Luxury US yachts being supplied with suspect Burmese teak

19.10.2017

There is rampant illegality and corruption in the logging industry in Myanmar. European court decisions suggest that it is impossible to guarantee that teak purchased from the country was legally sourced. So why do two US firms continue to import large quantities?

In the US, the Lacey Act prohibits the import of wood which was harvested illegally in the country of origin. Ignorance alone is no defence: to avoid the worst penalties, companies must exercise ‘due care’ when buying wood. 

Previous enforcement cases suggest that among other things, this means refraining from buying wood if there is ‘any uncertainty of legality’.

Is there such uncertainty for teak from Myanmar? There can be little doubt that wood from there is high risk. 

More than a decade of well-publicised reports have shown how hundreds of millions of dollars’ worth of logs and lumber are felled illegally and smuggled out of Burma each year, aided by corrupt officials. 

The proceeds have even been used to fuel armed insurgencies. Yet US customs data show imports of Burmese teak rising rapidly. Imports in 2017 have doubled.

Two US companies – East Teak Fine Hardwoods and J. Gibson McIlvain – control two-thirds of this trade. Between them, these two firms have imported around $5 million of teak from Burma so far this year. 

The teak these companies import ends up in things like expensive boats, more expensive boats, expensive boathouses and similarly expensive houses and hotels. As well, of course, as bespoke items like fishing chairs to put on your expensive boat. All in all, the essentials of everyday life.

On their websites, both companies continue to refer to special dispensation given by the US Treasury Department in 2014 to allow them to purchase teak from Burmese supplier MTE despite it being the subject of US sanctions due to its links to the military junta. 

But as McIlvain admits, this license system only ever guaranteed that the imports were not in breach of the sanctions, and said absolutely nothing about whether the wood was legally sourced or complied with the Lacey Act. 

This licensing system also ceased in October 2016, when the sanctions were lifted in response to the move to democracy in Myanmar.

Government-owned MTE – the Myanmar Timber Enterprise – is the only authority permitted to extract and trade timber in the country. However, buying teak from MTE is no guarantee that it is legal. 

Independent experts have concluded that the risk of corruption and illegality remains high. Governments in Europe charged with implementing the European Union’s equivalent of Lacey agree. 

Most importantly, they have also concluded that it is effectively impossible to reduce this risk, because MTE will not share the information needed to do so.

Under the EU law, ‘due diligence’ is a requirement in its own right. In November 2016, a Swedish court fined an importer of Burmese teak, after concluding that documents supplied by MTE could not guarantee legality, because they did not allow the wood to be traced back to the forest from which it originated. 

In March 2017, the Danish Environment Agency also castigated seven importers for failing to comply with EU law for the same reason. Authorities elsewhere in Europe are also investigating. 

Meanwhile, East Teak and McIlvain have continued to import teak from Burma. Shipping containers filled with the stuff get unloaded at US ports roughly every other a week.

All this rather begs the question: if these European importers cannot ensure their wood is legal, how can the US companies? Earthsight wrote to ask them. They didn’t reply.

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