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Amendment to the U.S. Lacey Act

Implications for Malaysian Forest Products Exporters

By R. Juge Gregg , Amelia Porges - Sidley Austin LLP, Sidley Austin LLP, Forest Trends
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Malaysia is one of the largest producers and suppliers of tropical hardwood and related products destined for the United States. In 2007, the United States imported almost 2.2 m3 RWE of timber products from Malaysia – mostly plywood and furniture – totaling USD$1.1 billion in value. Sabah and Sarawak supply the great majority of the plywood which the USA imports from Malaysia in roughly equal proportion. Between 2001 and 2007, the United States accounted for almost 20% of Sabah’s plywood exports. While this volume of direct bilateral trade is substantial on its own, it is likely that even larger volumes of Malaysian wood are traded through intermediary countries, such as China and Vietnam, for further processing prior to being imported into the United States.

In addition to using Malaysian harvested wood, Malaysia itself serves as a manufacturing hub of raw wood materials imported from other countries, notably Indonesia, Thailand, and Myanmar. There are reports of problems with the legal sourcing of some of these woods harvested in supplying countries, particularly Indonesia. The possibility that some of the Malaysian products exported to the United States are associated with illegal harvesting and other legal violations covered by the Lacey Act – even if the illegal acts occurred in the original producer country – will create a risk that manufacturers, exporters and retailers of goods made with suspect timber could face forfeiture, penalties and even imprisonment under the newly-amended U.S. law.