Companies in the European Union could fall foul of the European Union Timber Regulation (EUTR) by importing timber from Myanma/Burmar.

The EUTR, which came into force in March this year, prohibits traders from placing on the EU market timber which has been harvested or exported illegally from the country of origin. The regulation requires traders to carry out due diligence on imports to screen out illegal timber.

Analysis of the chaotic state of forest governance in Myanmar demonstrates how the due diligence required is impossible on imports from the Mekong states.

EIA’s alert warns companies to avoid importing from Myanmar until compliance with the EUTR can be demonstrated and further urges bodies tasked with implementing the EUTR to crack down on companies falling short of the due diligence requirements.

EIA ALERT

European Union Timber Regulation

Non-compliant Myanmar/Burma timber shipments

Corruption, bribery and illegality underpin chaotic Myanmar timber production and trade, in both state and non-state controlled areas

An EU Timber Trade Federation (ETTF) report by an EUTR Monitoring Organisation concludes that current controls do not allow for EUTR compliant trade in Myanmar timber.

However, since the EUTR came into force in March 2013 more than US$8 million of Myanmar timber have been imported into the EU. All of these shipments are likely in breach of the EUTR due diligence obligations, if not also the prohibition.

EUTR Competent Authorities must monitor compliance of all operators importing from Myanmar, in relation to all individual shipments

Despite the lifting of sanctions, EU Operators should desist from placing Myanmar timber on the EU market until it can comply with the EUTR. This will require substantive reforms.

EUTR Obligations for Operators Placing Myanmar Timber on the EU Market

The EUTR prohibits the placement of illegal timber on the EU market, and obliges operators to apply a due diligence system incorporating risk assessments and risk mitigation measures to all consignments of timber.

Such due diligence measures require operators to identify the concession within Myanmar from which such timber has been harvested, and reduce the risk that relevant forestry and trade laws have not been complied with to “indiscernible” levels. Where risks of illegality cannot be reduced to indiscernible levels, timber should not be placed on the EU market. Any placement of timber on the EU market where risks of illegality can be discerned is in clear breach of the EUTR. [i]

Systemic Illegality in Myanmar’s Forestry Sector

In September 2013, the recognised EUTR Monitoring Organisation (MO) – NEPCon – produced a report commissioned by the EU Timber Trade Federation (ETTF) on the feasibility of complying with the EUTR when trading in timber from Myanmar.

The report found that bribery and corruption in the allocation of harvesting rights was “normal” and “essential”, and concluded that “even timber with the legally required hammer marks and documents at the point of export will be subject to considerable risk that the original logs have been harvested or transported in ways that are not in compliance with the Myanmar Forest Law or the EUTR.” [ii]

Guidance issued by WWF in November 2013 is similarly negative, concluding that “most of the timber Myanmar produces is illegally harvested or traded, or comes from natural forests being managed or converted without regard for broader conservation values.”[iii]

The UN Office on Drugs & Crime has similarly found that 85 per cent of all Myanmar timber exports are illegal.[iv]

Doing EUTR-Compliant Due Diligence in Myanmar

Myanmar’s existing control and traceability mechanisms are not implemented in accordance with key legislation, and are not currently capable of facilitating the levels of due diligence required by the EUTR.

Efforts to establish a national timber certification system have floundered for over 15 years, and while a new committee has been established to develop a scheme, it remains a work in progress. No private certification schemes that mitigate the risks of illegality to unidentifiable levels exists to date in Myanmar, and while some are reportedly under development it remains debatable to what degree that could credibly mitigate the risks of corruption in resource allocation that are acknowledged by the ETTF and an EUTR Monitoring Organisation.

EIA argues that it is not possible to do EUTR-compliant due diligence in Myanmar at the current time, and that in turn it is not possible to comply with the EUTR when placing Myanmar timber on the EU market.

Recent EU Imports of Myanmar Timber

EIA research shows that since March 2013 (when the EUTR came into force) US$8,173,041 of EUTR-regulated timber and timber products have been imported into the EU directly from Myanmar, principally to Germany, Italy, Denmark, The Netherlands, Belgium and Sweden.[v]

EIA contends that these multi-million dollar imports are occurring in violation of the EUTR.  EIA is concerned that these shipments are not being assessed for compliance by Competent Authorities in these countries.

Recommendations

• Competent Authorities should ensure all shipments of Myanmar timber placed on the EU market are rigorously audited for compliance with the EUTR.

• Operators should ensure no Myanmar timber is placed on the EU market until risks that corruption and crime have occurred in production and trade are reduced to unidentifiable levels.

• Myanmar’s Government should ensure its reforms are robust and widespread enough to allow Myanmar exporters to legally access the EU market by being compliant with the EUTR.

NOTES

[i] Article 6 of Regulation No 995/2010 (the EUTR), combined with Paragraphs 3 & 4 of Article 4 of Commission Implementing Regulation (EU) No 607/2012 of 6 July 2012, require that “where the risk of illegal harvesting between concessions of harvest in a country or sub-national region varies” operators are required to provide information on the concession of harvest,rather than just the country or sub-national region of harvest. Illegal logging rates do indeed vary between different concessions within Myanmar, triggering this requirement. The EUTR also obliges operators to assess and mitigate risks of non-compliance with applicable legislation to “negligible” levels.  Section 2 of EC Guidance Document for the EU Timber Regulation stipulates that “Negligible risk should be understood to apply to a supply when, following full assessment of both the product-specific and the general information no cause for concern can be discerned.”

[ii] Myanmar Forest Sector Legality Analysis, NEPCon, for the European Timber Trade Federation, September 2013, https://docs.google.com/file/d/0B5tKhrSFViK2dDZobHpDNnRUdUU/edit

[iii] Guidance note on sourcing forest products from Myanmar (Burma), WWF, November 2013.

[iv] Transnational Organized Crime in East Asia and the Pacific: A Threat Assessment. United Nations Office on Drugs and Crime (UNODC), 2013.

[v] UNCOMTRADE data downloaded by EIA, http://comtrade.un.org/db/