The impacts of the Lacey Act Amendment of 2008 on U.S. hardwood lumber and hardwood plywood imports

Abstract

The Lacey Act of 1900 was amended on May 22, 2008, to prohibit the import of illegally sourced plant materials and products manufactured from them into the United States and its territories, and to similarly ban their interstate transport. Trade theory suggests that the effect of the new law would be to reduce the flow of illegally sourced fiber into the United States, increasing prices. Monthly U.S. import data on tropical lumber (January 1989–June 2013) and hardwood plywood (January 1996–June 2013) quantity and unit value were used to estimate alternative statistical models that quantify the impact of the 2008 Lacey Act Amendment on import prices and import quantities of products from potential source countries. Results show that the Amendment's quantity effects are generally negative and double in magnitude in percentage terms than the price effects, consistent with expectations of the effects of a backwards shift in foreign supply against an elastic import demand. Models indicate that there have been double-digit percentage increases in prices and decreases in quantities of tropical lumber imports from Bolivia, Brazil, Indonesia, Malaysia, and Peru. Similarly large changes in hardwood plywood import prices and quantities from Brazil, Indonesia, and Malaysia have occurred, while smaller, and in some cases statistically insignificant, changes have been observed for hardwood plywood imports from China, Ecuador, and Taiwan.