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What global trade professionals need to know about Phase VII of the Lacey Act

Karen Lobdell  Senior Manager / Product Management / Thomson Reuters

· 5 minute read

Karen Lobdell  Senior Manager / Product Management / Thomson Reuters

· 5 minute read

A new phase of the Lacey Act is on the horizon, and global trade professionals will need to understand what new developments this entails

The Lacey Act was first enacted in the United States in 1900 and was originally designed to address the issue of bird poaching. Then, the 2008 Farm Bill included sizable amendments to the Act and extended the protections to a much larger group of plants and plant products, also making it illegal to import certain products without a Lacey Act Import Declaration.

These amendments focused on illegal logging and harvesting of wild plants, practices often linked to terrorist funding, political instability, deforestation, and unlawful trade, which are all important environmental considerations for a corporate environmental, social & governance (ESG) strategy. Indeed, importation of plants and plant products must be done in a manner that ensures they were harvested legally.

New requirements as part of Phase VII

In Phase VII of the Lacey Act, Import Declarations will be required for all remaining plant product Harmonized Tariff Schedule (HTS) codes that are not 100% composite materials, which are plant products and plant-based components of products in which the original plant material is mechanically or chemically broken down and subsequently re-composed or used as an extract in a manufacturing process. Examples of these composite materials could include paper, paperboard, particleboard, and medium- and high-density fiberboard.

Phase VII will impact a wide array of imported products, such as furniture, essential oils, and cork — products that in the past did not require a declaration, but now will need them.

Animal and Plant Health Inspection Service (APHIS) is currently reviewing HTS codes to determine the complete list of materials and products that will be included in Phase VII. Later in 2023, APHIS will publish a list of the affected HTS codes in the Federal Register and will require import declarations for those products six months later.

Currently, the Lacey Act requires a declaration upon importation, meaning that it is required at the time the shipment lands within U.S. jurisdiction. The vast majority of importers will file their declarations in the U.S. Customs & Border Protection Automated Commercial Environment (ACE) system using the Lacey Act Message Set at or before the shipment arrival. The Lacey Act declaration must be filed or signed by the Importer of Record, or their designated agent (such as a Customs Broker), with the appropriate Power of Attorney. A current list of products that require a Lacey Act Import Declaration can be found at the Lacey Act Declaration Implementation Schedule.

Declarations can also be filed electronically via the Lacey Act Web Governance System (LAWGS). Until the U.S. Customs and Border Protection (CBP) implements a module in ACE for filing declarations for imports into Foreign Trade Zones (FTZs), LAWGS provides that capability and allow large uploads of Lacey Act declaration data using XML. The use of LAWGS for FTZs does require a serial number, however.

There is also the APHIS web-based system for importers who may typically file a paper declaration. Although electronic submission is the preferred method, paper declarations (PPQ Form 505) are also still accepted by mail and are typically only used for small-volume importers.

Preparation is key

Although the list of additional HTS numbers has not yet been published, key steps ensuring that importers and other users have a solid process in place for gathering necessary data and filing the declaration is something that can be done now. Some of these steps include:

      • Monitoring and auditing product database — Importers should continue to check the Federal Register for the publication of the additional HTS numbers that will be included in Phase VII. Once those are published, they should conduct a review of their product database to identify any products that will now require the declaration, especially if those products did not require that in the past.
      • Engaging suppliers — They also should conduct outreach with their suppliers to the affected products to gather the necessary data points and update product records, where appropriate (such as to genus, species, country of harvest, and more). Although the Lacey Act does not require any additional documentation outside of the Import Declaration, companies that are responsible for transporting, purchasing, and processing regulated plant products are expected to know their supply chain. Exercising due diligence means knowing that your plants and plant products were not taken, transported, possessed, or sold in violation of the Act. Supply chain visibility and mapping, along with supplier due diligence is a best practice.
      • Ensuring appropriate configuration of IT systems — Importers should ensure that the IT system they are using, whether for self-filing or via a third party (such as a Customs Broker) is properly configured to capture the required data elements, validate for completeness and accuracy, and electronically file the required Lacey Act Import Declaration in ACE.
      • Employing software — Global classification solutions streamline and automate your product classification workflow, so importers can reduce the time and resources spent on classification, while increasing accuracy and improving collaboration across their organization. Additionally, Global Trade Management (GTM) Import Management solutions provide customs clearance control, allowing users to easily validate and track import clearance documents and directly file with government agencies, thus lowering their risk of non-compliance. To assist in gathering the necessary data points from suppliers for filing purposes, third-party risk management solutions also are available.

Any individual importer or importing company that violates the Lacey Act is potentially subject to civil or criminal penalties. Ensuring compliance with these new requirements is key for importers to avoid any penalties.

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