Are US hardwood imports in violation of the EU Timber Regulation?

Are US hardwood imports in violation of the EU Timber Regulation?

August 15, 2021

6 minutes

A significant amount of US hardwoods are likely being imported into the EU in violation of the EU Timber Regulation (EUTR).

TimberCheck was contacted by an apparent representative of the American Hardwood Export Council (AHEC) claiming that this article is “groundless”. For more information on their claims see: Did AHEC pay to exempt US hardwoods from the EUTR?

Illegal logging, and other legal risks frequently occur in US wood supply chains. (From timber poaching, to timber sale bid rigging, and failed policy enforcement.)

But, regardless of whether material has been harvested illegally, if wood is placed on the EU market without the importer exercising due diligence, it is a violation of the EUTR.

So then, what constitutes adequate due diligence? A Netherlands court recently provided clarification. Interestingly, this data is unlikely to be present for a significant amount of U.S. hardwood shipments.

What is the EUTR?

The EU Timber Regulation:

Prohibits the sale of illegally harvested timber; and,
Requires EU importers to exercise due diligence.

The latter involves collecting data on the legality of timber in the supply chain.

EUTR due diligence requirements

On August 4th, 2021 the Netherlands highest court ruled that two EU wood importers broke due diligence requirements when importing Teak from Myanmar.

In its reasoning, the court confirmed a number of EUTR due diligence requirements.

According to the Environmental Investigation Agency (EIA), the main EUTR whistleblower, these are:

origin and legality of timber must be confirmed to the felling location;
companies must confirm traceability (chain-of-custody) of the timber along the entire supply chain;
no relevant documents can be missing.

This type of data is likely absent from a significant amount of US hardwood shipments, which would make their import illegal under the EUTR.

Traceability to the original harvest site is often not possible for US hardwood producers given the complex supply chain typically involving many small landowners and indirect purchases (e.g., through dealers, brokers, and concentration yards).
Seneca Creek LLC 2017 Study for the American Hardwood Export Council

Here’s why….

Ownership of US hardwood forests is highly fragmented

Most US hardwood timber comes from privately owned land that is widely distributed among relatively small landowners.

According to the American Hardwood Export Council (AHEC):

Of the total hardwood harvest in 2012, 90% came from privately owned lands.
In the Eastern States, which accounted for 98% of all U.S. hardwood harvested in 2012, there are 9.75 million forest owners.
Each of these forest owners holds an average of 15 hectares.

The EUTR due diligence requirement that the origin and legality of timber must be confirmed to felling location, combined with the nature of US hardwood logging, which is many “small” timber harvests, means exercising due diligence can have a high data cost (per shipment) for US hardwoods.

As a result, it’s unlikely that data showing negligible risk, starting from the felling location, is being collected, analyzed, and documented at scale.

`Map of forest ownership in the United States. Source: Who owns America's forests? Data: Hewes et al 2017`

In fact, a 2017 study by Seneca Creek commissioned by the American Hardwood Export Council, found “Traceability to the original harvest site is often not possible for US hardwood producers given the complex supply chain typically involving many small landowners and indirect purchases (e.g., through dealers, brokers, and concentration yards).”

Limited monitoring of US timber harvests and wood flows

US timber harvests and wood flows are not monitored to the extent they are in other countries.

Even questionable timber harvests of public forests receive seemingly minor oversight…

…the timber sale cruising, appraisal, sale preparation, and contracting program fro the Big Thorne Stewardship Contract and Kosciusko Good Neighbor Authority Agreement were not always managed in accordance with the terms of the agreements and Forest Service policy.
FINAL REPORT – ALASKA REGION TIMBER SALES PROGRAM AUDIT. USDA FOREST SERVICE.

See: Two Alaska timber sales were not managed in accordance with USDA Forest Service policy

The lack of monitoring of US timber harvests, and wood flows, means less data is available for timber due diligence.

As a result, chain-of-custody data (traceability) is either unlikely to be available for many US hardwood shipments; and/or, is relatively weak at showing negligible risk.

`A logging truck transports logs in western Virginia. Photo: Counselman Collection`

‘Anything goes’ attitude towards US Hardwoods

Despite known legal-risks associated with US hardwood species like Black Walnut and White Oak, they appear to be relatively immune from the EUTR.

Consider, for example, that the illegal logging of Eastern Black Walnut is a big enough problem that US Forest Service recently sponsored a Black Walnut tree DNA collection effort. And, according to the Department of Justice, a case in which Walnut was illegally logged on a ‘large-scale’ in Giles, Virginia.

And most legal risks in US hardwood supply chains go unnoticed…

A study in the southern Appalachian hardwood region estimated that about 120 instances of timber theft occur each year in just a 20 county area. In the three years prior to the study, in the same 20 country area, there were only 36 criminal cases related to timber theft. In other words, roughly 10% of timber theft cases were being prosecuted.

The hands-off approach to US hardwoods by the EUTR, despite known illegalities, could be due to two key factors. First, the United States rarely uses the Lacey Act to enforce laws governing US timber harvests and trade. Second, the EUTR and the Lacey Act seem to be managed by whistleblowers who focus on tropical wood flows.

(In fact, some of these whistleblowers stood beside the US forest products industry when these timber trade policies were ratified. See: The Lacey Act protects U.S. industry not forests)

The relative immunity of US hardwoods from the EU Timber Regulation means it’s highly likely that less data is being collected regarding US hardwood origin, traceability, and legality (provenance).

`Map of showing range of Black Walnut tree DNA collection effort. Source: Adventure Scientists`

EUTR risk to US hardwood supply chains

It’s probable that a significant amount of US hardwood is entering the EU market illegally, in violation of the EUTR, without adequate due diligence data, because:

US hardwood timber due diligence data costs are high;
Timber due diligence data for US hardwoods is relatively scarce;
There is limited incentive to collect such data on US hardwoods relative to other species, especially tropical ones.

To date, the EUTR has not been enforced on wood shipments originating in the US.

Will the entities (environmental whistleblowers and EU courts) enforcing the EUTR apply the law to US hardwoods, or will they continue to focus on tropical species?

If the EUTR is enforced on shipments of US hardwoods, US hardwood supply chains could face demand disruptions, higher transaction costs, and elevated levels of legal risk.

This article is open source. If you would like to suggest changes to this document, or have concerns with any of the information presented here, please leave a comment below.

One response to “Are US hardwood imports in violation of the EU Timber Regulation?”

Roderick Wiles

November 4, 2021 at 6:40 am

The blog post’s allegation that US hardwood shipments are illegal under EUTR is completely groundless. The writer is misinformed about the content of the EU Timber Regulation and is unaware of the high quality independent and peer reviewed research carried out clearly demonstrating a negligible risk of any exported US-origin hardwood being illegally sourced.

The EUTR requires that the EU importer is able to identify for every product group the “country of harvest and, where applicable, the sub-national region and the concession of harvest”. Information on origin beyond the country of harvest is required only in those circumstances where there is a risk that the wood derives from an illegal source. The EIA interpretation referenced in the blog post refers to those countries or regions, like Myanmar, where there is a risk of illegal harvest, not where there is incontrovertible evidence of negligible risk.

The evidence of negligible risk of illegal harvest in the case of US hardwoods is probably more far-reaching, better documented, and firmly attributed than for any other wood-based commodity. It is contained in an independent “Assessment Report of Lawful Harvesting & Sustainability of US Hardwood Exports” commissioned by the American Hardwood Export Council (AHEC) in 2008 and subject to a comprehensive review and update in 2017. Drawing on an exhaustive analysis of forest regulations, infringements, and enforcement actions, forest inventory data, media and environmentalist reports, the 2017 update report concludes that:

“The preponderance of evidence compiled for this update strongly indicates that there is very low or ‘negligible’ risk that US hardwood exports contain wood from illegal and unsustainable sources”.

“Based on an examination of pertinent data, we conclude that all states in the US hardwood-producing region can be considered Low Risk of sourcing illegal hardwoods per the requirements of the EU Timber Regulation, the Australia Illegal Logging Prohibition, Japan’s Goho program, and the due diligence and risk assessment requirements of the certification programs (FSC®/SFI®/PEFC®) operating in the United States”.

“There is a Low Risk of sourcing and exporting illegal or unsustainable hardwoods pursuant to the current requirements for avoiding uncontrolled or controversial sources outlined in certification and procurement programs operating in the United States. While minor and occasional instances contrary to the controlled/non-controversial sources standards are likely to be found, they are below the risk thresholds of concern for all of the relevant certification standards in effect as of December 2017”.

“The data indicate that federal, state, and local laws governing various aspects of forest management are effective and enforced”.

“Illegal logging in the US context most commonly involves timber theft and/or trespass on private and public lands. While timber theft is a pernicious crime that can cause serious economic harm to an affected landowner, the amount of stolen timber across the hardwood region is very low relative to total hardwood production. The few academic studies and systematic surveys published since 2008 continue to suggest that stolen wood very likely represents a negligible volume in the mix of hardwood products exported, almost certainly less than one percent. The most commonly reported incidents of timber theft involve poorly marked or disputed property lines leading to timber trespass. Since 2008, several states have further strengthened enforcement capability and/or increased penalties for crimes involving timber theft.”

The 2008 Assessment Report was prepared by a team comprising:
• Alberto Goetzl, founder and president of Seneca Creek Associates, LLC, who has authored widely regarded studies on US and global forest and forest products trade issues.
• Dr. Paul Ellefson, at the time one of the most recognized authorities on regulations and voluntary programs that affect forest management at the national and state levels in the U.S.
• Phil Guillery who at the time was working with FSC and private sector clients on certification and controlled wood assessments and who between 2011 and 2021 was the FSC Supply Chain Integrity Director.
• Dr. Gary Dodge, an ecologist with Trailhead Associates who has consulted with the FSC on the Controlled Wood Standard.
• Scott Berg, President of R.S. Berg & Associates, Inc., a consulting firm that works with forest landowners and timber purchasers in preparing for FSC, SFI, PEFC, ISO 14001 and Tree Farm land management and chain of custody certification.

The 2017 Assessment Report was prepared by a team again led by Alberto Goetzl and including Dr. Gary Dodge and Scott Berg, joined by:
• Dr. Steven Prisley a Forest Biometrician and expert in U.S. forest inventory at the U.S. National Council for Air and Stream Improvement.
• Ms. Jazmin Varela, Information Manager, and Mr. Trevor Cutsinger, both of The Conservation Fund, one of the U.S. largest environmental non-profits that has worked in all 50 states to protect over 8 million acres of land since 1985.

Also in 2017, a separate Expert Technical Panel was commissioned to review the updated Assessment Report. This panel found the Assessment to be a “credible and accurate representation of the current state of hardwood production in the evaluated regions”, and confirmed that there was a low risk of sourcing and exporting illegal and unsustainable hardwoods from the United States. The expert panel also concluded that “As with the original report released in 2008, this updated report sets a benchmark” and was found by the reviewers to be “more focused, logical, rational and defensible than other risk assessment approaches that are currently being applied in the marketplace”. The Expert Technical Panel comprised:
• Dr. Ann Bartuska, formerly Chief Scientist to the U.S. Department of Agriculture who now leads the Land, Water, and Nature Program at Resources for the Future, a U.S. non-governmental organisation.
• Emily Fripp, an expert in EU Timber Regulation, forest certification, and timber procurement policies, who formerly managed the UK Central Point of Expertise on Timber (CPET) and is heavily engaged in sustainability verification in other commodity sectors.
• Katie Fernholz of Dovetail Associates who has more than 20 years’ experience in the U.S. forest industry focusing on operations and certification in the non-industrial private forestry sector.

The documents referenced here are available at:
https://www.dropbox.com/sh/9yq8x0sy1rjwz92/AADxjZYpFKV1r2iNjTW_Ed_fa?dl=0

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