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Cablegate: Amended Lacey Act Implementation: Indonesian Views

VZCZCXRO6002
RR RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHJA #2262/01 3500655
ZNR UUUUU ZZH
R 150655Z DEC 08
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 0981
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEAWJA/DEPT OF JUSTICE WASHINGTON DC
RUEHKO/AMEMBASSY TOKYO 2851
RUEHBJ/AMEMBASSY BEIJING 5735
RUEHBY/AMEMBASSY CANBERRA 3408
RUEHUL/AMEMBASSY SEOUL 5234
RHEHNSC/NSC WASHDC
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 02 JAKARTA 002262

SIPDIS

DEPT FOR OES/ENRC, EAP/MTS, EAP/RSP
OES/ENRC FOR MJOHNSEN
USTR FOR MLINSCOTT, DBROOKS
USAID FOR ANE, EGAT
BANGKOK FOR RDM/A
NSC FOR CEQ CONNAUGHTON, VAN DYKE
USFS FOR CMACKIE
JUSTICE FOR ECOLBOURN

E.O. 12958: N/A
TAGS: SENV EAID EAGR KGHG ETRD EINV ID
SUBJECT: AMENDED LACEY ACT IMPLEMENTATION: INDONESIAN VIEWS

REF: STATE 126654

1. Summary. Indonesians are expressing both considerable
enthusiasm for as well as some concern about the amended Lacey Act.
Many of the concerns are based on misunderstanding how the amended
Lacey Act will be implemented and what it requires. The wood
industry appreciates the Act's intent to combat illegal logging and
views this as an opportunity to position Indonesia as a leading
exporter of legally harvested timber. Both government and industry
are eager for frequent updates on the import declaration requirement
and phase-in schedule, to avoid misunderstandings and ease concerns.
End Summary.

Wide Audience Informed About Lacey Act
-------------------------------------
2. Post conveyed the amended Lacey Act implementation information
to a combined Government of Indonesia (GOI) and wood industry
audience on December 3. Approximately 30 representatives of the
Ministry of Forestry, Ministry of Trade, National Forestry Council,
Indonesian Association for Forest Concession Holders (APHI), Forest
Industry Revitalization Agency (BRIK), and Indonesian Furniture
Industry and Handicraft Association, as well as individual timber
companies, attended the meeting. These interlocutors also attended
a December 10 seminar jointly sponsored by USAID, the EU Commission,
and several NGOs, at which Senior Trial Attorney Elinor Colbourn of
the U.S. Department of Justice (DOJ) gave a presentation on the
amended Lacey Act and its implementation.

A Warm Welcome, Despite Some Concerns
-------------------------------------
3. Industry representatives and officials appreciated the Lacey
Act, stating that illegal logging is detrimental to Indonesia's wood
industry and welcoming "every effort to combat illegal logging".
Others said that they respect the Lacey Act's intent, and singled
out the non-discriminatory nature of the Lacey Act's requirements.
Some hoped that the Lacey Act implementation would lead to higher
prices for Indonesian timber and wood products over the longer term.
Another private sector representative stated that the Lacey Act is
"more positive than negative; it will change us, make us more
careful and responsible [in business practices] ". The Executive
Director of LEI, the Indonesian Eco-labeling Institute, took the
opportunity to underscore for the Indonesian audience -- in light of
the Lacey Act -- the importance of implementing a credible
Indonesian wood legality verification standard that has the force of
law. This draft standard, the Standar Verifikasi Legalitas Kayu
(SVLK), is awaiting final approval from the Ministry of Forestry.

Concerns: Some Misinformation, Much Misunderstanding
--------------------------------------------
4. Industry representatives and officials initially expressed
concerns about their ability to meet the Lacey Act requirements. The
biggest concerns stemmed from a lack of knowledge about what will be
required, as well as from some completely inaccurate information.
These concerns were mostly dispelled over the course of the two
separate meetings, but there is a clear desire for continued and
frequent updates from the USG about the Lacey Act.

5. Embassy representatives and the DOJ's Elinor Colbourn are
responding to the concerns/complaints (listed below), many of which
are based on erroneous information.

-- Declaration requirement will be onerous and impose burdensome
transaction costs on Indonesian firms. The declaration requirement
is therefore a de facto trade barrier.
-- Declaration is mandatory beginning December 15.
-- Firms will not be ready to provide required information by April
1, when the USDA plans to begin the phased-in enforcement of the
declaration requirement.
-- Indonesians will face difficulty identifying the different wood
species, particularly in mixed-wood products (plywood,
particleboard, pulp and paper, etc.). The (potential) resulting
inaccurate declarations will lead to prosecutions of Indonesian
companies.
-- Furniture products have to be sourced exclusively from plantation
forests beginning July 2009.

JAKARTA 00002262 002 OF 002


-- Indonesians will have no further opportunity to comment on the
implementation process later on.
-- The declaration requires a certificate of legality.
-- It will be difficult to prove legality because new Indonesian
legality standard is not yet in force.
-- U.S. laws will determine legality of wood imports.

Indonesian Stress Need for More Information
-------------------------------------------
6. Both government and industry are eager for frequent updates on
the import declaration requirement and phase-in schedule, to avoid
misunderstandings and ease concerns. One timber concession
executive, after hearing the answers to some of his questions,
stated that GOI officials had provided some inaccurate information
about the amended Lacey Act and its implementation. He and others
stressed the need to disseminate accurate information to a wider
Indonesian audience, now and in the coming months. (Note: Although
the USG has kept the members of the bilateral working group on
illegal logging informed about Lacey Act developments, they do not
appear in turn to have conveyed this information to other Indonesian
officials and industry representatives. End Note.)

7. Representations by Embassy Officers and DOJ attorney helped to
dispel many misunderstandings and allay concerns. For example, we
clarified that the novel elements of the declaration are limited to
information on the country where the plant material (wood) was
harvested, and the genus and species; the declaration does not
require information on legality, and it is voluntary from December
15 until April 1, 2009. We emphasized that legality will be
determined by the applicable laws of the exporting country (i.e.
Indonesia) and that, by and large, legitimate companies exercising
due care and paying closer attention to their supply chains should
be able to provide the required information without much additional
effort or expense. We also pointed out that the phase-in schedule in
subject to change, and will take into account feedback from
concerned parties.


HUME

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