The Case for Full Enforcement of the 2008 US Lacey Act Amendments and the Example of US-Vietnam Trade
Biden has committed to rebuild the US, its economy and its position in the world not as it was pre-Covid-19 pandemic and pre-Trump administration, but “better.” He has also pledged to make the mitigation of the climate crisis an inter-sectional issue, which will cut across a variety of sectoral policies and national priorities. In many instances, this overdue renovation of US policy will undoubtedly be challenging. In other cases, it may end up being easier as long as the right opportunities are identified and seized. We describe here what such an opportunity looks like when climate and international trade intersect.
The destruction and degradation of forests is a key driver of the global climate crisis. In several tropical regions in the world, such as the Congo Basin, illegal logging is one of the main factors responsible for the destruction and degradation of forests. When US companies import illegal timber or products made of illegal timber, willingly or not, they contribute to the global challenge of fighting climate change and biodiversity loss through an increased carbon footprint overseas. This is one area where climate crisis mitigation measures intersect with international trade policies and provides an excellent opportunity to put the vision outlined by the new US Administration into practice.
The good news is that the US is well equipped to address this challenge with the amended Lacey Act. In 2008, the US passed powerful amendments to the Lacey Act with strong bipartisan support, making it the first country in the world to ban illegal timber products. This model legislation, which led to passage of similar laws in other countries (e.g. the EU and Australia), is recognized by American timber companies and trade associations as a rigorous means to ensure timber legality in the US. In so far as the Lacey Act is a fact-based statute, no third-party certification or verification schemes can be used to prove legality. The amended Act is impressive in that it covers violations of any international and national laws governing the timber trade. Importantly, the Lacey Act applies to all steps in the supply chain and holds all parties accountable, whether or not they knowingly or unknowingly engaged in the prohibited conduct (with sanctions of penalties designed to encourage greater due diligence). According to available data, the enforcement of the amended Lacey Act has changed the illegal international timber trade game.
That said, while there have been landmark cases over the past decade, broad enforcement of the 2008 Lacey Act amendments has been a challenge, in part due to structural reasons. According to the UN Comtrade database, the US is the 2nd largest importer of wood products in the world. Specifically, according to our (EIA) analysis based on US import data from Panjiva, the US imported on average 51,609 tons of timber each day over the past five years. The origin and diversity of the timber imported is as wide as it could be. Timber leaving overseas ports located – literally – all around the world ends up in the US; the country imported timber directly from 194 countries from 2015-2020. If the US is serious about ending its role in the illegal logging of the world’s forests, then sufficient financial and personnel resources must be allocated as a priority to fully implement the Lacey Act and meet the sea of wood products coming into the US.
Direct import of illegal timber from the origin country where the tree was cut is the tip of the iceberg. One of the major trends in international timber trade over the past decade has been the globalization of the trade, widely used by organized criminal networks to hide their dirty operations. Nowadays, it is quite common for a tree to be illegally cut in a tropical forest, like the Congo Basin, processed in a booming manufacturing hub, like Vietnam, and sold as a finished or semi-finished product to Europe or the US. For example, timber trade available on Panjiva shows that an increase in trade between Vietnam and the US has occurred between 2015 and 2020 by 484 percent. From 2015-2019, approximately 23 billion USD worth of finished products (e.g. furniture) and unfinished products (e.g. lumber) was imported into the US from Vietnam. During the recent investigation by the Office of the US Trade Representative (USTR) into Vietnam’s import and use of illegal timber, testimonies from a myriad of Vietnamese and American associations and alliances attempted to show that bringing in timber from high-risk countries is an impossibility. However, EIA’s Tainted Timber, Tarnished Temples report published in November 2020 demonstrates that despite good intentions, circumventing legal processes to facilitate the illegal timber trade still occurs, at a large scale. Ensuring that the hundreds of thousands of tons of illegal timber exported from Cameroon to Vietnam do not end up in American homes is critical. And this is but one example.
Returning to some good news, there are opportunities to facilitate Lacey Act enforcement in the case of the Vietnam-US timber trade. One of them is by increasing the dialogue and collaboration with the European Union (EU) and Vietnam, which have collaborated for several years in order to build together a legally binding trade agreement with partner countries called a Voluntary Partnership Agreement (VPA). A VPA is a mechanism for timber importations through a license process that affords fast-tracking capabilities once all conditions have been met at the point of exportation. At the core of the VPA is the Timber Legality Assurance System (TLAS) that includes supply chain controls that verify legality at each step, including controls requiring purchasers in Vietnam to conduct due diligence on the source of imported timber. With a recently signed decree that went into effect in October 2020, Vietnam is poised to operationalize its TLAS.
The system in place is far from perfect. The due diligence process requirements in particular need immediate attention, but it offers an ongoing and transparent governance safeguard against illegal trade that could benefit the enforcement of the Lacey Act.
With a new administration in the US seeking to ameliorate its international relationships and build [America] back better, engaging in a US-EU dialogue to effectuate sound trade systems that root out illegal natural resource trade, and learn and adopt from each other would be a great step towards economic and environmental recovery. It will also demonstrate that “build better” means “build with others,” and help ensure that US companies are operating in partnership with communities in the US and around the globe upon which they depend.