US EXPORTS, LEGALITY AND FOREIGN PROCUREMENT POLICIESMichael Virga1
1American Forest & Paper Association, Washington, D.C. USA

Government procurement policies in Japan and Europe are attempting to ensure that imported wood products arederived from legal and sustainable sourcing of timber. The United States is a “low-risk” supplier to international markets interms of illegal logging and a high performance producer in terms of sustainability. Tenure of forest land iswell-established and enforced. An array of legal, voluntary and cultural institutions ensures long-term forest sustainability.
The rule of law is deeply-rooted in the American culture and enforcement of laws and regulations is very effective. Forest
resources are vast -- they cover one-third of the country – and forest resources are well-monitored. The area of forest
land has remained stable and has, in fact, increased slightly over the past two decades. Timber inventory has
consistently increased over the past fifty years despite rising demand and production. Net growth exceeds harvesting forboth softwoods and hardwoods. The use of certification systems is also increasing.
Keywords: legality of forest resources, wood products, certification

INTRODUCTION
Timber production in the United States is highly
regulated by federal, state and local governments
although the United States does not have a single or sole
national forestry law. Instead, an array of legal, voluntaryand cultural institutions ensures long-term forest
sustainability. Tenure of forest land is well-establishedand enforced. Over 70% of the forest resource isprivately owned. The vast majority of private forest landis owned by over 10 million family forest landowners thatown small forest tracts, typically less than 25 hectares.
Data on US forest resources consistently show stable
forest area, and growth in excess of harvests, but U.S.
producers are increasingly becoming certified to meetthe requirements of international procurement policies.
Forest Conditions
The area of forest in the US has remained stable
over the past fifty years and has even increased slightly
over the past two decades. About one-third of thecountry is forested. Net growth exceeds removals by a
substantial margin for both softwoods and hardwoods
and, thus, U.S. timber inventory continues to expand
despite increasing timber production.
Populations of many species of wildlife haveincreased even as some species are at risk.
Populations of deer, wild turkey, elk and the American
Bald Eagle are just a few examples of wildlife that haveregained their prominence after a period of decline.
Protection for endangered species is codified in theEndangered Species Act supplemented by additionallaws at the state level. Species and their habitats thatare identified as threatened or endangered are legally
protected and usually the subject of concerted recovery
efforts.
The management of US forest resources issupported by a sophisticated forest inventory andanalysis system administered by the US Forest Service.

For the past five decades, every forested state has
undergone periodic forest inventories to measure andmonitor forest conditions. More recently, the periodic
system is being transformed into an annual inventory
that will enable early warnings and faster responses tochanges in forest conditions.
US LEGAL & REGULATORY ENVIRONMENT
National Laws
Six major federal laws regulate human activities onforest land: Endangered Species Act (ESA); Clean Water
Act (CWA), Clean Air Act (CAA) and Federal Insecticide,Fungicide and Rodenticide Act (FIFRA); National
Environmental Policy Act (NEPA); Occupational Safety &Health Act (OSHA). As noted earlier, none of these laws
is specific only to forestry, but all provide strict legal
oversight of various aspects of forest practices. For
example, the ESA reaches deeply into US forests.
Forest landowners and managers cannot cause injury or
death to a species listed under the ESA by direct harm or
through habitat modification. The ESA has effectively
removed large swaths of public lands from commercial
exploitation and has additionally restricted forest
management activity over millions of hectares of private
land.
Species such as the northern spotted owl,
red-cockaded wood pecker, Kirtland's Warbler andgopher tortoise are just a few of the forest-dependent
species protected under the ESA.
Penalties forviolations of the ESA are severe.
Under the federal Clean Water Act, states musthave programs to control non-point source pollution,
usually accomplished through Best Management
Practices (BMPs), and federal regulations control
activities in forested wetlands. Every forested state has a
program of either mandatory or voluntary BMPs for forest
lands.
Similarly, under the Clean Air Act, states must haveprograms to protect air quality and visibility. Thesetypically include controls on prescribed burning and theuse of ozone-depleting chemicals.
Chemical use in forest stands, whether for insect
control or for vegetation management, is regulated under
FIFRA. All forest-use chemicals must be registered andforest land operators must follow application guidelines.
NEPA mandates that federal agencies assess andminimize the environmental impacts of their activities on
government-owned forest land. NEPA has resulted indetailed assessments of impacts from federal activities
on forests and associated wildlife, and has frequently
necessitated changes in management or has resulted ineliminating activities altogether.
Finally, in terms of the major federal laws that affectforestry, the Occupational Safety and Health Act (OSHA)
prescribes that very specific safety measures be taken
and safety equipment used while engaged in commercial
activity in forest areas. Detailed records of accidents,
injuries, and corrective measures must be maintained.
Penalties for violations are severe.
State & Local Laws
Each of the fifty US states has various laws that
affect forests. In total, over 1,000 full time employeeswith a payroll of over $57 million are engaged in statelevel regulatory activities. Some 276 different stateagencies have some kind of regulatory authority overforest practices. A recent study characterized over half ofthese as extensively or moderately engaged in forest
practice regulatory activity [1]. At least 15 states haveextensive regulatory programs specific to forestry. Most
require some form of harvesting plan, notification orpermit and most require a reforestation plan. Of thefifteen states with extensive forestry regulation, thosewith the most rigorous forest practice laws tend to belocated in the western region – in states such as
California, Oregon and Washington – where, as apractical matter, most of the exports to Japan originate.
Enhancement of water quality is the primaryobjective in regulating forest practices in most states. In
37 states, regulatory agencies provide oversight of
non-point forest sources of water pollutants.
Timber Theft & Logging
Timber theft occurs in the United States. However,while there are no data on the extent of the problem, it is
not believed to be of major significance in terms of total
production, neither nationally, nor locally.
Virtually every jurisdiction in America has strict laws
against trespass and theft. Any theft of timber or logs, orthe cutting of timber in parks, reserves, or other similarareas where it is precluded by law, is vigorously
prosecuted. Law enforcement is stringent and provides
an effective deterrent against timber theft. Landowners
are protective of their private property and local law
enforcement responds to complaints. Consequently,
illegal harvesting is not a significant national problem in
the U.S.

Moreover, most transactions are subject to theUniform Commercial Code which governs the sale ofgoods, their transportation and delivery, financing,storage, payments, and various other aspects ofcommercial transactions. All commercial transactions,
including timber sales, carry with them an explicit or
implied warranty of title. Any breach of this warranty
incurs serious civil or criminal penalties.
Landowners are always advised to clearly markboundaries, obtain bids for timber sales, always havewritten contracts and have a professional forester
oversee harvesting. Written contracts are always
enforceable in courts of law.
VOLUNTARY STEWARDSHIP & SUSTAINABILITYPROGRAMS
Sustainability Defined
The definition of sustainable forestry as used byforest industry is an adaptation of the more generalapproach to sustainability adopted in 1987 by the World
Commission on Sustainable Development. That is: “tomeet the needs of the present without compromising theability of future generations to meet their own needs bypracticing a land stewardship ethic that integrates
reforestation and the managing, growing, nurturing, andharvesting of trees for useful products with theconservation of soil, air and water quality, biologicaldiversity, wildlife and aquatic habitat, recreation andaesthetics.”[2]Sustainability Programs & Certification
To foster forest sustainability, voluntary forest
certification programs have increased dramatically overthe past decade in the United States. More than 35
million hectares have been voluntarily certified to leading
sustainable forest management certification systems.
These include the Sustainable Forestry Initiative (SFI),
Forest Stewardship Council (FSC) and the American
Tree Farm System (ATFS). SFI has over 22 million
certified hectares; FSC has over 9 million certifiedhectares; Tree Farm has over 8 million certified hectares.
Tree Farm and SFI are members of the Programme
for the Endorsement of Forest Certification (PEFC).
SFI is an endorsed PEFC scheme while the PEFC Tree
Farm endorsement is pending. The American Tree
Farm System was formed in 1941 primarily for small
forest growers in the U.S. FSC was formed in 1993
primarily by WWF and other environmental organizations
to curtail tropical deforestation in the developing
countries. The SFI was originally formed by theAmerican Forest & Paper Association (AF&PA) as acode of conduct for the industry. It has since evolved
into a completely independent system and as of January
1, 2007 has severed all organizational links with AF&PA.
Forest Certification & Legality
All certification systems in the U.S. have recognized
standards for sustainable forestry management andchain-of-custody. In addition, all certification systems in
use in the U.S. require compliance with U.S. law as aThird-party auditing provides credible assurance
that sustainability indicators are being addressed. In allcases, the accreditation and certification bodies havedetailed
remediation
procedures
tocorrect
non-conformances or identify opportunities forimprovements. All systems are continuously scrutinized,reviewed and criticized by ENGO’s, governments,
customers and other stakeholders. This, along withcompetition among the systems, drives the continuous
improvement process for all systems.
Chain of Custody
SFI and FSC have provisions for Chain of Custody(CoC) tracking and certification. Given the complex
supply situation in the US involving millions oflandowners, CoC is a more challenging task than it might
be in other countries. Nevertheless, 42 mills/facilities
are using SFI CoC certification and FSC lists 622 CoC
certificates issued in the United States
MEASURES OF GOVERNANCE
The World Bank has compiled a series of indicatorsthat are a useful tool to assess the effectiveness ofgovernance in over 200 countries. The World BankWorldwide Governance Indicators measure six
components of good governance: (1) voice andaccountability; (2) political stability and absence ofviolence; (3) government effectiveness; (4) regulatory
quality; (5) the rule of law; and (6) control of corruption.
In terms of Rule of Law, the most relevant of theWorld Bank indicators with respect to the risk of illegal
timber production, the US ranks in the 92nd percentile
amongst 208 countries, indicating a very high confidence
in enforcement of laws and regulations. This compares
favorably against Japan in the 89th percentile, Malaysia
in the 66th percentile, Brazil in the 43rd percentile, China
in the 41st percentile, Russia in the 22nd percentile, andIndonesia in the 20th percentile.
MARKET CONSIDERATIONSGreen PurchasingU.S. producers are increasingly becoming certified
to meet the requirements of international procurement
policies or those of major domestic customers. Major
retailers have instituted policies giving preferences tocertified material and/or not trading in timber products
from “endangered forests.”
U.S. consumers who are aware of these issues
encourage all producers and markets to procure only
legally harvested timber. This is a general trend in North
America and Europe but awareness will vary. While

Rule of Law - 2005
(Chosen comparator also shown for selected countries)

2HIGHUNITED STATES

3

Normalized Rule of Law Index

condition of certification and the certification bodies haveprocedures in place which determine compliance withthe standards. Beyond legal compliance, each of thethree systems used in the U.S. have extensive
performance measures and indicators on sustainability
that also must be met. Thus, certified U.S. producers
meet all international procurement requirements forlegality and sustainability.

10-1-2208 Countries-3

LOW

Fig. 1. World Bank Rule of Law Indicator, 2005 [3]increasing, there is currently little domestic demandpressure directly from consumers for assurances about
legality and sustainability. Generally, the US market does
not demonstrate a premium being paid for certified forest
products although some producers are beginning to seesome market differentiation.
Government Procurement Policies in the US
Federal, state and local governments in the US havevarious procurement policies related to environmentallypreferable products. The most common have to do withrecycled content in paper. The federal government andother government jurisdictions have guidelines thatencourage the purchase of paper with various
acceptable thresholds of recovered paper content
depending on the paper grade.
To date, US government procurement policies are
not dictating that wood products be purchased fromverifiably legal and sustainable sources. In general, theU.S. government is “certification neutral,” leaving
decisions about certification systems to the marketplace.
Instead, government procurement is moving towards
recognizing “green building” standards that typically
include preferences for certified wood products. Not all of
the available and referenced green building standards
provide equal treatment of the three certification
schemes. The most prevalent of the green building
systems – Leadership in Energy and Environmental
Design (LEED®) – discriminates against wood products
by providing more favorable treatment to other building
materials. It also recognizes only FSC certification forwood products. In contrast, the Green GlobesTM Systemand the NAHB’s Residential Green Homebuilding
Guidelines recognize all three certification schemes.
The U.S. government also has laws that prohibit
government procurement of stolen property. National
Stolen Property Act (NSPA) makes it a federal crime totransport stolen goods across state lines or in interstate
commerce.
In a few localities, local governments have imposed
restrictions or outright bans on the use of certain timber
products (particularly, tropical timber products) in public
procurement, but they are few in number and highly
controversial.

EFFORTS TO COMBAT ILLEGAL LOGGING

Potential Policy Pitfalls

In 2003, the U.S. Administration launched thePresident’s Initiative Against Illegal Logging (PIAIL)
whose goal is to assist developing countries to combat
illegal logging, the sale, (including for export) of illegally
harvested timber products, and fight corruption in theforest sector. More recently, in November 2006, theU.S. signed a Memorandum of Understanding withIndonesia, a legally binding document that commits thetwo countries to work together to address the problem.

Policy-makers should be aware that policies that
affect the trade and use of wood products can haveinadvertent
andsometimes
counter-productive
consequences. One the major concerns is that demandside measures can increase costs for legitimate, legal
producers while not increasing the risks associated withillegal production. Thus, the gap between illegitimateand legitimate production costs widens. That, in turn,provides an even greater incentive to illegal operators.

In 2004, AF&PA sponsored what is widely
considered to be the one of the most credible andinformative reports on illegal logging. The study
measured the economic impact on timber production andtrade that results from illegally harvested wood products.
The report concluded that many of the estimates on theextent of illegal logging are likely exaggerated, but theproblem is nevertheless significant and depresses world
prices by between 7 and 16%. [4]Second, in the US, Chain of Custody tracking andcontrol is much more challenging because of the large
number of landowners and complex supply situation.
That the US has a very high rule of law quotient, strict
environmental laws and demonstrably effective law
enforcement should be sufficient to establish all US
wood products as low risk for illegal sourcing. Indeed,
the problem of illegal logging is not known or alleged tobe nationally significant in the US.

AF&PA is also in partnership with Conservation
International in the Alliance to Combat Illegal Logging.
The Alliance is working with local law enforcement inselected countries in using remote sensing technologies
to identify illegal logging in protected areas. TheAmerican Hardwood Export Council (AHEC) will soon becommissioning a study to assess the risk of illegal woodentering the supply chain for American hardwood
products. The study will be independently peer reviewed
and any significant issues with illegal wood supply will be
addressed

Third, even from countries where the risk of illegal
activity is high, markets and shipments are easily
fungible. Thus, verified legal product may be shipped tomarkets with procurement restrictions while all otherproduct is shifted elsewhere.
Finally, demand side measures if mandatory ordiscriminatory may violate WTO rules. Whilegovernments are making efforts to institute policies they
believe are in conformance with WTO rules, measuresthat result in trade distortions may well be challenged byan affected country.

FINAL NOTES
References
Future Steps
While US forest resources are sustainably managed,
there remain many challenges. One of the goals should
be to expand the area under forest certification which
now represents just 17% of US timberland. Another goal
should be to increase the number of chain-of-custodycertificates in the U.S. while accommodating our own
unique tenure system whereby the majority of timber is
supplied by 10 million +/- small private family forest
owners.
Having an assortment of competing systems – SFI,
FSC, PEFC, ATFS -- tailored to specific situations should
be encouraged because the competition will by itself
foster improvements in the certification schemes.
Healthy competition among forest certification systems
helps ensure market-responsive changes and adaptation
to different wood supply situations. All systems alsoneed to be continuously improved. The SFI will be
undergoing its 5 year review in 2008. The American Tree
Farm is currently seeking to be endorsed by the PEFC.
Certification is a useful tool but will not in and of itself
be the cure for illegal logging or the deeper, underlying
causes of illegal logging (corruption, absence of rule oflaw and good governance, lack of effective enforcement,poverty, etc). We need to be shifting resources towards
the underlying core causes of illegal logging.

[1] P. Ellefson et al, “State Government Regulation ofForestry Practices Applied to Nonfederal Forests: Extentand Intensity of Agency Involvement”, Journal of Forestry.
Vol. 104, Number 8, 2006, pp.401-406.
[2] Sustainable Forestry Board, “Sustainable Forestry
Initiative® Standard, 2005-2009 Standard”, 2005, pp. 3.
[3] Daniel Kaufmann et al, “Governance Matters V:
Governance Indicators for 1996-2005 " World Bank,
September, 2006.
[4] Seneca Creek Associates, LLC and Wood
Resources International, LLC, “’Illegal Logging’ andGlobal Wood Markets: The Competitive Impacts on theUS Wood Products Industry:, November, 2004.