Investigating Peru's Illegal Timber Trade and the Failure of the US-Peru Trade Deal

At the end of February, after years of turning a blind eye to evidence that Peru has been exporting illegally taken timber to the U.S. in clear violation of its commitments under the U.S.-Peru trade pact, the U.S. is opening its eyes -- just slightly -- to the trade violations. For the first time ever, the U.S. Trade Representative (USTR) is asking Peru to verify the legality of one timber shipment of one exporter. While we welcome this announcement, we are also deeply concerned that this action is both too narrow and too late.

In 2007, the United States Congress passed a free trade deal with Peru. In response to the illegal logging crisis in Peru that was fueling climate disruption, destroying communities and ecosystems and threatening U.S. jobs, the deal included a detailed set of binding obligations to curb illegal logging and associated trade. Years later, however, the obligations still haven't changed the reality on the ground, and the illegal logging crisis continues unabated.

In 2012, the Environmental Investigation Agency (EIA) published a multi-year investigative report which documented that at least 112 illegal shipments of cedar and mahogany wood -- laundered with fabricated papers and approved by the Peruvian government all in violation of the trade pact -- arrived in the U.S. between 2008 and 2010. Using rules in the U.S.-Peru free trade pact, EIA and the Center for International Environmental Law (CIEL) in 2012 petitioned the USTR to take action under the trade deal and verify the legal origin of all shipments from two companies, including Maderera Bozovich SAC, because of their history of exporting significant volumes of timber to the U.S. from logging concessions with illegal activity. Environmental organizations and labor unions also called on the U.S. to take action to verify the legality of shipments from these two companies, but the USTR did not do so, and the illegal activity continued.

In 2015, Peru’s own government officials found that several shipments from a company called La Oroza had falsified documents, claiming that the wood was legally cut on land belonging to an indigenous community when instead it had been illegally taken elsewhere. This is particularly significant because La Oroza is owned by the same proprietors as Oroza Wood SAC, which EIA identified in 2012 as a supplier of illegally harvested timber to Maderera Bozovich SAC. Because the USTR and Peruvian officials failed to investigate the well-documented violations back in 2012, the owners of Oroza Wood were able to continue operating, under a slightly different company name, illegally.

Now, four years later, it’s the same company -- La Oroza -- whose shipment of wood triggered the USTR to request that Peru verify the legality its timber. In the long interim, while the USTR looked the other way, La Oroza shipped illegal wood to the U.S. in plain sight. In a documentary last year, Al Jazeera followed the illegal shipments of timber from La Oroza to the United States; the illegally taken timber now could be anywhere, including your dining room floor.

Even worse, in October of last year, Peru’s forestry oversight agency found that in 94 percent of 144 surveyed logging operations, wood slated for export had been logged illegally. In January, Peru's government responded to the finding by firing the person in charge of the forestry oversight agency.

Despite such flagrant violations, the USTR has consistently refused requests to enforce the trade deal’s anti-illegal logging provisions. In the first 2,581 days of the agreement, Peruvian timber companies with a documented track record of illegality sent well over 100 shipments of wood to the U.S. Not once did the USTR ask Peru to verify any of these shipments.

It wasn’t until last week, after more than seven years, that the USTR made its first such request, for a single shipment of a single exporter. This almost complete lack of enforcement undercuts U.S. businesses and workers by allowing U.S. consumers to unwittingly support environmental destruction.

Peru now has 45 to 75 days to verify whether La Oroza’s most recent shipment was legal. After that, the U.S. can decide "within a reasonable time" whether to deny the shipment from entering the United States and/or block entry to all CITES-listed shipments from La Oroza.

This issue is particularly timely given that twelve nations across the Pacific Rim, including Peru and the United States, have recently signed the Trans-Pacific Partnership (TPP) trade agreement at a casino in New Zealand. As Sierra Club executive director Michael Brune said upon the symbolic signing ceremony, “Signing the TPP is Russian roulette for our economy and our climate.” The fate of the TPP, which still has to go to U.S. Congress for a vote, is uncertain; the pact is increasingly controversial in Congress, and is opposed by all major presidential candidates and more than 1,500 civil society organizations.

But one thing is certain. If it has taken this long for USTR to use the incredibly detailed set of rules in the US-Peru deal to take a small step toward holding Peru accountable for the blatant violations, it’s hard to imagine how the TPP, with its far weaker rules on illegal logging, is going help transform illegal activity in Peru’s forest sector.  This is why, in late 2015, 13 environmental organizations urged Congress “to withhold its vote on the TPP until Peru has addressed past violations and until it has come into compliance with its new TPP environmental obligations.”

It's time to create a new model of trade that puts communities and the environment above corporate profits. Join us.