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CITES Good for Forests or Corrupt Regulatory System?

A recent investigation into African rosewood supply chains alleges that large amounts of CITES certificates were issued for illegal shipments of Kosso wood (Pterocarpus erinaceus). The determining factor in obtaining a CITES certificate appeared to be the payment of a bribe to government officials. While the pay-to-play corruption of CITES documentation might not be news to those in the tropical timber industry, the scale of this African Rosewood CITES case is shocking. The investigation alleges that approximately 4,000 CITES documents were issued retroactively to legitimize wood that had been detained at foreign ports.

Legitimacy of CITES

If true, this massive fraud of African rosewood CITES documents brings up the bigger question about the legitimacy of CITES regulations. Specifically, whether the net effect of adding new layers of regulation such as CITES help solve the problem of unsustainable harvests or simply create advantages for rogue businesses and politicians whose model has always been to work outside the law. After all, what is the purpose of increased documentation, if the documents themselves can be falsified? Does it not tilt the playing field in favor of those cheating the system?

Failed Regulatory Systems Distort Markets

Too often, regulations in the tropical forest products industry give an advantage to two groups: 1) those making money from enforcing the law (corrupt officials), and 2) those who never cared for laws in the first place (criminals). Legitimate, transparent forest enterprises, the ones who invest in forest management most efficiently and add value to forests by providing income and employment to local populations, often end up the losers of failed regulatory systems. By playing by the rules they face higher transaction costs, demoralizing government scrutiny, an unquantifiable risk from seemingly random applications of vague laws, and ultimately less capital to reinvest in the forest. As a whole, this reduces the competitiveness of the forest sector and the relative economic value of forests.

Where is the Due-Diligence by Governing Institutions?

Conserving tropical forests can only be achieved by increasing the value of forests relative to other economic uses of forestlands. Poorly implemented policies can have a net-negative effect on the resources they are intended to protect. This case of 4,000 CITES documents being issued retroactively for rosewood shipments that were detained, is just another illustration of the need for new approaches beyond the failed regulatory systems of the past.

Recognizing that these laws do not work has been the rationale for yet more regulation such as the EU Timber Regulation and The Lacey Act. These regulations shift the burden of forest governance to private enterprises requiring them to carry out intensive audits of their supply chains in an effort to eliminate illegally traded timber from them. The emphasis on the EUTR and The Lacey Act seem to be an admission that regulatory systems fail, yet, ironically the solution is more regulation.

This approach should be unacceptable to those truly concerned about conserving forest resources for the wise-use and development of local economies. Where is the evidence that additional regulations such as CITES actually lead to sustainable harvests and trade? Where is the due-diligence by the institutions governing trade and management of tropical forests with regards to the effectiveness and outcomes of their policies?

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