Overview
On October 6, 2021, Senator Brian Schatz (D-HI) and Representatives Earl Blumenauer (D-OR) and Brian Fitzpatrick (R-PA) introduced the Fostering Overseas Rule of Law and Environmentally Sound Trade (“FOREST”) Act of 2021 to “deter commodity-driven illegal deforestation around the world.”
The FOREST Act aims to disincentive illegal deforestation by restricting certain commodities and derivative products originating from illegally deforested lands from accessing the U.S. market. If the FOREST Act is passed by Congress, foreign producers of “covered commodities,” such as: palm oil, soy, cocoa, cattle, rubber, and wood pulp, as well as foreign companies that produce products that are wholly or partially derived from these commodities will be affected by the new legislation.
A similar deforestation proposal has been introduced in the United Kingdom, and another is expected to be published by the European Commission under a proposed Regulation on November17, 2021. As some of the largest consumers of agricultural commodities, the introduction of deforestation legislation in the United States, the United Kingdom, and the European Union could be the start of a larger global effort to address one of the most environmentally harmful practices using trade measures. Depending on their terms and how they are implemented, the FOREST Act and its counterparts in the EU and UK could have negative implications for foreign producers and primary exporting countries of the commodities, if passed into law in any of these three jurisdictions.
FOREST Act Legislative Framework
The current bill consists of four major parts:
- “Risk-based Framework” to Ensure Transparent Supply Chains. Amends the Tariff Act of 1930 to include Section 527A, providing that--
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- Importation of any of the “covered commodities” or derivative products that is produced from land that “undergoes illegal deforestation” on or after the enactment date is prohibited;
- Importers of any of the “covered commodities” or derivative products must file a declaration upon entry that they had exercised “reasonable care to assess and mitigate the risks” that the products did not originate from illegally deforested lands;
- Importation of any of the “covered commodities” or derivative products produced in a country designated by an “action plan” is prohibited unless an importer files a declaration upon entry with “sufficient information” about the supply chain, and the steps taken to assess and mitigate risks of potential illegal deforestation in the supply chain.
- The USTR would be responsible for developing action plans for countries “without adequate and effective protection against illegal deforestation caused by the production of commodities likely to enter the United States.” An action plan would be designed to assist the country to achieve certain goals, such as new laws to end illegal deforestation, enhancing enforcement capacity, monitoring and data sharing, transparency and accessibility to land-use, and traceability and data-sharing for commodity supply chains. Furthermore, an action plan would also include certain benchmarks, such as “legislative, institutional, enforcement, or other actions” the USTR deems “necessary to demonstrate that the foreign country has achieved the goals” previously mentioned.
- Financial and Technical Assistance. Establishes a fund in the US Treasury to provide, inter alia, “financial and technical assistance and other resources” to governments “that are working to complete the benchmarks in action plans.”
- Criminal Liability to Prevent Corruption, Organized Crimes, and Human Rights Abuses. Amends 18 U.S.C. § 1956(e)(7)(B) to create criminal liability for the use of illegally derived funds to “knowingly to carry out, enable, or encourage illegal deforestation.”
- Responsible Government Purchasing. Amends 41 U.S.C. Chapter 47 to allow reduction of a contractor’s bid price by 10% when comparing proposals that include “covered commodities,” if the bid meets certain reporting criteria.