Friday, September 2, 2011

Why is the Justice Department Raiding Gibson Guitar?

The Justice Department has raided Nashville based Gibson Guitar twice now, once in 2009 and just last week -  seizing guitars, wood and electronic records. The issue? Whether Gibson illegally imported wood and other plant products covered by the Lacey Act. Here is the Wall Street Journal's take on Gipson fighting back. And here is an excellent primer from Powerline. And here is the greatest irony of this job killing raid.

Mr. Juszkiewicz (CEO of Gibson) says that the government of the country where the rosewood comes from certified it for export, and Gibson jumps through rather elaborate hoops before it buys the wood after it is imported to the U.S. The Lacey Act, which puts American importers of exotic woods at risk, is discussed here. One of the ironies, as you might expect, is that America is a trivial importer of rosewood from Madagascar and India. Ninety-five percent of it goes to China, where it is used to make luxury items like $800,000 beds. So putting Gibson out of business isn’t going to do a whole lot for the forests of Madagascar.

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