On May 22, 2008 the U.S. Congress passed amendments to the Lacey Act of 1900 that make it unlawful to import, export, sell, purchase or transport in interstate or international commerce any plants or products made of plants harvested or traded in violation of domestic and international laws, including timber and timber products. These amendments may open a new era in the development of global forest governance.

For one thing, this is a U.S. law that not only bans domestic trade in goods that were produced in violation of domestic laws of the United States, U.S. States and foreign countries but also attempts to indirectly regulate the production in foreign countries. At the same time, the Lacey Act itself does not violate international free trade regulations. The Lacey Act therefore brings public forms of forest governance back in the transnational space. Another interesting thing about it is that public and private actors reactivate an old piece of legislation to address a current issue. The case of the amended Lacey Act demonstrates that actors can effectively export dormant or taken-for-granted rules from one issue domain to another to achieve their goals. Finally, the Lacey Act opens up new opportunities for a public-private cooperation: if public authorities recognize certificates issued by nonstate certification programs similar to the Forest Stewardship Council forest certification as a sufficient proof of legality of timber, this may become an incentive for producers to certify their forest management. Nonstate actors can therefore use the Lacey Act as a leverage to promote better standards of forest management among or to reward well-performing producers.

The Lacey Act was enacted in 1900 to stop international trade in tropical birds, elephant ivory, tiger skins and similar products. In early 2008 the Lacey Act was amended to include a broader range of plants, including illegally harvested timber. Basically, the Lacey Act does three things. First, it bans the imports of raw materials and products made of plants harvested or produced with violation of domestic laws of exporting countries. It also bans domestic trade in raw materials and products produced with violation of the U.S. laws and U.S. state laws. Second, the Lacey Act requires importers to declare the scientific name of any species used, its origin, the quantity and measure and the value. It makes importers responsible for ensuring the legality of products and for complying with the Lacey Act. Third, it specifies penalties for the violation of the Act that include forfeiture of goods and vessels, fines and jail time. Provided that the U.S. is the world largest consumer of timber and that illegally sourced wood is estimated as 10% of the total wood supply, the Lacey Act can become a powerful tool in combating illegal logging in the U.S. and beyond it. It can also strengthen the competitiveness of legally harvested timber and manufactured products undermined by cheaper illegal wood products.

The Lacey Act may also potentially mark an important turn in the development of the global forest governance regime. Since the late 1980s, a plethora of private initiatives has emerged to regulate the behavior of firms in the forest sector, promote sustainable forest management and combat deforestation and forest degradation. Forest certification is the most prominent example. Environmental activists created these initiatives in response to the failure of governments and international organizations to agree on legally-binding instruments for solving forest problems, such as a global forest convention, and to the inability of individual countries to ban imports of illegally harvested timber. Governments were cautious to implement such measure as bans and tariffs, since they could be interpreted as non-technical barriers to trade prohibited by GATT (later WTO). This motivated environmental activists to create voluntary programs for promoting sustainable forest management and improving the condition of the world’s forests.

Many environmentalists, however, perceived voluntary programs and standards as a second-best option. Companies could exit programs any time, monitoring and control was very costly, participation depended on the market incentives that were difficult to construct, and programs reached mainly companies that were already performing well, mainly in developed countries. They felt that governmental regulation could better address global forest problems. They continued to lobby governments to strengthen the measures against illegal logging at the global scale. The Lacey Act has become the critical step in this direction.

The Lacey Act is the world’s first statute that prohibits trade in illegal wood but does not violate international free trade regulations. In contrast to earlier bans that prohibited all imports of tropical timber as potentially illegal, the Lacey Act bans specifically imports of illegal wood and interstate trade in illegal wood. It identifies what illegal wood is, does not impose U.S. laws on foreign countries, requires importers and traders to prove the legality of wood and specifies penalties. It provides a powerful incentive for importers to eliminate illegal wood from the consignments shipped to the U.S. and impose legality requirements on their suppliers in foreign countries. The Lacey Act therefore does not discriminate against timber from specific countries or regions, e.g. tropical timber, but bans illegal wood, which is consistent with WTO regulations. The Lacey Act has a potential to reshape long and complicated cross-border supply chains and provide benefits to legal forest operations and incentives to legalize their operations to illegal loggers beyond the U.S. borders. The Lacey Act thus brings public regulation back into the transnational space.

Two other things are interesting about the Lacey Act. First, it demonstrates the ability of both private and public actors to cooperate and creatively seek clever solutions to common problems, such as illegal logging and international trade in illegal wood. The Environmental Investigation Agency nicely describes the history of the amended Lacey Act:

For years, experts have pointed out that the absence of “plants” from the Lacey Act was a glaring omission. At the same time, the devastating impacts of illegal logging and associated trade for local communities, invaluable ecosystems and good governance in developing countries have been increasingly well documented. As it became clear that amending the Lacey Act would be an effective measure to address these issues, the legislation was proposed in the U.S. Congress by Representative Earl Blumenauer and Senator Ron Wyden, both of Oregon, in 2007. A precedent-setting coalition of environmental, industry, and labor groups backed these bills, recognizing the need for the world’s largest consumer market to take action at home to curb illegal wood and plant product imports (The U.S. Lacey Act. Frequently Asked Questions about the World’s First Ban on Trade in Illegal Wood).

Second, the Lacey Act opens up new opportunities – and new markets – for various public and private initiatives. Since supply chains in the forest sector can be very complex and companies often cannot guarantee the legality of their sources, the Lacey Act makes use of the concept of “due care” to evaluate companies’ efforts in securing legality. Although the Lacey Act is a fact-based law and no document presented by the company can guarantee the legality if the opposite can be verified by facts, companies can present evidence that they took a due care. If companies can prove that they practiced due care in court, they are most likely be charged with a small fine, instead of jail time or significant civil penalty fines. Internal company policies, tracing systems, systems of legality verification, certification, other similar programs offered by external organizations and other innovative private or public-private partnership programs can serve as evidence of due care. This opens new avenues for cooperation between business and environmentalists and between public and private actors. For example, the Forest Stewardship Council announced that its program of forest certification was a reliable tool for demonstrating legality (FSC News Plus Notes. Volume 6, Issue 9, September 5, 2008).

Private organizations – NGOs and business associations – supporting the Lacey Act:

Amazon Watch
American Forest and Paper Association
Center for International Environmental Law
Conservation International
Defenders of Wildlife
Dogwood Alliance
Environmental Investigation Agency
Forest Trends
Friends of the Earth
Global Witness
Hardwood Federation
International Brotherhood of Teamsters
National Wildlife Federation
Natural Resources Defense Council
Rainforest Action Network
Rainforest Alliance
Sierra Club
Society of American Foresters
Sustainable Furniture Council
The Nature Conservancy
Traffic – The Wildlife Trade Monitoring Network
Tropical Forest Fund
United Steelworkers
Wildlife Conservation Society
World Wildlife Fund (WWF)

Sources: FSC, FSC US, Animal and Plant Health Inspection Service of the U.S. Department of Agriculture and Environmental Investigation Agency