Swedish Court Ruling Stokes Concerns Over Impact on Burma Teak Exports

By Nyein Nyein 16 November 2016

Following a Swedish court’s decision to fine its trading company over the use of “illegal teak” products from Burma, environmental experts say the market shares of Burmese timber exporters will also be affected.

This week, Sweden’s administrative court fined Almträ Nordic, a Swedish trading company specializing in bringing wood products into European market, 17,000 Swedish kronor (US$1,700) for a “lack of adequate proof” that a shipment of Burmese teak imported into Sweden had been legally harvested, according to a statement released by Forest Trends, a US-based environmental NGO, on Tuesday.

Following almost a year of injunctions from Swedish authorities and an appeal from the company, the court ruled that certificates—provided by the Myanmar Forest Products Merchants’ Federation (MFPMF)—as well as permits issued by the Myanmar Timber Enterprise (MTE), “were insufficient to prove a negligible risk of illegality.”

In a ruling on Oct. 7, the court said that the company had imported the teak via a Singapore trader that had violated the European Timber Regulation, a 2013 law requiring companies to ensure their risk of importing illegally logged timber into the European Union is negligible.

The company has informed Sweden’s EUTR regulator that it will no longer import wood from Burma.

The verdict of the Swedish court indicated that the Burmese government must carefully consider the source of timber exports, said Burmese environmentalists.

Prominent environmentalist Win Myo Thu, the director of EcoDev and chair of Green Motherland (Sein Lan Ami Myay), told The Irrawaddy that an EU court’s decision has had a large impact on the future of timber exports for Burma.

“It impacts our economy, and it damages our dignity if the company and the government do not follow regulations and if our timber is not freed from any illegal logging activities,” he said, referring to how the Swedish court said that Burmese teak meets neither the European standard nor the international one.

Currently, the state-owned Myanmar Timber Enterprise, which is under the jurisdiction of the Ministry of Natural Resources and Environmental Preservation, has sole responsibility for monitoring all timber extraction. Burma banned logging earlier this year and banned the export of raw timber in 2014.

MTE’s deputy general manager Aye Cho Thaung told The Irrawaddy that they are assessing the Swedish court’s ruling with the Myanmar Forest Certificate Committee. The MTE stopped issuing timber certificates two years ago, after the ban was issued on raw log exports.

“If the Swedish court or related regulators asks us [the Myanmar government], we could check and provide information about whether this teak was actually from Myanmar, because we harvest our teak through legal means,” said Aye Cho Thaung. “As of now, we can not verify [its origins] as we only know that it involves a Singapore trader and we do not know the company’s name.”

Teak from Burma has primarily been exported to a number of European countries, including the Netherlands, Denmark, Italy and Germany.

“This first case could hinder other buyers from importing our products, and this would impact exports to other EU countries and to Australia and the United States,” Win Myo Thu said.

Kerstin Canby, Director of the Forest Policy, Trade and Finance program at Forest Trends, told The Irrawaddy via email that it is likely that other Swedish companies are going to ask for more documentation from Burmese sellers.

“If they cannot find the information that the Swedish court indicated was missing in this case, the Swedish companies will likely not buy the Myanmar product to avoid being fined,” she said.

Burma’s access to European wood markets was valued at close to €50 million between 2012 and 2015. If Burma wants to maintain its market access, transparency within the supply chain needs to be reformed with credible evidence proving compliance with the EUTR, according to Forest Trends.

Win Myo Thu added that, despite the certificates provided by the private MFPMF and the current government’s Myanmar Forest Certificate Committee, it is not always possible to guarantee that timber extractions were done in accordance with regulations.

“We, civil society organizations, have been urging legal timber extraction,” Win Myo Thu said, “although it remains a question as to whether government officials follow the rules and regulations instructed by the ministry.”

Ms. Kerstin Canby added, “If they [Swedish traders or importers] are using the same documentation – the so-called Green Folder – that Almträ used, without additional proof that the Swedish court deemed missing, it is likely that the Swedish regulator, backed up by the Swedish court decision, would also find those companies in violation of EUTR.”

Authorities in other EU countries are already investigating similar cases involving Burmese teak, according to Forest Trends, which expects to see similar court rulings in the future.

“This is the first case in which a court has determined that the certificate issued by the MFPMF is not enough to secure legality; this case is likely to be used as guidance by other courts in the EU responsible for judging whether European companies have complied with the EU Timber Regulation,” said Jade Saunders, a Forest Trends senior policy analyst who works with law enforcement officials in Europe and the United States.

She suggested that a third party audit for responsible timber buyers be introduced as a “new global norm,” as long as those countries sourcing timber do not yet have “robust transparent national systems.”

“This ruling makes explicit that European companies must document their full supply chain back to area of harvest in order to assess and mitigate risk,” Saunders told The Irrawaddy.

“Today we are focusing on Europe but the court decision is also likely to impact US imports from Myanmar by raising the bar for expectations of Due Care under the Lacey Act,” she said.