US Announces Move to Bar Timber Imports from Peruvian Company, Citing Illegal Logging Concerns

26 October 2017

The US is set to use a provision in its trade accord with Peru to bar entry to imported timber from Inversiones La Oroza, a Peruvian exporter, according to an announcement from the Office of the US Trade Representative last week.

In taking the “unprecedented” step, the US agency touted it as an effort to tackle illegal logging head-on, citing the results of a previous examination by Peruvian officials and independent authorities. That probe aimed to verify whether this specific company had been in violation of the South American country’s rules on harvesting and trading timber.

“Illegal logging destroys the environment and undermines US timber companies and American workers who are following the rules. We will continue to closely monitor Peru’s compliance with its obligations under our trade agreement,” said US Trade Representative Robert Lighthizer in making the announcement.

The statement confirmed that this measure would be in place for at least three years, though this could be shortened if the “Interagency Committee on Trade in Timber Products from Peru” – a panel chaired by a USTR official and featuring participants from various other US agencies – deems that the exporter in question has taken the necessary steps to resolve the problems.

The action was touted by US trade officials as a sign of the current administration’s commitment to trade enforcement; however, the concerns are not new, with the original verification process requested by the previous administration of President Barack Obama.

Over a year ago, then-US Trade Representative Michael Froman sent a letter to Peruvian officials asking for verification regarding whether a timber shipment by Inversiones La Oroza was indeed compliant with relevant local laws and regulations.

The shipment at issue, from 2015, along with the various supply chain steps involved, faced a review by several local agencies, including OSINFOR, an independent body charged with overseeing the Peruvian forest sector and wildlife. Peru set up OSINFOR in 2009, with the creation of the agency spurred in part by the trade accord’s forest provisions.

“This verification process highlighted, in particular, ongoing challenges to ensuring timely enforcement of Peruvian forestry laws throughout the timber supply chain,” said a subsequent August 2016 statement from the Interagency Committee on Trade in Timber Products from Peru.

Trade, biodiversity, and jobs

Since 2009, Washington and Lima have had a trade promotion agreement in place that slashed tariffs on a host of manufactured and agricultural products, along with improving services market access and including chapters on topics ranging from intellectual property to investor protections to labour rights.

Notably, it also featured both an environment chapter and a related “forest annex,” with the stated goal of addressing illegal logging and wildlife trade, along with fostering improved governance of their respective forests.

The environment chapter and the forest annex are both legally binding, with parties able to use the deal’s dispute settlement provisions to address concerns if necessary. The annex itself committed Peru to taking a series of forest-related actions within 18 months of the trade accord’s taking effect, including putting in place legal penalties for violations of domestic laws on timber harvest and trade, as well as for anything that would “impede or undermine the sustainable management of Peru’s forest resources.”

Among other measures, the annex also outlined how both sides would cooperate for verifying and auditing any potential violations of timber-related laws, both in terms of harvest and export. It also set out what steps Washington can take in response to a finding of an illegal timber shipment – such as blocking the shipment itself from entering the United States.

A wide stretch of Amazonian forestland is found within Peru’s borders, with the Andean nation surpassed only by Brazil in this respect. These forests are credited with providing a rich source of biodiversity and a carbon sink, along with being responsible for hundreds of thousands of domestic jobs.

However, the WWF places the level of illegal logging within Peru at 80 percent, with the rate of deforestation having harmful implications for greenhouse gas emissions, livelihoods, and the indigenous communities which rely heavily on these forests.

Experts say that the risk of continued deforestation, including from illegal logging, remains – even with action taken to address the problem at multiple levels. According to World Bank data, the percentage of Peruvian land area covered by forest has already dropped from 60.9 percent to 57.8 percent between the years 1990 and 2015.

At the global level, illegal logging and trade of timber is considered to be both damaging for domestic economies, as well as fuelling or benefitting from other types of crime. According to a joint UN Environment-INTERPOL report issued last December, illegal logging is responsible for revenue losses falling anywhere between US$51 billion and US$152 billion worldwide – along with being tied to financial crimes, drug trafficking, corruption, and the support of terrorist or armed groups.

Along with other environmental crimes, the report noted that illegal logging can also lead to poorer communities being subjected to exploitation by criminal groups.

Organisations such as the Washington-based Environmental Investigation Agency (EIA), which has conducted its own probes into illegal harvesting and export of Peruvian timber, have called for further action to improve forest governance, including through additional trade enforcement and measures to better monitor the various steps in timber supply chains.

“These well-documented illegal logging practices are incredibly destructive to forest ecosystems and the communities that rely upon them. This is an example of organised crime and must be treated as such,” said Julia Urrunaga, who serves as program director for Peru at the Environmental Investigation Agency, warning that this case is just one instance of a “systemic” situation that has long affected the country.

ICTSD reporting.

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