By Sarah Zimmerman
HICKSVILLE, N.Y.—With green consciousness coming to fruition on the consumer level, it seems loggers, manufacturers, distributors, specifiers, retailers and installers have become wary of their moral obligations to provide legally harvested (and imported) wood products across the board. And, to help keep everyone in check, various organizations and even the U.S. government have recently stepped in, stating that everyone—including the consumer—can and will be held legally responsible for their actions concerning products made from illegally harvested hardwood.

Though the majority of the flooring industry is behind the environmentally honest venture, there is no doubt the recent International Trade Commission (ITC) Report findings and amendment to the Lacey Act will affect a large number. However, the ultimate outcome will be a positive one, according to industry leaders, who suggest a level playing field will be reinstated as well as a certain level of honesty and integrity that has been missing.

“The ITC report and Lacey Act amendment are both necessary and useful,” said Kim Holm, president of Mannington Mills’ residential division. “And, in the future, if and when there is action on both counts, it definitely has the potential to level the playing field for domestic producers.” He noted the level of importance each document holds, stating even though “we have one of the most efficient operations in the world, nothing is efficient enough to overcome unfair practices. This is definitely a step in the right direction.”

Don Finkell, Anderson’s president and CEO, continued noting illegal logging—which is just a precursor to the ITC findings on dumping and unfair trade practices— has been and is a huge factor in depressing wood flooring prices—not to mention an eco no no. “The amendment to the Lacey Act will directly address the subject of illegal logging,” he explained, “and, the ITC report only gives U.S. Customs more impetus in acting to stop illegal imports at the border. We have confirmed there is smoke. Now, the industry has to decide if it wants to go further and prove/put out the fire.”

EarthWerk’s Jonathan Train, product manager, said while the recent moves are good, they will not solve all the problems facing the hardwood segment. “It’s definitely a positive and necessary first step. The wave of moral and legal obligations and now ramifications has begun, and though it will take time to move along, as it is a learning process, the industry will be better for it in the end.”

Peter Spirer, marketing director for Max Windsor, noted the problem is not so much with the quality of product— though this has caused issue in the past—but more sowith honor. “We are so very in favor of the Lacey Act stipulations because it gives companies their honor back, placing them on equal footing. This, in turn, reaffirms the importance of issues like the environment, fair trade practices and illegal logging throughout the entire chain of custody.”

He noted just as green has rapidly accelerated, this too will continue progressing as more consumers and specifiers are made aware of it.

The specifics

It is believed that 13% to 15% of the hardwood flooring and furniture being imported into the U.S. today comes from illegally harvested forests. To remedy this situation, the ITC released its factual Section 332 study last September, near the same time U.S. Congress amended the 100-year-old Lacey Act, making the importation of illegally logged timber products punishable by fines up to $500,000 and up to five years in prison.

The following is a look at the two recent actions:

• The ITC 332 Report. For several months leading up to the Sept. 16, 2008, release of the ITC 332 findings, it was suggested that U.S. wood flooring and plywood manufacturers were contemplating filing antidumping duty and/or countervailing duty cases against imported wood flooring— specifically from China, Brazil, Canada and Malaysia. If successful, these would result in high border taxes on imports entering the U.S. The report was released as groundwork for action.

Key findings include:

1. U.S. production, consumption and trade of these products significantly increased from 2002 to 2007.

2. During this time, imported products increased market share from about one third to one half, with total import value doubling from $1.2 billion to approximately $2.4 billion.

3. China has become the No. 1 competitor for the U.S. in this market, accounting for most of the increased imports during this time.

4. Illegal logging has contributed to the increased production and consumption of such imports.

5. Other non-price factors in making a purchasing decision included quality, subsidies declining in China and several U.S. companies remaining stagnant on capacity or production increases or expansions.

Anderson’s Finkell, who testified before the ITC in public hearings related to the report, noted the study’s significance claiming most of the industry was probably unaware that hardwood flooring imports had increased from one third to one half. Though he explained, “Most of this imported material is being sold by big box stores such as Home Depot and Lowe’s.”

He also commented on the importance of the Lacey Act in dealing with illegal logging, which has given a significant advantage to foreign suppliers. “Although business is down due to the economy, housing slump, credit crunch and low consumer confidence, 50% of the market will now become more attainable by independent dealers as the Lacey Act goes into effect.”

• The Lacey Act.

Initially enacted in 1900, Lacey is America’s oldest national wildlife protection statute, which served as an anti-trafficking law, protecting a broad range of wildlife and wild plants. In May 2008, the U.S. Congress amended the Lacey Act to include any plant and/or plant particle or product— including hardwood.

The new provisions are quite broad—including lumber, wood pulp, paper, gums, resins, saps, cork and most other conceivable materials that can be made from trees and plants— covering not only hardwood floors, but potentially laminates, particle boards, glues and other flooring products.

Under the amendment, it is illegal to import, export or traffic in materials that are harvested in violation of either local or foreign laws. And, any violations of the Lacey Act—which permeate all links of the chain of custody—may result in civil and criminal fines and forfeiture. Intentional infringements can lead to fines of up to $500,000 and five years jail time, and a mistake violation may cost $100,000 or up to a year in prison.

Furthermore, to enforce the new law, importers are now required to file declarations identifying such things as the scientific name of the plant or tree species, the value of the product, the quantity imported, the name of the country in which the product was harvested and whether the product contains recycled content.

Under the new act, the World Floor Covering Association ( WFCA) suggests all flooring contractors and retailers that directly import products such as bamboo, cork or hardwood take the following steps to comply:

1. Include in the purchase order form that the foreign supplier will provide all necessary information to complete the Lacey declaration.

2. Have the foreign supplier certify that the material is not harvested in violation of any local laws or requirements.

3. Document all steps the company takes to ensure the products are not manufactured from illegally harvested wood or plants.

4. Include in the purchase agreement form a provision that your supplier will “hold harmless, indemnify and defend” your company for any claims that the Lacey Act was violated or for any inaccurate information provided by the supplier.

WFCA warns, however, non-importers must take appropriate precautions as well, as the Lacey Act not only condemns the importation of illegally harvested materials, but the trafficking of such products. Retailers can minimize the risk of being found in violation of the law by taking the following precautions:

1. Include in the purchase agreement form that the distributor or manufacturer is responsible for obtaining all necessary materials under the Lacey Act and is required to provide you with a copy of the Lacey Act filings.

2. Require the distributor or manufacturer to provide a copy of the Lacy Act Declaration filed by the importer.

3. Require the distributor or manufacturer to certify the products do not contain any material from illegally harvested plants or trees or any endangered plant or tree.

4. Include in your purchase order form a provision the distributor or manufacturer will “hold harmless, indemnify and defend” your company for any claim that the Lacey Act is violated or for any inaccurate information provided by the supplier.

Banning together

Though the facts are daunting and the amendment strict, industry members are using the recent ramifications as springboards to a better category, on a moral, environmental and legal level.

WFCA noted dealers can and should use the Lacey Act to protect themselves and their consumers against the unfair competition of illegally logged wood flooring products, which often win on price. It also warned, much of this illegal product is being sold without storefronts via the Internet.

“If a floor covering dealer believes a competitor is selling illegal wood products, it can report the alleged violation to the Department of Agriculture’s Animal Plant and Health Inspection Service, the Fish and Wildlife Service, the U.S. Customs and Border Protection or the ITC.”

Other industry organizations, such as the National Wood Flooring Association ( NWFA) and Forest Stewardship Council (FSC) are also providing and encouraging the industry to utilize programs and certifications abiding by the newly enacted laws.

An example of this is NWFA’s Responsible Procurement Program (RPP), which recognizes companies that work to sustain the world’s forests ( FCNews, Nov. 10/17). Supported by the FSC-US and FSC Family Forest Alliance, RPP is a three-tiered program focused on promoting environmentally and socially responsible forest management in regions that supply timber.

Ed Korczak, executive director and CEO of NWFA, applauded the Lacey Act’s amendment passage. “This legislation is a huge accomplishment for the wood products industry,” he said. “Not only does it protect our world’s forests, it protects industry representatives who practice their due diligence when purchasing wood products from other countries.”

He noted the burden of proof for legal harvesting being placed on the country of origin, not the purchasers as a massive step for the industry, and said it’s no wonder the statute has gotten so much support.

“The strong support this legislation received reaffirms for the world that the U.S. is focused on protecting our environment not just here on our own shores, but globally as well. We will no longer tolerate the destruction of our world’s forests through illegal means.”