Beautiful cabinets and fancy doors made of timber from the Peruvian Amazon decorate the homes of people in 35 countries. This timber likely comes from illegal deforestation of the Amazon rainforest, which in turn impacts the environmental crisis. For nearly a decade, 130 forest authorities signed more than 1,000 forest management plans that included false information to circumvent the law and extract timber from prohibited forests, national parks, and indigenous community protected lands in Peru.
In 2015, CBP blocked the Yacu Kallpa in Houston, a ship that was travelling from Peru to the US and contained at least 95% illegally sourced timber. Ever since, the US has tried to stop illegal logging in the Peruvian Amazon in several ways. Instruments like the Lacey Act and the United States-Peru Trade Promotion Agreement are promising, and the United States Trade Representative (USTR) has used them in innovative ways. However, without a system that not only blocks but also investigates and holds corporate directors accountable, impunity is still the rule.
This blog post briefly describes the market in which timber is commercialized and how corporations extract timber from protected areas of the Amazon rainforest. Then, it examines the strategies that the US has put in place to block importations of illegally sourced timber. Finally, it proposes ways to expand the results and prevent further deforestation in the Peruvian forests and beyond.
The Journey of a Tree
For many years, companies in Peru have exported timber from the shihuahuaco tree --a slow-growing reddish tree with a lifespan of up to 700 years that grows in the Amazon rainforest. Global demand for timber is pushing the shihuahuaco, like mahogany and cedar trees, to extinction. Local authorities refuse to speed up the process of declaring the shihuahaco in danger of extinction, which is why it cannot be included in the CITES red list of species. Much of the timber that companies export from the Peruvian Amazon comes from this tree, but civil society has a hard time proving this. While local laws require companies to identify each log with the exact GPS location and the name of the species, the industry is characterized for a lack of transparency and authorities have been lenient, often accepting companies’ faulty paperwork. Only recently, journalists discovered that more than half of the timber that Peru exported from 2012 to 2020 came from shihuahuaco trees.
Shihuahuaco wood transits through 66 ports, including Tampico, Le Havre, Porto Velho, and Rotterdam. Journalists that got access to European companies’ shipment records (like Global Timber in Denmark, Vogel in Belgium, and Van Den Berg Hardhout in Holland) found that these companies imported millions of dollars of Peruvian shihuahuaco over the last decade. However, their sales catalogues only reference timber from Brazil, which makes Peruvian shihuahaco invisible to consumers. These European companies are certified by the self-proclaimed “pioneers of forest certification”, the Forest Stewardship Council (FSC). When journalists asked these companies how they could guarantee that their certified timber did not come from deforestation in Peru, they replied, in a tautology, that they only buy FSC certified timber. However, FSC certification does not ensure that no illegal logging takes place. For more on why eco-social certification schemes entrench harmful practices, see our previous blog post.
Peruvian companies like La Oroza and WCA Investments, currently banned from exporting to the US, have made a fortune out of timber exportation. A cocktail of abusive corporate behavior, port negligence, lax customs enforcement, and local governmental connivance have allowed hundreds of shipments filled with illegally sourced timber from Peru to arrive at their destinations in China, Mexico, the United States, and many European countries. Over 1,000 people --including legal representatives and supervisors-- were involved in approving plans that include trees that don’t exist. Customs officials at Peru ports don’t ask companies to disclose the scientific name of the timber they export. Such ambiguity is convenient for companies that chop the trees and hope to make them look legally sourced. Because of this lackadaisical approach, companies don’t have an incentive to source only from non-protected forests. In the rare cases in which the local forest authority does inspect shipments and finds illegal timber, it simply charges the company a small fine and seizes the wood. No further action is taken. A source reported that after a company transported wood without official documentation for its possession and commercialization, “which constitutes a very serious forestry infraction,” the company simply apologized, paid a $135 USD fine (that is not a typo), and the forest authority left the wood in a warehouse, where it was destined to rot.
Sourcing illegal timber has also taken a toll on indigenous communities in Peru. Companies persuade communities to sign illegal or abusive contracts. Forced labor, exploitation, and invasion of indigenous peoples’ land have been reported. Indigenous people have been killed for protesting against corporate interests in the Amazon rainforest, and environmental defenders that speak out face death threats. Not only has there been little to no corporate accountability, but the directors of some of these corporations have blamed informal loggers who, they claim, pose “the real threat” to the Amazon rainforest.
The United States’ approach
After finding irregularities in the timber supply chain and noting that Peru did not have mechanisms in place to comply with the parameters set by the US Timber Committee, the United States Trade Representative (USTR) took action. The USTR has attempted to control the market of illegally sourced timber using two legal tools: the Lacey Act and the United States-Peru Trade Promotion Agreement.
The Lacey Act prohibits illegal trafficking of wildlife and plants. A 2008 amendment to the Lacey Act makes it unlawful to “import, export, transport, sell, receive, acquire, or purchase in interstate or foreign commerce” any plant taken, possessed, transported, or sold in violation of any foreign law that regulates the “taking of plants without, or contrary to, required authorization.” Violators of the Lacey Act, a strict liability statute, can face civil and criminal sanctions. In 2016, CBP played an important role in the first felony conviction related to the importation of illegally sourced timber and the largest Lacey Act penalty in the Lumber Liquidators, Inc. case.
Despite mounting evidence and years of detailed reports that document violations related to illegally sourced timber, Lacey Act breaches rarely result in convictions. A California-based corporation, Global Plywood, was investigated for its $2 million purchases from La Oroza every year. Global Plywood was meant to receive 85% of the Yacu Kallpa shipment, which led to the Department of Homeland Security executing a search warrant “for probable cause that the corporation violated the Lacey Act.” However, there have been no formal charges against Global Plywood and, although the investigation is “ongoing,” Global Plywood was dissolved in December 2017. A case that could have expanded the Lacey Act’s potential instead showed that the law is not strictly enforced.
In addition to the Lacey Act, the USTR used another tool: the United States-Peru Trade Promotion Agreement, which requires Peru to “conduct audits of particular timber producers and exporters, and upon request from the United States, perform verifications of particular shipments of wood products.” In 2016, the Obama administration’s USTR, Michael Froman, cited the Environment Chapter of the Trade Agreement to request “detailed information” about timber that Peru intended to export. Peru revealed that significant portions of La Oroza shipments did not meet the Timber Committee’s standards. After finding that “significant portions of the Oroza shipment were not compliant with the applicable laws and regulations governing the harvest of and trade in timber products,” the Trump administration’s USTR, Robert Lighthizer, directed CBP to block timber imports for three years from La Oroza in 2017, from WCA Investments in 2019, and reinforce the ban on La Oroza in 2020. Biden’s USTR, Katherine Tai, will decide whether to lift or reinforce these three-year bans.
How the US could improve enforcement
By using the Lacey Act and the United States-Peru Trade Promotion Agreement, the US shows potential in addressing environmental harm and human rights violations in the timber industry. The fact that the US used the Trade Agreement to protect the environment is potentially groundbreaking. The US has similar trade agreements in place with many countries --in fact, the United States-Colombia Trade Promotion Agreement has an Environment Chapter that is almost identical to the one with Peru. When available, the US should use these agreements to ask importing countries to inspect their supply chains. CBP prohibitions on imports can incentivize companies to stop importing goods that harm the environment or that are produced with forced labor. For more on how the CBP has blocked goods produced with forced labor, see our previous blog post.
However, many challenges remain. Exportations from La Oroza and WCA Investments anywhere outside the US are still legal, and La Oroza timber may even still be entering the US because of ownership rules and corporate design, as it is a shareholder in several other companies that continue these practices. The Lacey Act has been inconsistently used as an enforcement mechanism, which could mean that companies are less likely to take it seriously. Although CBP bans are an important incentive for companies to comply with regulations, they are most valuable if they are used to change corporate behavior. The US should realize the full potential of these legal instruments by mixing all available tools at hand: CBP prohibitions, inspections and audits based on trade agreements, and civil and criminal prosecution for corporations under the Lacey Act.
Isabella Ariza is a Colombian attorney and a Legal Fellow at CAL.
