In March of 2013 the European Union’s Timber Regulation (EUTR) legislation went into effect. Simply put, EUTR is Europe’s version of the US Lacey Act as it relates to lumber production. There are similarities between the two laws and a lot of differences. For instance, EUTR does consider certifications (FSC/PEFC) and verifications (TLTV/VLO) as risk mitigation when conducting “due diligence,” whereas Lacey ignores these completely. Lumber carrying CITES or FLEGT permits is automatically in compliance as well.
Again, as we saw in the Gibson Guitar case, these permit and certification schemes do not guarantee compliance. The biggest difference is that EUTR goes a few steps further in quantifying what compliance means by spelling out a Due Diligence System (DDS). It is this DDS that has us most interested, since there are finally some guidelines to help us and others in our supply chain build processes that could classify as “due diligence” under the Lacey Act.
Due Diligence System
EUTR states that a Due Diligence System (DDS) should contain three elements:
1. Access to Information
Importers and Distributors should be able to produce on request information about their supply chain such as the following:
- Description of the product (botanical name, trade name)
- Country of harvest including any regional information and specific concession of harvest
- Name and address of supplier
2. Risk Assessment
Once information has been collected, you must evaluate if your product has been produced in compliance with the laws of the harvesting country. Ask yourself the following questions:
- How do I ensure that my suppliers comply with legislation?
- Are my products certified or verified by a third party scheme? Do I consider those schemes trustworthy?
- Do illegal harvesting practices exist in the country of origin? Does armed conflict exist there?
- Are there any economic sanctions imposed on the country of origin
- Is my supply chain complex?
3. Risk Mitigation
If your risk assessment raises further questions or if a positive answer to any of the last three bullets above results, then further investigation is needed such as getting certification or verification documents, or possibly shifting to a more reliable source. Basically, you need to increase your level of comfort before buying or selling the lumber. If the outcome of your assessment is that there is negligible risk, then there is no need for further mitigation.
How Does This Help Us with the Lacey Act
At face value, the above points seem pretty obvious, but honestly, this is the first time anyone has spelled out a course of action. Most of us in the industry are already doing this, but now with legislation behind it, the foreign sawmills are more amenable to providing this information. Moreover, as a US supplier who buys from many European run sawmills and/or sawmills that export a large percentage of product to Europe, there is much greater awareness about the need to investigate and document the supply chain. In the past, when we sought out further documentation, US importers were the only ones requesting it. The sawmills would become annoyed or stall and sometimes just sell to Europe or Asia, where no one was asking for more details. Now that additional markets are requiring documentation, it has become easier to get supporting information for your compliance investigation.
I can’t state this strongly enough. EUTR is not the same as the Lacey Act! As a US lumber dealer, we must adhere to Lacey, and just because we may comply with EUTR, there is no guarantee that Lacey will also be happy. However, at least now we have some guidance, and more people will be investigating the supply chain. Since Lacey is much more ambiguous and only states that “due diligence” be performed, it is reasonable to state that going through the DDS process spelled out by EUTR would be considered due diligence for Lacey. The exciting part of all of this is that now the two largest lumber markets have legislation in place to prevent illegal logging, which should make obtaining documentation and supply chain investigation much more commonplace.
Lacey Doesn’t Care Where You Are in the Supply Chain
Another major point to remember is that though the EU Timber Regulation draws a distinction between the importer and the trader who buys further downstream, the Lacey Act does not. In the US, the entire supply chain is held to the same standards, so it is even more imperative that you build relationships with your suppliers and ask questions about where the lumber comes from as well as what other risk mitigation factors are in play. In the end, you MUST make sure you are buying from a supplier that knows answers to these sourcing questions. If they do not, and they cannot produce documentation on request, then it is time to find another supplier. This isn’t just to protect you, but also to protect your customers further downstream.