Myanmar teak shipments imported to U.S. despite sanctions, group says

SINGAPORE —

More than 1,700 tons of teak — much of it evading economic sanctions — were exported to the United States from Myanmar after the Southeast Asian country’s military seized power in a coup last year, a watchdog group says.

Shipments over the last year of the highly coveted hardwood prized by luxury yacht builders were nearly equal to 2020 despite U.S. sanctions imposed on Myanmar’s largest state-owned lumber company, Myanma Timber Enterprise, nearly three months after the Feb. 1 military takeover. The timber trade is used to finance human rights violations and repression, according Justice for Myanmar, an advocacy organization that examines the military’s business dealings. More than 1,400 people have been killed by security forces since the democratically elected civilian government was deposed. Atrocities by the military are on the rise, particularly in Myanmar’s border regions where armed resistance has intensified.

A protest in Myanmar

People protest the military takeover of Myanmar in February 2021. More than 1,400 people have been killed by security forces since the democratically elected civilian government was deposed.

(Getty Images)

“Continuing trade in timber from Myanmar supports the illegal military junta that is committing atrocity crimes with total impunity, including the indiscriminate murder of children,” Yadanar Maung, a spokesperson for Justice for Myanmar, said in a statement upon release of the group’s report. “We call on the U.S. government to ban all Myanmar timber imports to prevent further revenue from reaching the illegal military junta.”

Myanmar’s government generated $100 million in taxes and royalties on the timber trade during the 2017-18 financial year, according to the most recent data available published by the Extractive Industries Transparency Initiative. The country’s main natural resource industries are supported by timber, oil, gas and minerals. After months of turmoil, the junta wants to exploit and export them in order to support an economy that is in freefall.

Last year the military, also known as the Tatmadaw, held several auctions to sell hardwood, including teak, from a stockpile of 200,000 tons of illegally harvested timber seized by the former civilian government. Justice for Myanmar stated that some of the lumber was believed to have been sent to America through intermediaries. According to Justice for Myanmar, eighty-two teak shipments, consisting mainly of board and scantling, used for shipbuilding and outdoor decking, were exported last year. The watchdog group’s findings were gleaned using Panjiva trade database.

Myanmar, also known as Burma, is the source of what’s widely considered the finest teak in the world because of its durability and smooth surface. British colonial firms used elephants in the 1800s to plunder Burma’s forests for tropical hardwood to outfit the Royal Navy’s vessels with teak. Elephants can still be found in remote forests, where vehicles are not possible.

Demand for timber from Thailand, China, India and Europe exploded in the 1990s, leading to a surge in illegal logging and multinational corruption that enriched the military elite and funded ethnic insurgent groups along Myanmar’s borders, according to the London-based Environmental Investigation Agency, which has uncovered extensive criminal activity in the industry.

Rampant deforestation led to the loss of nearly 29,000 square miles of forest in Myanmar between 1990 and 2010, amounting to 19% of the nation’s forest cover or an area larger than Ireland.

It wasn’t until 2014 that the government banned the export of teak logs. Activists claim that the ban is now at risk because of the military’s power. Faith Doherty from the Environmental Investigation Agency, head of forest campaigns, said: “The coup just exacerbated criminality into which main profiteers will become the junta.”

Even before the sanctions, imports from Myanmar were risky for Western buyers. The U.S. Lacey Act prohibits illegally sourced timber imports and requires traceability. This is difficult to do in Myanmar’s corrupt supply chain.

The U.S. blacklisting of Myanma Timber Enterprise on April 21 effectively amounts to a ban on Burmese timber. This state-owned company operates sawmills and oversees exports.

” The forestry industry of Myanmar is effectively controlled and managed by MTE,” stated Justice for Myanmar. It is asking for a ban against Burmese timber imports because intermediaries can still be used to illegally bypass sanctions on Myanma Timber Enterprise. They are asking the U.S. for an investigation into last year’s teak shipment, including the banks and logistics companies involved.

Justice for Myanmar’s report shows that nearly half the 1,725 tons of teak imported to the U.S. last year after the coup was purchased by East Teak Fine Hardwoods in Donalds, S.C. Another 15% was imported by J. Gibson McIlvain, a lumber wholesaler in White Marsh, Md. Both companies have been among the biggest U.S. importers of Burmese teak for years, using the hardwood for boat decks, flooring and siding.

Neither firm responded to a request for comment. On its website, J. Gibson McIlvain says it maintains relationships with Burmese mills and exporters that “stretch back centuries” and that it complies with government regulations. The relationship between the U.S.A and Myanmar can be confusing. It is important that we keep track of it to make sure we are legally importing lumber to protect our customers who purchase from us,” the website states. Shannon Rogers, the company’s director of marketing, recorded a podcast shortly after sanctions against Myanma Timber Enterprise were announced discussing alternatives to teak.

A crane lifts a log

The timber trade in Myanmar finances repression and human right abuses, according Justice for Myanmar, an advocacy organization that investigates the military’s business dealings.

(Ye Aung Thu / AFP/Getty Images)

“You cannot buy teak from Myanmar without going through the MTE,” he said, adding that the junta was “killing women and children” and making the Tiananmen Square massacre look like “Romper Room.”

Other companies named in the report with much smaller shares of imports include Lumberbest of Alhambra, Kingsley Bate of Manassas, Va., and World Panel Products of Riviera Beach, Fla.

In an email, Clay Kingsley of Kingsley Bate said his purchases were legal and comprised of “a few containers” of furniture, not lumber.

Jeff Davies from World Panel Products stated that his imports were legally purchased prior to the coup by exporters who had been vetted and approved by the International Wood Products Assn. Davies stated in an email that he strongly opposed any abuse of human right and any direct correlation with governments like the current junta. The trade association did no respond to a request for comments.

Lumberbest also did not respond to a request for comment. Since the coup, sanctions have been imposed by the U.S. on numerous Tatmadaw officials, associates, military conglomerates, and companies in the gems- and mining industries. Calls are growing to extend sanctions to Myanmar’s multibillion-dollar oil and gas industry, the country’s largest source of foreign currency. The U.S. Treasury Department’s Office of Foreign Asset Control is responsible for enforcing the sanctions. It declined to comment on the Justice for Myanmar report’s teak findings.

” The laws surrounding international sanctions compliance have a reputation for being complex. Enforcement is hampered by political whims and limited resourcing,” stated Timothy Stanley, Asia director of the Risk Advisory Group. Many smaller companies take the calculated risk that less-resourced enforcement agencies will not pursue sanctions investigations against their trading activities with Myanmar. But it stretches credibility that these same businesses are unaware of the prevailing sanctions environment and the potential legal and regulatory risks of breaching them.”

Read More