Bad Actors

Over the last few blogs, I talked about Dabblers, those who do a little importing on the side and don’t know what they don’t know. They often make mistakes out of ignorance. Today, let’s talk about those who do know what they should, but don’t care and often don’t do what they ought to do. These are the knowledgeable and deliberate Bad Actors. And unfortunately, Origin issues are one of the biggest bad actions out there.

I talked last week about companies taking Chinese plywood to third countries for use as engineered flooring core and calling the final floor a product of the third country. This is a form of circumvention and it is illegal. Some companies have even shipped in blanks to be profiled and finished in the third country, which is even more obviously illegal. And there are also companies who have taken actual flooring out of China and just marked it “Made in X,” and sent it on its way without any further processing at all. Pretty blatant bad behavior.

A lot of people just assume it’s the foreign supplier who is cheating. Well unfortunately, there are many U.S. importers who knowingly purchase these illegal products. These are U.S. companies willingly accepting bad material into their inventory.

I am not great with economics, but I know some of the fundamental concepts. One type of supply channel is the “Push” one, where products are pushed up from the producer to the consumer. In this case, the manufacturer would be the source of the problem, be it deliberate or because of unfamiliarity with U.S. trade law. The buyer needs to vet the sourcing to eliminate bad production “pushed” on to them.

The other supply system is the “Pull” channel where manufacturers respond to buyers’ demands. In this scenario, Bad Actors create the demand for illegal products. If no one bought the illegal material, factories wouldn’t make it; and frankly there aren’t enough ignorant Dabblers to support a large supply of illegal material. From what I have seen, the majority of the illegal material entering the U.S. is coming through knowing violators.

This situation with the Bad Actors reminds me of something that Congressman John Lacey said when he defended his proposed legislation on the House floor. For those that don’t know the history, Lacey was an avid birder, and he hoped to stop birds being poached for feathers for the millinery trade. He said his bill was directed specifically against the poacher by “removing his market.” He said that he was absolutely after individuals on the ground; those conducting the illegal harvesting. But the method he used was removal of the market. Previously only the individual actually committing the crime was held accountable; this bill made the entire chain accountable. Lacey put the burden on the demand portion of the market to take responsibility for bad behavior at the source. He wanted to eliminate the “Pulling” of bad material into the supply chain.

Distributors and retailers who don’t ask questions of their importing suppliers are putting themselves at risk. (As noted previously, Lacey and TSCA violations can pass down the chain.) But even more than that, they are permitting and encouraging Bad Actors who in turn are encouraging bad behavior by supplying mills. I hear a lot of complaints in the market about the foreign “cheater.” Yes, for sure, there are some. But what about U.S. companies who knowingly purchase that material or turn a blind eye to its existence? And what responsibility lies with the downstream market who is happy enough to buy something cheaply with no questions asked?

This might be seen as a depressing topic to end the year with, but I’m doing so asking for better behavior in the years to come. I’m hoping we can help the Dabblers do better and eliminate the knowing Bad Actors who put all of us at risk.

I do see this as a risk to the entire industry for a lot of reasons. Bad Actors send the wrong message to the mills, suggesting that certain behavior is acceptable. That makes it harder for the good actors to do their job. Bad Actors don’t pay for compliance activities (or often fail to pay the proper duties and fees) and artificially lower market pricing. Bad Actors put their customers at risk for downstream liability under Lacey and TSCA – a dealer could face lawsuits or fines because of their supplier’s actions. And do we want people moving from wood to non-wood products because they don’t trust our supply chains? This could happen if there is another formaldehyde scare or Lacey enforcement.

I hope we can do a lot more education together next year and as the world opens up again, return to in person reviews of our supply chain and improving the conditions around the world. I wish you all the best for 2022 – it’s all got to keep getting better, right?!

Elizabeth Baldwin is Environmental Compliance Officer for Metropolitan Hardwood Floors. In her 25 plus year career in the wood industry has visited over 70 countries and hundreds of facilities of all sizes and types. She describes herself as a “jack of all wood trades.” Familiar with jungles of all sorts–having camped out along the Amazon and walked the halls of Congress–she blogs for the NWFA on both environmental and regulatory issues for educational and informational purposes only. Her blog is not intended and should not be construed as legal advice. Persons seeking legal advice on compliance with CARB, TSCA, the U.S. Lacey Act or any other law, regulation, or compliance requirement/claim should consult with the regulatory agency directly and/or a qualified legal professional.

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