[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).
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \3\ 16 U.S.C. Sec. 3371(d).
---------------------------------------------------------------------------
    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
---------------------------------------------------------------------------
    \6\ S. Rep. No. 91-526, 91st Cong., 1st Sess. 12 (1969), reprinted 
in 1969 U.S.C.C.A.N. 1425.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \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
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \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
---------------------------------------------------------------------------
    \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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  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.
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    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
---------------------------------------------------------------------------
    \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.
    [GRAPHIC] [TIFF OMITTED] T8330.005
    
    [GRAPHIC] [TIFF OMITTED] T8330.006
    
    [GRAPHIC] [TIFF OMITTED] T8330.007
    
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:]

[GRAPHIC] [TIFF OMITTED] T8330.009

[GRAPHIC] [TIFF OMITTED] T8330.010

    .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:

[GRAPHIC] [TIFF OMITTED] T8330.011

[GRAPHIC] [TIFF OMITTED] T8330.012

    [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: 

[GRAPHIC] [TIFF OMITTED] T8330.013

    [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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    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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    \4\ http://www.high-seas.org/docs/Lacey_Act_Paper.pdf
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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

                                 
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