American Hardwood Southeast Asia Supplement 2019

36 AMERICAN HARDWOOD Southeast Asia Supplement 2019 By Michael Snow, Executive Director AHEC I t is clear that Asia is well placed to exploit comparative advantages in the global market for wooden furniture and handicrafts. Backed by a strong woodworking tradition, high skills, and competitive labour rates, the region’s manufacturers have earned a strong international reputation for their ability to supply high quality and fashionable products at a competitive price. To maintain this growth, however, manufacturers must deal with the related challenges of depletion of traditional sources of wood supply. Manufacturers will need a strong focus on avoiding any wood products that might come from illegal sources when finished goods are shipped to the major consuming countries of North America, Japan, Australia and Europe. This demand for environmental assurances is driven by the introduction and tightening of laws which make importers of all wood products, including furniture, liable to sanction if any illegal wood is identified in the products they sell. The sanctions for failure to comply with these laws can be severe. This is most vividly illustrated by the US$13.5 million fine imposed on Lumber Liquidators for US Lacey Act violations in relation to flooring manufactured in China from hardwood sourced from Russia and Myanmar. To date the largest sanction imposed for non-conformance to the EU Timber Regulation (EUTR) is a fine of €80,000 in Sweden linked to imports of Myanmar teak. On top of the direct financial effects of these sanctions is the severe reputational damage due to prosecution. While the details of the various laws introduced in the US, EU and Australia differ, they all share one critical feature. They are all risk-based. The need for far-reaching measures to track wood to individual forest management unit, or to seek FSC or PEFC certification of supply chains, apply only to those countries, or regions, where there is a risk of illegal harvest. If the risk can be shown to be “negligible” at national level (using the terminology of EUTR), then there is no need to trace timber further than to the port of export from the supply country. This opens the door to a very simple solution for Asian manufacturers interested in expanding markets for their products in the EU and the US: they should manufacture their products using wood imported from countries where there is a negligible risk of illegal harvest. Of course, there are many wood exporting industries that claim all their Michael Snow, Executive Director AHEC