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Global legality requirements and chain of custody certification : potential impacts of recent changes on China's wood products industry Huang, Yu

Abstract

Many initiatives have been designed to reduce illegal logging and to legitimize the associated forest products trade. The latest governmental initiatives include the United States Lacey Act Amendment (US LAA) and the European Union Timber Regulation (EU TR). A key non-governmental initiative is Chain of Custody (CoC) certification. Since China is a very large importer of primary wood products and a major exporter of value-added wood products, it is critical to understand the impacts of these initiatives on China. The study aims to analyze the potential impacts of the US LAA, the EU TR, and CoC certification on China's wood products industry at two levels. First, at the individual producer level, 107 export-oriented Chinese wooden furniture manufacturers were randomly selected to investigate their perceptions of and responses to these initiatives. Guided by an integrated innovation-adoption model, the study identified the factors that affect a firm's legal compliance and its propensity to adopt CoC certification. Second, at the wood products industry level, the potential longer-term impacts of the US LAA and the EU TR on China's wood products industry were estimated using the International Forest and Forest Products (IFFP) trade model. There were several key results. First, at the individual producer level, multiple linear regression identified factors that were statistically significant in determining a firm's willingness to comply with legality requirements. They included the natural logarithm of firm size, the natural logarithm of export proportion, the interaction between opportunity and: client pressure, the natural logarithm of export experience and the natural logarithm of export proportion. Second, at the individual producer level, binary logistic regression suggested that client pressure, firm size, and the expectation of general benefits were statistically significant in determining a firm's decision to adopt CoC certification. Third, at the wood products industry level, the IFFP results indicated that these governmental initiatives in the US/EU might decrease the production and net export of China's plywood, veneer sheet, and fibreboard. The results also indicated an increase in China's sawnwood and particleboard production, and a decrease in their net imports.

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Attribution-NonCommercial-NoDerivatives 4.0 International

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