A Tale of Two Laws: EIA files precedent-setting timber cases

  • New analysis reveals EU manufacturers’ US importers and distributors are at legal risk
  • European Union Timber Regulation violations are predicate offences under US Lacey Act
  • Princess Yachts and Sunseeker Yachts reported to US authorities
  • Ramifications for all EU industry exporting products containing timber to the US

 

LONDON: Stand-alone laws in the European Union and USA seeking to combat illegal timber trade could be used in concert, exposing importers from the EU to prosecution in the US.

Legal analysis by the London-based Environmental Investigation Agency (EIA) has revealed previously unidentified but massive legal risks for US-based importers and distributors receiving EU products containing illegitimate timber.

In the new report A Tale of Two Laws, EIA details how violations of the European Union Timber Regulation (EUTR) actually constitute predicate offences under the US Lacey Act, making the import, sale and possession of EU-manufactured products containing illegitimately traded timber a crime in US law.

The revelation, which the timber industry and regulators are understood to have overlooked to date, has significant legal and commercial ramifications for broad sections of EU-US trade.

EIA has already reported the US distributors of Princess Yachts and Sunseeker Yachts, two of the UK’s largest luxury yacht manufacturers, to the US Department of Justice following investigations which revealed that Burmese teak traded in breach of the EUTR entered both companies’ supply chains.

Under the EUTR it is an offence to place on the market timber harvested illegally or for which the risks of illegality remain unmitigated. The EUTR only regulates the “first placer” of timber and authorities do not always have the powers to seize non-compliant timber, resulting in timber traded in breach of the EUTR still being available in the EU.

A Tale of Two Laws details how EU customers of these “first placers” are putting their US importers and distributors at risk of product seizure and forfeiture – and of fines and prison sentences – if products containing timber placed in violation of the EUTR are exported the US.

EIA calls on EU trade federations to urgently issue guidance to members on the need to conduct Due Diligence on supply chains and so protect their market by ensuring that non-compliant timber is not present in their products, regardless of whether companies are currently regulated by the EUTR.

Peter Cooper, EIA Forests Campaigner, said: “This relationship between the two pieces of legislation increases the scope of both, as well as the power for these demand side measures to drive legal compliance in the EU, the US and in producer countries. Companies not regulated by the EUTR need to demand legally traded timber to ensure Lacey Act compliance, cutting the demand for illegal timber in Europe.”

EIA is also calling on EUTR Competent Authorities to publish all details of enforcement actions because a lack of transparency in enforcement, coupled with EUTR non-compliant timber remaining on the market, is increasing risks to EU industries exporting to the US.

EIA has previously revealed how all Burmese teak entering the supply chains of luxury yacht builders Princess and Sunseeker has been traded in breach of the EUTR. It has identified the main US distributors of each brand – and the yachts they have received – and shared the information with US authorities.

Cooper added: “EIA has been alerting industry of the EUTR legal risks associated with Burmese teak since 2013. A failure to ensure it receives only EUTR-compliant timber and to identify legal risks has led to Princess and Sunseeker sleepwalking into a situation where their importers and distributors (and, in the case of Princess, its US subsidiary) are now exposed to significant legal liabilities in the US.”

This liability is not unique to Princess and Sunseeker. EUTR Competent Authorities have stated that no Due Diligence System assessed to date for Myanmar teak complies with the EUTR. As such, US importers and distributors of any EU-manufactured yachts containing Burmese teak and built since the EUTR entered into force are also exposed.

“The message to the European yacht manufacturing industry and others is clear: if you cannot source legally traded timber you must instead use the readily available, EUTR-compliant alternatives to protect your customers from legal action,” added Cooper.

 

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EDITORS’ NOTES

  1. The Environmental Investigation Agency (EIA) investigates and campaigns against environmental crime and abuses. Our undercover investigations expose transnational wildlife crime, with a focus on elephants and tigers, and forest crimes such as illegal logging and deforestation for cash crops such as palm oil; we work to safeguard global marine ecosystems by tackling plastic pollution, exposing illegal fishing and seeking an end to all whaling; and we address the threat of global warming by campaigning to curtail powerful refrigerant greenhouse gases and exposing related criminal trade.
  1. Read and download a copy of A Tale of Two Laws at https://eia-international.org/wp-content/uploads/A-Tale-of-Two-Laws.pdf
  1. The US Lacey Act makes it an offence to import, export, transport, sell, receive, acquire or purchase in interstate or foreign commerce any plant taken, possessed, transported or sold in violation of any law or regulation of any State or any foreign law that protects plants.
  1. Sunseeker International is a British luxury motor yacht manufacturer. Its headquarters and main assembly facility is in Poole Harbour, Dorset. The largest British boat builder, Sunseeker produces about 300 yachts a year. Princess Yachts International is another major British motor yacht manufacturer, based in Plymouth, Devon, and also produces about 300 yachts a year.
  1. The EUTR only regulates the act of ‘first placement’, so Princess and Sunseeker are not guilty of breaching the EUTR but are making use of illegitimately traded timber. The firms found in breach of the EUTR within the Princess and Sunseeker supply chains have failed to conduct EUTR-compliant Due Diligence, which requires anyone placing timber on the EU market to reduce any risks of illegality in their supply chains to unidentifiable levels. EUTR competent authorities throughout Europe have agreed with EIA that, under current conditions, it is impossible to conduct Due Diligence on Burmese teak due to the extremely high risks of illegality and a fundamental lack of available information.

 

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