What Do the New CITES Rosewood Restrictions Mean for MI Retailers?

Monday, May 15th, 2017

CITES BM banner

By Michael Raine

As the cliché goes, even the most well intentioned rules and regulations have unintended consequences. And so it is that the MI industry has become collateral damage in an international effort to protect forests from the Chinese furniture industry. On Jan. 2, 2017, a new Convention of International Trade of Endangered Species of Flora and Fauna (CITES) regulation came into effect that restricts the exporting and importing of nearly all species of rosewood that are used in the making of guitars and other instruments. For MI dealers and manufacturers, this means more headaches, paperwork, and permit applications are in store in order to sell and ship instruments across international borders.

What Is CITES & Why the New Rules?

CITES is an international agreement in place since 1975 that is meant to protect threatened and endangered plant species by regulating their trade. Brazilian rosewood was already under CITES protection for several years, but under the new CITES Appendix II that was agreed on by signatory countries (which include Canada, the U.S., and most other major markets) in October 2016 and that came into effect this January, all rosewood under the genus dalbergia and three bubinga species are now covered by the regulation. This includes over 300 species of rosewood, including East Indian and Honduran rosewood, as well as woods like cocobolo and African blackwood that are commonly used in stringed instruments, marimbas, and woodwind instruments. In layman’s terms, this means almost all rosewood used in the making of guitars and other musical instruments needs to be certified and accompanied by a permit in order to cross a border.

The reason that the trade of rosewood has come under greater scrutiny is not because of musical instruments, but because of the Chinese high-end furniture market. This industry has created a demand for rosewood worth billions of dollars, which has led to deforestation and the endangerment of several rosewood species in countries like Vietnam and Thailand.

What Does this Mean for You?

Well, in short, if your business hasn’t gotten ahead of these new rules, get ready for a fair bit of paperwork and a lot of patience. “Let go of some leisure activities for the weekend,” laughs Paul Haggis, co-owner of Bluedog Guitars in Vancouver, who has recently gone through the process of obtaining CITES permits for his inventory.

A certificate confirming its legality and specifications must now accompany any guitar or other rosewood-containing product that crosses the border for commercial purposes. If you’re a Canadian dealer or distributor selling a U.S.-made guitar to a customer in the U.S., for example, that guitar must now be accompanied by a re-export CITES permit issued by Environment Canada. A certificate, likewise, must accompany a Canadian-made guitar being sold to a customer in the U.S. Essentially, the only exceptions are products for personal use. For example, a musician crossing the border with his or her own guitar doesn’t need a permit (unless it contains more than 10 kg of regulated wood).

Haggis and his business partner, Jenn Ladd, received some warning and information about the impending regulation before Christmas from some of their suppliers, including Taylor and Bedell Guitars, as well as from NAMM, Haggis says.

Paul Haggis & Jenn Ladd

Paul Haggis & Jenn Ladd of Bluedog Guitars

“Taylor [Guitars] has really been out front on it and just warning us that there were going to be changes to the models and we’ve had certain models being hung up in delivery, and it might just be as simple as a faceplate,” Haggis continues. “We’ve had great success with [Taylor’s] eight-string baritone guitars and the only rosewood on those is the faceplate because it’s a mahogany top, Tasmanian blackwood back and sides, and everything else is legit. So they’re hung up now over what to do with the faceplate. A few models they warned us ahead of time would be discontinued. They had rosewood on the GS Minis and things like that and they’re moving to substitute woods across the board.”

Because the CITES regulations apply to any amount of restricted wood, some builders, such as Virginia-based boutique brand Huss & Dalton Guitar Company, are having to decide what is worth the hassle. “They’ve always used Honduran rosewood for their bridge plate,” explains Haggis. “That’s it – just the bridge plate and so now they’re [wondering,] ‘Do we change what has been a signature building point for us?’ They’re really up front about declaring everything and who it’s going to and even the experienced luthier looking inside with the proper tools would have to know how a maple bridge plate looks different than a rosewood bridge plate. But the builders themselves, they’re having to specify the actual weight of any material that’s going onto a guitar, because the whole idea is if they’ve pre-registered any woods supply they’re getting, then they have to account for anything they’re sending out, which is basic supply management – wood in, wood out. We’ve seen builders having to list on a specific form, if it’s a guitar going into the U.S., ‘two pieces for the back, two pieces for the sides, four pieces for the binding,’ and then the weight of the actual material. So it’s very onerous for the builders and we’re talking pages of paperwork.”

So for Canadian MI retailers, the biggest hassle comes with getting CITES permits from Environment Canada for the products they had in-store prior to Jan. 2, 2017. Products that retailers have and will receive from their suppliers after Jan. 2nd should be accompanied by a CITES certificate, which the retailer will then repackage with the product if they resell that item outside of Canada. All CITES permits must be issued before the item is exported and will not be issued retroactively. The permit forms can be obtained through the Environment & Climate Change Canada website at www.ec.gc.ca/cites.

“We had to send them a listing of everything we had and then they gave us a number of permits to be used when we then re-exported. So a re-export certificate is what we have in-hand and I’m happy to say we’ve been able to use them successfully in sending the guitars back into the States that were originally built there,” explains Haggis. “It was lengthy, but you know, I feel for Environment Canada. They’ve done a stellar job reacting to the volume of questions that must be coming at them. We were just patient and fortunately we were able to get really good examples from our suppliers of what we have in terms of records and specifications as per the instruments. So there is some trust involved just to make it all run smoothly and so far it’s working well.”

As mentioned, the manufacturer should include a certificate for exporting (if made in Canada) or re-exporting (if made outside of Canada) with every new product sent to Canadian retailers. Where the new CITES regulation may become the largest hassle for retailers is with the international sale of used and vintage instruments. If a Canadian retailer brings in a used or vintage instrument after they’ve already obtained the permits for all their pre-Jan. 2, 2017 inventory, then they need to go through the permit process again for that single vintage item if they plan to resell it to a customer outside Canada. On average, it’s taking around three months to obtain CITES permits from Environment Canada. So frankly, the seller needs to make a judgement call if it’s worth the hassle and wait to sell that product internationally. Thankfully, the permits issued by Environment Canada are free. In the U.S., the CITES permits issued by the Fish and Wildlife Agency cost $75 each, or $5 each plus a $200 Master File fee for those who do a lot of international business.

“It just comes down to bookkeeping and being thorough and just good business practices. You just have to suck it up, I guess. Patience is a virtue here and Environment Canada is doing all they can,” concludes Haggis. “We know there are other retailers who are still shipping instruments and, anecdotally, we hear from the U.S. that the regulations are not being enforced. But we’re just not willing to take the risk of an instrument getting hung up [at the border] because, say, there is a Border Services agent having a bad day and they just decide something looks like rosewood.”

END

Michael Raine is the Senior Editor of Canadian Music Trade.