Volume 46, Issue 9 - November/December 2007

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In the News

Import Issues

Associations Speak Out about Illegal Logging Bill
A number of U.S. wood and timber associations had been anxiously awaiting the congressional hearing on Congressman Blumenauer’s (D-OR) Legal Timber Protection Act, HR 1497, that took place in the House Natural Resource subcommittee on Fisheries, Wildlife and Oceans on Tuesday, October 16. The hearing to review the legislation was originally scheduled for September 11, but was cancelled due to a sudden change in the House schedule. The bill would expand the Lacey Act—which currently regulates trade in fish, wildlife and a limited subset of plants—to prohibit the import, sale or trade of illegally harvested wood and wood products.

What’s the Problem?
“Illegal logging is a problem that crosses national boundaries to affect communities, companies and ecosystems alike,” said Rep. Blumenauer (D-Ore.). “This legislation would level the playing field for U.S. industry, not create new obstacles. We see an extraordinary opportunity for common ground here and we believe this legislation is a solution that benefits everyone.”

But various associations look at this illegal-logging legislation differently.

Proposed illegal logging legislation places undue responsibility on small-family businesses to enforce foreign laws, makes U.S. Customs regulations more complex and provides no protection for innocent owners, according to testimony by the International Wood Products Association (IWPA) in the Congressional hearings.

“This legislation is well-intended but attempts to get at illegal logging by deputizing small, family businesses to enforce foreign laws,” said IWPA government affairs committee chairman Craig Forester. “If enacted, U.S. importers, manufacturers and distributors can be held responsible for illegal acts overseas at any step of the supply chain—violations that they would have no reasonable expectation to know about, much less the underlying laws that exist in all foreign countries.”

Forester stressed that HR 1497 provides no protection for “innocent owners” in the supply chain who handle imported wood and reinforces the key principle of “innocent before proven guilty.” Such a provision would legally protect good actors, but not prohibit the government from taking goods that violate foreign laws.

Forester stressed, “Foreign governments issue documents, permits and paperwork that allow products to be traded legally under international and national laws and regulations. The U.S. government accepts those documents as legal upon entry at our nation’s borders. Now, however, we’re being told that isn’t enough—we also must somehow audit a foreign government’s issuance of those documents.”

My grandfather started my family’s small business in 1946. We’ve grown through our environmental stewardship and activism. I don’t see how this ready-aim-fire approach to stopping illegal logging with small U.S. businesses as the target will do anything to stop illegal logging overseas,” Forester concluded. “We implore the members of the committee to amend the anti-small business bill to protect innocent owners and save U.S. jobs.”

Level the Playing Field
But other associations feel this bill would make the market more level when it comes to business.

The Hardwood Federation (HF) presented testimony in support of this legislation (with amended changes to support the Senate version S. 1930). Victor Barringer, president and chief executive officer of Coastal Lumber Co., testified at the hearing on behalf of the HF.

“Illegal logging contributes to deforestation, undermines the viability of legally harvested and traded forest products and creates unsustainable forest conditions. The Combat Illegal Logging Act is an important step in addressing these global issues. The legislation is a product of industry, environmental and conservation groups coming together to halt the damaging effects of illegal logging to domestic industries and foreign environments,” the HF said in a press release about the Congressional hearings.

But the issue of illegal logging and fair trade in the wood industry isn’t just a Congressional fight. Both the IWPA and members of the HF recently met with the International Trade Commission (ITC). Representatives of the IWPA met with the ITC to discuss how the association feels its industry supports the U.S. job market and sustainable practices worldwide. According to IWPA, the $23-billion imported wood products industry supports hundreds of thousands of American jobs.

“The demand for high-quality, affordable imported woods, many of which are species that just don’t grow in the U.S., helps support U.S. manufacturing, distribution and retailing, not to mention the U.S. consumer,” IWPA executive vice president Brent McClendon says. “The benefits are seen in industries as diverse as hardwood plywood, kitchen cabinets, flooring, recreational vehicles and manufactured housing.”

Under Investigation
A panel commented on the value of imports for domestic manufacturers and answered questions from the six ITC commissioners and their staff members at a public hearing. The session was a part of the Section 332 investigation on the U.S. flooring and hardwood plywood industries.

IWPA says all of the imports handled by its members arrive in the United States, accompanied by the necessary permits, documents and paperwork that allow them to be traded legally and sustainably under international and national laws and regulations.

“Our members are made up largely of small, family-owned businesses that personally visit their overseas supplier operations to ensure that these businesses are built upon sustainability and legality,” McClendon says. “Following these best practices, importers play an active role in the future of people in developing countries who rely on forests for their livelihoods.”

The IWPA members emphasized the seriousness of the issues the ITC commissioners face currently. Speakers condemned illegal logging and encouraged the U.S. government to take action against those who willfully misclassify products and take part in deceptive business practices for a competitive advantage.

IWPA says it applauds the government’s work against illegal logging, including the recent negotiation of several bilateral agreements with foreign countries to address illegal logging. Among those agreements are the U.S.-Indonesia Memorandum of Understanding on combating Illegal Logging and Associated Trade and the U.S.-China Strategic Economic Dialogue Task Force to Create Bilateral Agreement Addressing Illegal Logging and Associated Trade. The association says it has also played an active and ongoing role in the U.S. government’s efforts to combat illegal logging through the President’s Initiative Against Illegal Logging (PIAIL).

Leading the Effort
NOFMA—The Wood Flooring Manufacturers Association, a member of the Hardwood Federation, also met recently with the ITC as part of the Section 332 investigation.

Timm Locke, executive vice president of NOFMA, explained to SHELTER some of the history behind the Section 332 investigation (also see SHELTER April 2007, page 22).“In large part, NOFMA—The Wood Flooring Manufacturers Association was the impetus behind the Hardwood Federation addressing the import issues in the way we have. Three years ago, NOFMA led the effort to entice the Customs Bureau to more actively address misclassification issues and enforce existing executive vice president, NOFMA trade laws regarding hardwood flooring,” says Locke. “That evolved into an effort to prompt the Senate Finance Committee to request a Section 332 investigation, an effort that was two years in the making before we were successful in getting the investigation started.”

Locke says NOFMA’s members were compelled to lead the effort in misclassification of hardwood flooring because its members for the past decade have watched as the American furniture industry was swept overseas. “The flooring industry feels it could be next. As we looked at the situation in the furniture industry we started to see conditions that went beyond simple fair competition,” Locke says. “We began to ask ourselves, ‘How is it that a manufacturer half a world away can purchase logs or lumber in the United States, ship that raw material around the world, make it into flooring, put a finish on it and ship it back around the world to sell for less than it costs a U.S. manufacturer to make the unfinished product in the first place?’”

Locke says that, at the time, many people pointed to cheap labor as the culprit, but many more factors were at work. “Turns out, illegal logging, which causes artificially deflated raw materials prices, is just one of those factors,” Locke says. “Other factors that must also be addressed include lax environmental standards in many of the countries we’re competing with; manipulation of currency exchange rates in China and perhaps elsewhere; unsafe working conditions that would cost money to remediate; Harmonized Tariff Schedule misclassification for the purpose of tariff avoidance; governmental subsidies designed to allow foreign producers to “buy” market share with inexpensive products; and theft of intellectual property rights that goes unpunished; the list goes on …”

A Fair Shake
“One might be tempted to think NOFMA is a protectionist in its position regarding global trade, but that is simply not true. NOFMA and its members are in favor of free trade that is fair trade. It’s just that the current situation is far from being fair, so we are attempting to level the playing field,” Locke says.

Tommy Maxwell, owner of Maxwell Hardwood Flooring in Monticello, Ark., and a member of NOFMA, echoed Locke’s feelings in the ITC hearing, “Life is good, but we're having a pretty tough go of it right now. Flooring prices are in the tank and the cost of lumber is actually a little higher now than it was three years ago. On top of that, the cost of fuel to get lumber and flooring out is also much higher.”

Maxwell later made the following statement, “I’m not afraid of competition, but just give us somewhat of a level playing field, and we will compete with anyone. I’ve invested almost my entire adult life in this industry. As mentioned earlier, I have worked for several others. I was in logging and manufacturing before going into business for myself.

In fact, all of them are represented here today. We are all after the same thing: a simple, level playing field … I'll just simply close by saying: We’ve been profitable all this time and we paid a lot of taxes so that our government agencies can exist. We would like to continue that. But, under the present circumstances, I don’t know if that’s possible. We’re entrepreneurs in a free society; and we had the freedom to succeed and the freedom to fail.”

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