Indiscriminate Barriers: The Trade Effects of Due Diligence Policies in Global Timber Markets

Valentin Mathieu () and Clément Nedoncelle
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Valentin Mathieu: SILVA - SILVA - AgroParisTech - UL - Université de Lorraine - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, BETA - Bureau d'Économie Théorique et Appliquée - AgroParisTech - UNISTRA - Université de Strasbourg - Université de Haute-Alsace (UHA) - Université de Haute-Alsace (UHA) Mulhouse - Colmar - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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Abstract: This paper offers the first comprehensive assessment of the trade effects of due diligence policies (e.g., the U.S. Lacey Act and the EU Timber Regulation) designed to combat global illegal logging. We use a structural gravity model with global timber trade data from 2000 to 2021 to estimate the impact of these regulations, differentiating effects based on an exporter's risk profile and product type. We find that these policies act as a significant non-tariff barrier, reducing global timber exports by approximately 45% on average. Crucially, this deterrent effect is indiscriminate: we find no evidence that high-risk exporters are more constrained than compliant, low-risk exporters. This suggests that the substantial compliance costs and procedural barriers limit trade for all suppliers. We also show that these policies most strongly affect raw and lightly processed timber. Counterfactual simulations confirm that a risk-targeted policy-one that restricts due diligence obligations to high-risk exporters-could preserve overall trade volumes while effectively shifting sourcing away from risky suppliers. Our findings offer timely insights for global trade and environmental policy design, highlighting the need for refined, risk-calibrated mechanisms in emerging regulations such as the EU Deforestation Regulation (EUDR).

Keywords: Illegal logging; Gravity model; International trade; Wood products; Due diligence policies (search for similar items in EconPapers)
Date: 2025-10
Note: View the original document on HAL open archive server: https://hal.science/hal-05303899v1
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