Lacey Enforcement Heats Up
Heath E Combs -- Furniture Today, September 8, 2011
HIGH POINT - A recent raid by federal agents on Gibson Guitar's Nashville, Tenn., facilities has some industry experts wondering if warehouses used by furniture importers will be the next target.
The raid stemmed from enforcement of the Lacey Act, which was amended in 2008 to cut down on the use of wood obtained through illegal logging in foreign countries. Wood furniture importers have watched closely for implications that could affect the industry's supply chain.
The amendments require importers to declare the species and country of origin of plant products, including wood.
In the furniture industry, the declarations have been required since last year for seats with wood frames and some accent items, and the government says other wood products will be added to the list - although it's unclear when.
American Home Furnishings Alliance Vice President Bill Perdue said that even with its current limited scope, furniture importers should pay attention to the law.
"We've told our guys almost ad nauseam that if you are importing lumber into the United States you've got to comply with the Lacey Act," Perdue said.
The AHFA's biggest issue with Lacey is on composite wood products. Perdue said it would be extremely difficult to name each of the species within various types of particleboard, and that a general declaration for the category would be more effective. Particleboard is not yet subject to the act, but could be added in the future.
In the Aug. 24 raid at Gibson, agents seized several pallets of wood, electronic files and guitars. The government was investigating whether ebony and rosewood the company was using were harvested in violation of India's foreign trade policy.
Gibson quickly issued a statement saying it was being "bullied" by the U.S. Department of Justice. The company also said the wood in question was certified by the Forest Stewardship Council, a conservation group that promotes responsibly managed forests.
Gibson also took issue with U.S. enforcement of foreign laws, and said it was still dissatisfied after a previous raid on its facilities and an ongoing federal case filed in September 2010 concerning a shipment of ebony from Madagascar.
(To access a copy of the search warrant used in the latest raid, see this story on the www.furnituretoday.com website.)
Emily Chason, director of customs brokerage at logistics services provider Global Link Logistics, said that about 10% to 15% of furniture company shipments it handles have Lacey requirements.
Chason said she believes U.S. government agencies have been overburdened with Lacey Act paperwork and have too little manpower to go through it.
"I think it's just been much more information than they ever had before," she said.
Rather than looking at millions of declarations listing more common types of woods whose sourcing isn't problematic, Chason said blanket declarations for species like pine or rubber-wood would be an easier task for federal agencies.
Furniture importers and sellers are likely to run less risk of enforcement actions than Gibson, unless they are importing exotic woods for inlays and production, Chason said.
Lacey Act law enforcement appears to be encompassing any entity that handles the products in question, which could be the importer of record, a wholesaler, a retailer, or a manufacturer, she said.
John Dellinger, corporate broker for third party logistics broker Globe Express, where he oversees Customs compliance, said the Nashville raid looks a little overzealous since no charges were filed and Gibson claims the items were legitimately imported.
He said the raid shows that Lacey Act enforcement is unlike most Customs-related issues, which typically involve other remedies like regulatory audits.
"Not this law, they come in with agents with guns and say, ‘Let me have all your records,' start seizing product and you haven't even committed a crime," Dellinger said. "That's what kind of upsetting about this law and the way they enforce it."
Penalties for violating the act can include up to a $250,000 fine and five years in prison, he said.
Dellinger questioned why the wood imported by Gibson wasn't tagged illegal by the Forest Stewardship Council, and wondered why Gibson wouldn't have better controls on its wood sourcing after the initial 2009 raid in Nashville. The FSC did not respond to requests for comment.
Anne Middleton, outreach coordinator for the Environmental Investigation Agency, a nonprofit watchdog group, said the FSC label doesn't guarantee the legality of an imported wood product and isn't recognized by the U.S. government as sufficient proof of legality.
"Although there are guidelines within FSC targeted toward law and legality, it is a system just like anything else and there can be loopholes or there are only audits every now and then," Middleton said.
She said the Lacey Act was passed because the U.S. as an importing country should respect the laws of developing nations that protect their own resources.
Leonard Krause of Compliance Specialists, a trade policy and regulations specialist, suggested the act's wood provisions don't give the Department of Justice discretion to judge the seriousness of infractions like typical law enforcement agencies.
Some countries may not enforce laws regarding wood importing because they don't have sophisticated tracking systems, but the Lacey Act requires federal officials to enforce the law and take action, he said.
"There's no provision that goes, ‘Find out if this law is important to the country. And then if it is important enforce it and if it's not important don't enforce it,'" Krause said.
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