitted for the record by Peter T. Jenkins,
Director of International Conservation, Defenders of Wildlife
Madam Chairwoman and members of the subcommittee, I am writing on
behalf of Defenders of Wildlife (``Defenders'') regarding the
legislative hearing on H.R. 1497 to amend the Lacey Act Amendments of
1981 to extend its protections to plants illegally harvested outside of
the United States, and for other purposes (``Legal Timber Protection
Act''). Defenders endorses the testimony provided by Alexander von
Bismarck of the Environmental Investigation Agency (``EIA'') on the
above Act, and would like to present additional background information
to support this position.
Defenders of Wildlife was founded in 1947 and is a national non-
profit organization with more than 500,000 members and supporters
dedicated to the protection and restoration of all wild animals and
plants in their natural communities. The major cause for the current
decline in biodiversity is habitat loss and fragmentation. Defenders is
working to protect important habitats and keystone species, with the
understanding that the protection of these species is vital to the
health and stability of the greater ecosystem and other species.
Global forests represent critical habitats for a variety of
species, and are under threat worldwide by unsustainable harvesting and
illegal logging. Curbing the trade in illegally sourced wood and wood
products is vital in protecting species that rely on intact and
unfragmented forest habitat.
Wildlife are affected by illegal logging primarily through the loss
and fragmentation of habitat, but also through a subsequent rise in
illegal hunting and trade in meat products, through increased human-
wildlife conflict, and by the heightened risk of emerging diseases
transferred between humans and wildlife. On a broader level, illegal
logging affects people and wildlife worldwide through the loss of
ecosystem services such as carbon sequestration and the regulation of
climate and rainfall. As documented in the Stern Report in 2006,
deforestation causes 24% of global carbon dioxide emissions and 18% of
global greenhouse gas emissions, amounting to more emissions than all
transport worldwide.
The following are examples of species under threat largely because
of deforestation. These species would benefit directly from increased
protection through the passing of H.R. 1497:
Borneo and Sumatra--Home of the Orangutan:
Orangutans require a large home range. Bornean forests generally
support no more than one to three orangutans per square kilometer, and
Sumatran forests at most six or seven. Indonesia is undergoing some of
the most rapid deforestation in the world, and is likely to lose all of
its primary forest by the year 2012. By 2022, Sumatra and Borneo are
likely to lose 98% of their remaining forest. A report published by the
United Nations Environment Programme (UNEP) in 2007 declared a state of
emergency for the orangutan, predicting the species to go extinct
within the next 20 years. Approximately 80% of timber exported from
Indonesia is believed to be illegally sourced.
The Congo Basin--Apes, Bushmeat and Emerging Diseases:
The Congo Basin constitutes the world's second largest forest, and
is home to a rich diversity of plants, animals, and indigenous peoples.
Due to poor local legislation and law enforcement and often backed by
international financial institutions and foreign-owned banks, illegal
logging remains a large problem. In addition to the obvious problems
associated with habitat loss and fragmentation, the illegal timber
trade in this region is also associated with the illegal trade in wild
meat, or bushmeat, including gorillas and chimpanzees, and other
protected species. This carries not only risk of extinction for local
ape populations, but also poses a serious disease risk to the local
human population, as documented by repeated outbreaks of the Ebola
virus and other zoonotic diseases associated with the handling and
consumption of bushmeat.
Russia's Far East--Habitat of the Amur Leopard and Siberian Tiger:
Illegal logging does not merely affect tropical species. In the
Russian Far East, approximately half of all timber harvested is done so
illegally, and contributes to lasting corruption within state forest
management and the timber industry. The Amur leopard is the rarest
felid species on earth, with only 25-34 individuals currently remaining
in the wild. Though also critically endangered, the Siberian tiger
fares slightly better with up to 520 remaining individuals in the wild.
A report by the World Wildlife Fund in 2002 linked the future risk of
extinction for the Amur leopard and the Siberian tiger to illegal
logging.
Amazon Basin--Mahogany:
Illegal logging of mahogany is not only detrimental to the survival
of the species and to the ecosystem at large; it also constitutes a
grave threat for several indigenous peoples that have been living in
chosen isolation in the Peruvian Amazon, through forced labor in
indentured servitude, exposure of novel diseases, and direct violent
conflict with representatives of the illegal logging industry. In 2005,
83% of all mahogany exporters from Peru were involved in the trade in
illegally-sourced mahogany, in direct violation of the Convention on
International Trade in Endangered Species of Wild Flora and Fauna
(CITES). Mahogany represents a species that is difficult to regenerate.
CONCLUSION
For the reasons stated above and in the EIA testimony, we endorse
an amendment to the Lacey Act as proposed in H.R. 1497.
______
[A statement submitted for the record by the World Wildlife
Fund and TRAFFIC follows:]
Statement submitted for the record by the World Wildlife Fund & TRAFFIC
Thank you for the opportunity to provide written testimony on the
Legal Timber Protection Act (H.R. 1497). World Wildlife Fund (WWF) is
the largest private conservation organization working internationally
to protect wildlife and wildlife habitats. We currently sponsor
conservation programs in more than 100 countries, thanks to the support
of 1.2 million members in the United States and more than 5 million
members worldwide. TRAFFIC is the wildlife trade monitoring program of
WWF and IUCN-World Conservation Union (IUCN), and is a global network,
with 25 offices around the world. TRAFFIC works to ensure that trade in
wild plants and animals is not a threat to the conservation of nature.
This testimony is on behalf of both WWF and TRAFFIC. The testimony
discusses the following: (1) WWF's interest in H.R. 1497; (2)
background on the illegal timber trade; (3) current efforts to address
illegal timber trade; (4) the importance of H.R. 1497; (5) WWF's
comments on H.R. 1497; and (6) implementation of H.R. 1497; and (7) a
conclusion.
1. WWF Interest in H.R. 1497
WWF's interest in H.R. 1497 stems from its work conserving
important forest eco-regions across the globe. These include Borneo-
Sumatra, the Congo Basin, the Amazon, Russia (the Amur) and China (the
Heilong). The illegal timber trade threatens our work in each of those
eco-regions. For example, in the Russian Far East, we have witnessed
the widespread use of ``cleansing logging'' permits--issued to remove
wind-fallen trees--as tools to remove commercial volumes of timber at
an industrial scale. We have also witnessed logging in legally
designated protected areas. Such logging frequently occurs in and has
destroyed some of the best available habitat for the critically
endangered Siberian (Amur) tiger. WWF has documented the extensive and
complicated supply chains of this illegally logged oak, ash and birch
wood from the stump in the Russian Far East to specific Chinese
factories and all the way to the shelves of specific, well-known
American flooring and furniture retailers. In an effort to stem this
trade flow, WWF has trained Russian and Chinese border guards on how to
identify forged or falsified timber documents and has worked directly
with Russian wood suppliers and Chinese buyers towards phasing out
illegally logged wood from their supply chains.
In Indonesia, our Eyes on the Forest ground team (http://www.eyeson
theforest.or.id/) issues regular eyewitness reports of high-value wood
being harvested in legally protected areas, sometimes in collusion with
government officials, and sent to high volume pulp and paper mills with
markets in the U.S., Japan, China and Europe. WWF has worked with the
government of Indonesia, World Bank, USAID and others for several years
to develop practical trade and policy-related solutions to the illegal
logging problem in that country.
In the Peruvian Amazon harvest and trade of valuable timber species
such as big-leaf mahogany and Spanish cedar, a key national economic
development activity, has been seriously undermined by illegal logging.
WWF is leading a dynamic partnership with selected private forest
concessions, enterprises and indigenous communities, in cooperation
with Peruvian government agencies and regional and local governments
and international aid agencies such as USAID and WWF-Netherlands, to
promote a legal and sustainable forest trade in this region. The
partnership vision is that, by 2015, 2 million hectares of forest
concessions and 500 thousand hectares under indigenous communities will
be certified; an economically viable and socially responsible forest
sector, based on competitive and innovative forest enterprises,
offering high quality wood products legally will be established and;
Peru's forest exports will top U.S. $500 million per annum, from legal
and verifiable sources and chains of custody, directly benefiting local
communities and forest enterprises.
Given the significant investment that WWF has made in protecting
these and other forested eco-regions around the world, and our
significant investment in supporting the development of legal and
sustainable wood products trade globally, we take the threat of illegal
logging very seriously. It is our belief that H.R. 1497 will help drive
the demand for legally sourced wood, and as such, will contribute
significantly to global forest conservation and sustainable use.
2. Background on the Illegal Timber Trade
Illegal logging, defined here as the harvesting, transporting,
processing or trading of wood in contravention of national and
international laws, plagues the global forest products industry. The
criminal wood trade transpires in a number of ways, including: logging
in protected areas or national parks; over-harvesting or disobeying
cutting permit prescriptions; and avoiding government tax and royalty
payments. Roughly one-third of hardwood products traded globally are
thought to be of suspicious origin and 10% of U.S. wood-based imports
are sourced from areas of high risk for illegal wood export. While
illegitimate forest harvesting is mostly relegated to developing and
transitional economies marked by poor national governance and
corruption, much of this wood enters the world-wide market. The United
States is the largest forest products consumer in the world, imports
20% of global forest products exported and is a significant importer of
``emerging market'' wood where illegal logging is at its worst. Over
the last 6 years, according to ITC data, U.S. wood product imports
increased by almost 60%. As such, American consumers are unwittingly
complicit in driving illegal logging overseas.
From an environmental perspective, illegal logging contributes to
uncontrolled deforestation and degradation; each year we permanently
lose 50 million square miles of forest, roughly the size of Louisiana,
to non-forest land uses of lesser environmental value. Forests, in
protecting wildlife and fish habitat, biodiversity, soil, water and air
quality, play an irreplaceable role in ecological and human health.
Illegal logging jeopardizes these values. Additionally, deforestation
contributes up to 20% of global carbon emissions and thus has a
significant impact on climate change.
Furthermore, illegal logging has been associated with a number of
separate but indirectly related natural resource crises such as
wildlife smuggling, flooding, the criminal setting of large-scale
forest fires for the purpose of land conversion to monoculture
commodities such as palm oil, and the building of non-sanctioned and
poorly designed road systems throughout once pristine tropical
ecosystems. These serious environmental issues are oftentimes
accompanied by even more serious social issues. Over 50 million
indigenous people depend on forests for their livelihood and cultural
identity. Illegal logging can put native customary land rights, whether
communal or otherwise, for hunting, fishing, and farming and
subsistence at risk. Competition over resources sometimes results in
violence and human rights violations. In many developing economies
where gazetting of land and legal establishment of land tenure are
incomplete, local communities and indigenous groups are especially
challenged with defending their land and forest rights. Poor forest
governance contributes both to environmental and social degradation.
For some, even more alarming than these environmental and social
impacts are the economic repercussions of the illegal timber trade.
Illegal timber can be bought at half the price of legal timber in
certain regions, artificially depressing global wood prices by 7-16%.
The World Bank estimates that illegal logging costs the forest industry
over $10 billion per year and governments an additional $5 billion
annually. In the United States alone, the domestic forest product
industry loses approximately $1 billion a year in export opportunity
costs and undervalued sales. For the American forest products industry
where purchased wood inputs can comprise up to 40% of the cost of
production, these losses represent a significant hit on margin.
The myriad impacts of illegal logging are clearly demonstrated in
the case of Indonesia, where the forest products industry accounts for
20% of the nation's non-energy exports. Even the most conservative
estimates indicate that over 60% of Indonesia's natural hardwood
production is illegitimate. The country is losing forests at an
unprecedented level, with nearly 7,800 square miles disappearing
annually. Most of its tropical lowland forests are expected to be cut
over within the next decade, jeopardizing the thousands of endemic
species which inhabit them, and the long-term survival of some of the
most charismatic fauna in the world such as the endangered tiger, Asian
elephant, Sumatran rhinoceros, and orangutan. Valuable tropical tree
stands are cut unsustainably, at times replaced with acacia and palm
oil monocultures, leading to a decrease in tropical timber wood supply,
a simplification of the forest products economy and a creation of
unfortunate opportunity costs to national economic development.
Furthermore, the Indonesian government is deprived of over one third of
its potential forest industry revenues in unpaid taxes and fails to
collect on $650 million annually in reforestation fund repayments and
royalties alone. Losses of potential revenue translate to lost
opportunity for sustainable economic development. Clearly Indonesia is
suffering on several levels as a result of the unlawful timber trade.
While deforestation is caused by both conversion and illegal
logging, it is important to recognize that the ``informal'' timber
industry is typically the gateway to other major drivers of
deforestation. By its very nature, illegal logging is devoid of long-
term planning for a sustained timber-based economy, thus facilitating
land use conversion to other uses. For example, large-scale and illegal
forest clearing of both low- and high-value hardwoods in Sumatra by the
pulp and paper industry has made way for the palm oil industry to
establish itself. Large-scale and illegal clearing and road building of
the Brazilian Amazon jungles for tropical plywood and sawn-wood has
made way for the soy bean industry to greatly expand its presence. Both
the initial social, environmental and economic impacts of the
``informal'' timber industry, as well as its gateway effect, should
give rise to deep concern on the part of the U.S. government.
3. Current Efforts to Address Illegal Timber Trade
Given the significant negative impacts of illegal logging on the
lawful wood products industry, President George W. Bush created the
``Initiative Against Illegal Logging'' (PIAIL) in 2002 to support
supply-side solutions to illegal logging within developing, producer
countries. More than $15 million were contributed to partnership
projects under the PIAIL, adding to the millions more invested under
complementary public-private partnerships supported by non-governmental
organizations like WWF over the last decade. As a result of these
efforts, several useful tools were created, enhanced or adapted to
combat the illegal wood trade including legality verification, remote-
sensing forest monitoring, timber tracking, reduced impact logging,
community-based forest management and protection and corporate
responsible procurement programs. TRAFFIC has even helped to develop
legality standards for Malaysia, Vietnam, China, Republic of Congo,
Democratic Republic of Congo, Gabon, and Central African Republic
Although these supply-side measures are important steps to
addressing the problem, illegal logging continues relatively unabated
because there is still a market for cheap, criminally procured, raw
materials. As long as the buying market remains neutral on the legality
issue, rampant unlawful logging will persist. In the words of
Indonesian Forest Minister Mohamad Prakosa, ``Expecting or asking one
country to combat illegal logging while at the same time receiving or
importing illegal logs of course does not support efforts to combat
these forest crimes. In fact ``allowing import and trade [in] illegally
cut timber and associated products could also be considered as an act
to assist or even to conduct forest crime.''
Industry players on the buying side have responded to this
challenge in a number of different ways including seeking legality
verification, certified chain of custody and controlled wood, creating
wood traceability and supplier audit programs, using technology such as
Radio Frequency Identification (RFID) tags and genetic testing to
verify log origin, partnering with environmental groups on stepwise
programs to identify and eliminate unwanted wood such as the WWF Global
Forest & Trade Network (GFTN), and even boycotting entire geographic
regions in order to minimize their risk of inadvertently procuring
illegitimate wood. These actions have yielded some positive results.
For instance, over 13% of globally traded wood is managed under GFTN's
stepwise program to eliminate unwanted wood from supply chains.
However, market penetration of these voluntary and sometimes costly
efforts is not deep or broad enough to keep up with the rapid pace of
illegal logging and deforestation. Industry-wide actions are needed to
really transform the marketplace.
Recognizing the need for universal demand-side measures, the EU is
developing Voluntary Partnership Agreements (VPAs) with several
producer countries identified as being at high risk for trading in
illegal wood. Under the VPAs, licensing systems are being developed
that will help importers distinguish between sanctioned and non-
sanctioned exports. Timber products originating from partner countries
but lacking the appropriate license will not be allowed entry into the
EU.
The United States has also recognized the need for demand side
measures, stating at the 2005 G8 in Gleneagles, ``We agree that
tackling illegal logging requires action by both timber producing and
consuming countries...We will act in our own countries...to halt the
import and marketing of illegally logged timber.''
4. The Importance of H.R. 1497
Despite a desire by the U.S. government to address illegal logging,
the U.S. government still lacks a legal mechanism to identify or
exclude most categories of illegal wood as it enters the U.S. Unless a
tree species happens to be one of the relatively few covered under the
Convention on International Trade in Endangered Species (CITES) or the
Endangered Species Act (ESA), there is no legislative or regulatory
remedy available to address the illegal wood import issue. Under the
status quo, even if the Department of Justice has full knowledge of
imports of wood illegally harvested elsewhere but not listed under
CITES or the ESA, it can take no action against the perpetrators.
Without a universal requirement to conduct some credible level of
due diligence when importing wood from risky regions, lawful U.S.
industry actors must continue to compete with unlawful or less than
scrupulous industry actors who enjoy cheaper wood prices afforded by
illegal production and/or who expend less time and resources in
monitoring their supply chain. However, any universal requirement for
due diligence must not be overly-prescriptive, create unnecessary
documentation or push costly bureaucratic solutions that would severely
disrupt or harm businesses that are taking due care in their importing.
A balance must be struck between protecting lawful businesses from
undue bureaucracy and ensuring careful due diligence that excludes
illegal wood from the supply chain.
WWF's Global Forest & Trade Network works with wood importers and
retailers in the United States, as well as wood product manufacturers
and forest managers in many of the regions where illegal wood trade is
an issue such as Southeast Asia, West Africa, and Amazonia, to identify
and address illegal wood in the supply chain. We, and the American
companies that we work with, including Wood Flooring International and
Lowe's, ask the U.S. government to support our efforts by passing laws
that will create disincentives for trading in illegal wood; such an
action on the U.S. government's part will even our playing field.
5. WWF's comments on H.R. 1497
Suggested changes for H.R. 1497
WWF strongly supports H.R. 1497 with amended language that would
reflect the language in Senator Wyden's Companion bill S.1930, the
``Combat Illegal Logging Act''. Senator Wyden's bill language, as
mentioned by Ms. Wrobleski of International Paper/AF&PA in her
testimony, was the result of significant compromise among environmental
and industry representatives belonging to a coalition to support H.R.
1497 and S.1930.
Primary changes between H.R. 1497 as introduced and as WWF would
recommend be approved by Committee, consistent with S. 1930, are as
follows:
Creates same regime for interstate and foreign law by amending 16
U.S.C. 3372(a)(2)(B) instead of adding a new section 3372(a)(2)(C).
This measure was taken in order to assure compliance with WTO.
Alters wording of 16 U.S.C. 3372(a)(2)(B)(i). The new clause is
tightened in some ways (by eliminating verbs ``transported or sold'')
and expanded in others (by referencing ``laws to prevent illegal
logging''). The intent has been to provide greater clarity regarding
what ``laws'' are intended. The result is language that, as Ms.
Wrobleski stated, is ``carefully crafted to protect forests from
criminal activity''.
Adds ``transport and export'' to 16 U.S.C. 3372(a)(2)(B)(ii). This
captures an important subset of fraud against foreign government that
the original wording did not.
Removes the original ``documentation'' clause (v) from 16 U.S.C.
3372(a) and creates a new section 16 U.S.C. 3372(f) that specifies
information that must be declared. This new section, in essence,
mandates transparency in timber shipments. It requires specific
information and sets a timeframe for compliance, which allays industry
fears while at the same time precluding the risk inherent in the
original approach, of an indefinite or nonexistent process to
promulgate regulations. It also establishes the requirement for a
report on implementation success after the first two years, at which
point recommendations for alterations to declaration requirements can
be made.
Given the careful negotiations between industry and environmental
groups and their many members in coming to language that these
disparate stakeholders could agree upon, we support amendments to H.R.
1497 that would make it consistent with the language provided in the S.
1930.
Relationship to Lacey Act
WWF firmly believes that amending the Lacey Act is the optimal
means for meeting the goal of prohibiting illegal timber products into
the U.S. This goal is consistent with the history of the Lacey Act, and
the operational provisions of the Lacey Act.
The Lacey Act, first passed in 1900, makes it unlawful to ``import,
export, transport, sell, receive, acquire, or purchase'' fish, wildlife
and plants taken in violation of domestic law, and domestic and foreign
law where applied to wildlife and fish. H.R. 1497 would expand the
Lacey Act such that plant and plant products, like fish and wildlife,
would also be subject to relevant foreign laws.
At its inception, the Lacey Act was designed to conserve native
wildlife species, particularly those threatened by introduced exotic
species and excessive hunting and poaching, facilitated by interstate
trade. As with other laws, the Lacey Act has been amended several times
over the years to effectively address the evolving scale and scope of
the threat to the long-term survival of wildlife, plants and fish. Most
significantly, Congress amended the Lacey Act in 1981 in specific
response to the substantial increase in the international criminal
trade in fish and wildlife.
As case law and history demonstrate, the law was thought to be
deficient in meeting the threat so Congress expanded its scope,
increased civil and criminal penalties, and introduced strict liability
forfeitures and seizures of illegal goods even if the recipient had no
knowledge that they were aiding and abetting a crime 1.
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\1\ For more information on Lacey case law and history see Robert
Anderson, 16 Pub. L.L.R. 27 ``The Lacey Act: America's Premier Weapon
in the Fight Against Unlawful Wildlife Trafficking, Public Land Law
Review and Michele Kuruc ``The Lacey Act: Stemming the Flow of
Illegally Commercialized, Fish, Wildlife, and Plants'', NOAA.
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As the U.S. Court of Appeals for the 11th Circuit on U.S. v. McNab,
Blandford 2 stated:
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The legislative history reflects that ``the [main] thrust of
Congress's intention in amending the Act was to expand its
scope and enhance its deterrence effect.'' [FN20] 594,464
Pounds of Salmon, 871 F.2d at 828. Indeed, Congress clearly
stated that the amendments were meant to strengthen the
existing wildlife protection laws and to ``provide [the
government] the tools needed to effectively control the massive
illegal trade in fish, wildlife and plants.'' 127 Cong. Rec.
17,327 (remarks of Senator Chafee); see also 127 Cong. Rec.
26,537 (1981) (remarks of Representative John Breaux). The
Senate Report provided [*1239] that the amendments ``would
allow the Federal Government to provide more adequate support
for the full range of State, foreign and Federal laws that
protect wildlife.'' S.Rep. No. 97-123, at 4. The amendments
were intended to ``raise both the civil and criminal penalties
of the current laws and target commercial violators and
international traffickers.'' 127 Cong. Rec. 17,328 (remarks of
Senator Chafee). By strengthening the penalty provisions of the
Lacey Act, Congress intended ``to give the Federal Government
stronger enforcement tools to stop the large-scale importation
and taking of fish--which enjoy protection under other
foreign--laws.'' Id. at 17,329 (remarks of Senator James Strom
Thurmond).
``Innocent Owner'' Provision
WWF does not believe that H.R. 1497 should provide for an
``innocent owner'' defense. I.e., allow wood products that the U.S.
government proves to come from illegal sources (and by doing so proves
such products are contraband) from entering the U.S. Some opposed to
H.R. 1497 have claimed that the wood supply chain is much more
complicated than the fish or wildlife product supply chain and thus the
Lacey Act language should be softened to contain an ``innocent owner''
defense. WWF and TRAFFIC, in their work with fish, wildlife and wood
product supply chains, can testify to the fact that, as a function of
globalization of commodity markets, all of these supply chains are
equally complicated. For example, through its Marine Stewardship
Council work, WWF is intimately familiar with helping U.S. seafood
retailers to track their fish supply and assure that it is coming from
sustainable sources. The seafood industry is highly complex. For
processed seafood coming into U.S. it is not uncommon for the primary
sources originating from various regions around the globe to be mixed
and processed in a different global region, undergo yet additional
value-added processing in still another global region and then finally
shipped into the U.S. The seafood can be passed through a number of
hands, distributors, brokers, and manufacturers, before entering the
U.S. marketplace. Despite this complexity, the seafood industry has
managed to abide by the Lacey Act, with its existing seizure,
forfeiture, civil and criminal penalties, for over 25 years and has
even found it useful in protecting its business from unsustainable
offshore harvesting of seafood. 3
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hom_20060910060.shtml
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As has already been mentioned in this testimony, the 1981 Amendment
of the Lacey Act intentionally added the seizure and forfeiture on
strict liability, and increased penalties, in order to make the Lacey
Act effective in addressing the issue it was designed to address:
threat to the conservation of fish, wildlife and plants as a result of
illegal activity. As is often said with respect to the Lacey Act, one
of its greatest strengths is its deterrence effect. Any softening of
the language, such as the inclusion of an ``innocent owner'' protection
of contraband goods, would render the law ineffective in this regard.
In United States v. 144,774 Pounds of Blue King Crab ((410 F.3d
1131, 9th Circuit 2005), the 9th Circuit held that the innocent owner
provision in the the Civil Asset Forfeiture Reform Act of 2000 (CAFRA)
is not inconsistent with, or contrary to, the Lacey Act. In that case,
the U.S. sought forfeiture under Lacey of frozen blue king crab taken
in violation of Russian Federation law. Respondents raised the
``innocent owner'' defense under CAFRA, claiming that because they did
not know the crab was caught in violation of Russian law they should be
exempt from forfeiture. Despite the complexity of the king crab supply
chain, the 9th Circuit Court, based on Lacey Act law, history and
congressional intent, deemed the products to be unlawful, though not
criminal, and thus subject to forfeiture, a tool deemed by the Court to
strengthen the effectiveness of the Lacey Act.
In terms of general enforcement of the Lacey Act, apart from
criminal cases, the government must have a preponderance of evidence in
order to establish a case. The investigative procedures to make such
cases are exhaustive, as described by Paul Ortiz of NOAA. 4
In proving a Lacey violation, U.S. prosecutors will go to great lengths
to confirm that a foreign law has been violated, and will work closely
with foreign government officials to determine the relevant laws and to
ascertain whether there were any violations. They will often bring in
translations of laws, expert witnesses from the foreign country, and
other evidence to prove a violation. WWF expects that the same steps
would be taken in enforcement of an alleged Lacey Act violation
regarding timber products.
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In summary, the fish and wildlife supply chains that the Lacey Act
currently governs are just as complicated as the wood supply chains
that we would like to include under Lacey, so there is no need to
redress the Lacey Act in order to make it ``fit'' the wood product
situation. The Lacey Act 1981 Amendments strengthened enforcement
measures and penalties, including adding a strict liability clause, in
order to make Lacey more effective in meeting the ever-increasing
global threat perpetrated by the illegal fish and wildlife trade. Lacey
Act case law demonstrates that it is designed to, first and foremost,
capture and punish those who are knowingly complicit in illegal
wildlife and fish trade. Secondarily, Lacey establishes some measure of
accountability by exercising an appropriate level of due care. Lacey
puts the burden of proof on the government to establish culpability and
rewards those who are already practicing appropriate due diligence
relative to their risk of procuring illegal products by evening the
playing field in terms of punishing their less scrupulous competitors.
6. Implementation of H.R. 1497
WWF firmly believes that, through a risk-assessment based approach,
it is possible to distinguish wood that has a high probability of
coming from illegal sources within one's forest products. Using
existing tools, technologies and resources already adopted by several
industry leaders, it is possible to work with one's suppliers to
eliminate illegal wood, even within long and complicated supply chains.
WWF, through its Global Forest & Trade Network, collaborates with
retailers, importers, factories, distributors, brokers, suppliers, and
forest managers throughout their global supply chains to identify and
address illegal wood in the system. Given over a decade of experience
helping companies on this issue, we can attest to the fact that it is
possible to assess risk for illegal wood within forest products of all
product category types and it is possible to take appropriate actions
with suppliers to minimize and mitigate the risk.
In our experience, the first step in assessing risk level is to
know the species and country and forest management unit origin of wood
for a given product. Having worked with many wood product buyers and
retailers, we can safely say that even the most well-intentioned
companies do not necessarily know the origin of wood for their products
beyond knowing the physical location of their primary and direct
suppliers such as factories in China or brokers in Singapore. Foreign
factories and brokers often resist providing their customers with wood
origin information because they either lack systems to track their wood
or they are protecting what they consider to be a competitive trade
secret. Unfortunately, without knowing where, geographically, wood
originates, it is virtually impossible to assess and address risk of
illegal wood within one's supply chain. Those who are committed to
knowing the origin of wood to identify risk must often expend excessive
time and resources simply getting information needed to identify any
red flags. Their less diligent competitors actually save time and
resources by conducting ``business as usual.''
The proposed Lacey Act amendment would require shipments of forest
products to be accompanied by a declaration stating the species,
country of origin for the raw material, quantity and measure, and
value. The documentation requirement should help law enforcement agents
and, more importantly, the wood product buyers, to identify relative
risk of imports for illegal wood, which vary country by country, in
order to prioritize their efforts. The requirement should also serve to
motivate factories, brokers, distributors and others importing into the
United States to establish wood traceability within their procurement
programs. Wood traceability through the complicated global supply chain
is possible if the foreign factories and their suppliers put systems in
place to capture needed information. WWF has in fact worked with many
factories within China, Southeast Asia and Latin America to put these
tracking systems in place so we can attest to the fact that it can
indeed be done. The problem is that without significant demand for this
information, the factories will not change their current practices.
Moving from the current voluntary data exchange model to a
mandatory documentation model would greatly benefit U.S. companies who
are making every effort today to procure wood responsibly from the
hassle of trying to persuade their suppliers to provide critical supply
chain information on which to base their risk assessments. Increasing
supply chain transparency in this manner would also help to shine a
light on the less scrupulous wood buyers and, again, even the playing
field.
Once transparency is established, there are a multiple tools that
one may use to assess and address risk (see Appendix A for more
information). As mentioned previously, chain-of-custody certification,
controlled wood certification, legality verification, first and 2nd
party random supplier audits, Radio Frequency Identification (RFID)
tags and genetic testing to verify log origin, remote-sensing, and
step-wise programs like Rainforest Alliance's Smartsource Program and
the Tropical Forest Trust program are all viable methods of minimizing
and mitigating illegal wood risk and are all being used effectively
within the forest products sector by market leaders who have actually
integrated legality checks into their routine quality assurance
programs. In fact, and as an interesting aside, American Forest & Paper
Association (AF&PA) members, who support H.R. 1497, voluntarily
instituted programs to assess and address illegal wood within their
supply chains in 2002, as part of the Sustainable Forestry Initiative.
As AF&PA includes several companies who import wood products from high
risk regions, this is not a trivial matter. The fact that this
association has proactively met the illegal logging issue with
appropriate due care may in part explain their confidence in and
support for H.R. 1497.
While some forest product companies and associations recognize that
their level of due care must match the level of risk within their
business, others unfortunately do not. This is particularly
disconcerting when considering that the odds of sourcing illegal wood
products are 2:5 from China, 4:5 from Indonesia, 1:5 from Malaysia, 3:5
from Honduras, 2:5 from Vietnam, and 2:5 from Peru, all countries
exporting large volumes of wood products to the U.S. With such high
odds of sourcing illegal wood, it is puzzling to us that more companies
and associations are not raising their level of due care to be
commensurate with their level of risk. While several companies and
associations have codes of conduct and publicize high-level statements
against illegal logging, they are not taking appropriate measure to
implement these policies across the board, and unfortunately have a
competitive advantage over those companies that are practicing
appropriate due care. Indeed, if all market players were using the same
voluntary and abundant due diligence mechanisms available to exclude
illegal wood from their supply chains, then amending the Lacey Act
would become unnecessary.
The current importing of suspicious wood products into the U.S. is
not only damaging the U.S. forest products industry and the social,
economic and environmental situation of many developing countries, but
it is also harming the American consumer who is in fact the end user of
these products. Consumers have a right to trust that the products they
buy, if not necessarily sustainable, are at the very least sourced
legally. Consumers, unlike the forest product industry, have few ways
of distinguishing between legally and illegally sourced products and
they should not be put in this position anyway. We believe that the
U.S. government, in partnership with exporting nations and the global
forest products industry, has a responsibility to the American consumer
to screen out unlawful products from the U.S. retail shelf.
7. Conclusion
Congressional approval and enactment of this legislation, with
amendments suggested in this testimony, would place the United States
in a strong leadership role in addressing the illegal timber trade.
Given the serious environmental and social impacts of illegal logging
to developing and transitional economies, and the economic impacts to
the global forest products industry, it is critical that actions be
taken by both individual companies and governments to address the
problem. Although public-private partnerships and multiple supply-side
measures have shown promising results, we cannot expect these actions
to significantly abate illegal logging without being accompanied by
strong demand-side signals. Several companies have voluntarily
undertaken steps to exclude illegal wood from their supply chain.
However, market penetration of these voluntary and sometimes costly
efforts is not deep or broad enough to keep up with the rapid pace of
illegal logging and deforestation. Industry-wide actions are needed to
really transform the marketplace.
H.R. 1497, amending the Lacey Act to address illegal timber
imports, provides an effective and business-friendly tool for enabling
the U.S. government to punish criminal actors, encourage a credible
level of due diligence among all U.S. forest products industry, and
drive foreign suppliers to put systems in place that would enable them
to trace their wood to forests of origin. Knowing where the wood
originates is the first step in assessing and addressing risk of
illegal wood within a given supply chain. Amending the Lacey Act should
help level the playing field for responsible U.S. businesses and remove
the perverse incentives that currently exist for wood procurement that
causes irreparable social, economic and environmental harm.
Finally, along with the passage of H.R. 1497, we ask Congress to
provide sufficient appropriations to the agencies tasked with
implementing this critical legislation. The key to whether this law
succeeds on the ground is whether adequate personnel, training and
6funding are dedicated to enforcement efforts.
Thank you for the opportunity to provide this testimony to the
Subcommittee.
______
Some Tools and Resources for Companies to
Address Illegal Logging in Their Supply Chains 5
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\5\ The tools and resources listed here are in no way exhaustive or
comprehensive. We recommend that Department of Justice convene a multi-
stakeholder working group to develop a comprehensive list of available
resources
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Voluntary legality verification See http://
www.rainforest-alliance.org/programs/
forestry/smartwood/legal_verification.html for an example.
Keep It Legal Guidelines-- http://assets.panda.org/
downloads/keep_it_
legal_final_no_fsc.pdf.
FSC Controlled Wood Certification -- http://www.fsc.org/
controlled_wood
FSC Chain of Custody Certification -- http://www.fsc.org/
keepout/ en/content_
areas/77/134/files/FSC_STD_ 40_004_V1_0_EN_CoC_ for_Suppliers_
and_Manufacturers.pdf
Other 3rd Party forest chain of custody certifications
First and second party supplier audit systems--for a few
real-life examples see:
http://w3.upm-kymmene.com/for/internet/ upm_
tracing_russia_wood.nsf/start
http://search.storaenso.com/mini/woodprocurement/main.html
Stepwise Programs to Identify and Eliminate Illegal Wood
in Supply Chain:
WWF-GFTN -- http://www.panda.org/about_wwf/what_we_do/
forests/our_solutions/responsible_forestry/gftn/index.cfm -- includes
Risk Assessor database tool which cross-references country and species
and rates relative risk of illegal logging
Rainforest Alliance--Smartsource and Smartstep -- http://
www.rainforest-alliance.org/programs/forestry/trees/services/
smartsource.html
Tropical Forest Trust--Third party verification -- http://
www.tropical
foresttrust.com/third-party.php
Helveta and TFT Tracelite RFID tracking -- http://
www.tropicalforesttrust.com/tracelite.php
Remote sensing -- http://www.illegal- logging.info/
item_single.php?item=news
&item_id=1819&approach_id=1