The U.S. Lacey Act: Overview and Recent Developments

1. The U.S. Lacey Act:Overview and Recent Developments Caitlin Clarke World Resources Institute Washington, DC

2. Outcomes of Presentation • Review of the Lacey Act • What Lacey means for trade • The Forest Legality Alliance

3. The Lacey Act Amendments of 2008 • Fact-based, demand-side policy • No trade in illegally sourced forest products • No entry without declaration form • No false claims Source: Food, Conservation and Energy Act of 2008, Section 8204. Prevention of Illegal Logging Practices. 16 U.S.C. § 3372 (a). Representative John F. Lacey (R-IA)

4. Important Lacey Act facts • The import ban on illegal goods is effective now and for all products. Phase-in schedule concerns only the declaration requirement. • There are no documents or processes that can be used as “get-out-of-jail free” cards. Only actual legality counts. • The entire supply chain is at risk for prosecution, not just importers.

5. Two necessary components of a Lacey Act violation • An underlying violation of a state, foreign, or tribal law that protects or manages plants and/or derivative products occurs. • The tainted good obtained through violation of such a law is traded in the United States. The Lacey Act regulates trade, not logging.

6. Declaration requirement • Requires scientific species name, country of harvest, volume, and value • Does not require information on legality or “chain of custody” • Does not establish standards or require verification by government or a third party

8. Outcomes of Presentation • Review of the Lacey Act • What Lacey means for trade • The Forest Legality Alliance

9. Public enforcement actions to date • Gibson Guitar Corp., famed U.S. musical instruments manufacturer • Raided Nov. 2009 as part of an investigation into the use of illegally logged wood from Madagascar • Major shock to U.S. wood products industry • Investigation ongoing; current developments not yet public • U.S. Dept. of the Interior v. Three Pallets of Tropical Hardwood,a small business case in which the U.S. seized a shipment of imported hardwoods from Peru • Found that importer “did not do all he could within his power to comply with regulations and ensure that the shipment was authorized” – in essence, a failure of “due care”

10. U.S. private sector response to Lacey • The Lacey Act has reshaped the U.S. wood products industry and exporters’ business practices • The industry generally supports the intent of the Act but has concerns about its implementation • Awareness of the Lacey Act is high, and has been moving up the supply chain from importers to retailers of forest products • Concerns about complying with the Lacey Act focus on understanding “due care,” rather than on completing new paperwork

11. Perspectives from the trade “Three years ago, only a few companies were concerned about [illegal logging]. And now, everyone who is serious about exporting to the U.S. or the EU is.” – Intermediary “Our association wants to avoid illegal logging and market our products in the U.S., and for us, working with the Lacey Act is not a problem.” – Exporter “I would want to know the list of questions I need to ask back through the supply chain so that I can sleep at night and know that I am fine.” – Intermediary “The risk assessment tools, and a definition of what ‘due care’ looks like, that is needed, and that would make things easier.” – Importer/Retailer

12. New technologies for tracking supply chains • Enhanced timber barcode tracking • DNA analysis, mapping and tracking • Satellite analysis of land cover change • Trade databases • Fiber analysis • Isotopic analysis, mapping and tracking

13. Lacey and EU Timber Regulation • Laws differ in approach • In EU, “first placer” liable for legality of wood products; under U.S. Lacey Act, entire supply chain may be sanctioned • As exporters, know that both systems require legality only • Buyers may require additional assurances, but no third-party schemes are recognized by U.S. government as proof of legal origin

14. Outcomes of Presentation • Review of the Lacey Act • Current developments • What Lacey means for trade • The Forest Legality Alliance

15. The Forest Legality Alliance: Context • Information gaps on demand and supply sides • Move from voluntary to mandatory: the need to mainstream legality, risk considerations • Assist both U.S.-based and overseas forest products industries and stakeholders in adapting to legislation • Access to ALL information is key • Need for targeted U.S.-based information for legality • Not an official U.S. government voice

16. The Forest Legality Alliance Background and goals Activities • A clearinghouse for disseminating information and resources • Legality-only focused • No auditing, certification or verification of membership • A creator of appropriate tools to fill risk assessment and policy knowledge gaps • A platform for consensus and collaboration • Build awareness of forest legality issues and support supply chain efforts to deliver legal wood and paper products • Develop tools to help all parts of supply chains • Conduct feasibility demonstration studies

17. Membership • Nine major companies and associations in Industry Advisory Group • General membership open to companies, associations, NGOs, technical service providers, certain government entities,other stakeholders • Provide guidance on tools • Access to policymakers in U.S. government, peers in industry

18. Tools – Information to markets

19. Global focus

20. The Forest Legality Alliance www.forestlegality.org Thank You Caitlin Clarke – cclarke@wri.org This presentation is made possible by the generous support of the American people through the United States Agency for International Development (USAID). The contents are the responsibility of the Forest Legality Alliance and do not necessarily reflect the views of USAID or the United States Government.