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The GFTN Guide to Legal and Responsible Sourcing

Human Rights Violations

Internal and external stakeholder concerns may identify specific issues, countries, or companies that are extremely controversial or out of step with generally accepted practices. Sourcing forest products from such countries or companies does not so much raise questions of forest management practices; rather, it introduces the moral dilemma concerning support for regimes and practices that have a wider impact on civil society or human rights. In extreme cases, the United Nations will call for trade embargoes on such countries, as will individual national governments.

Individual responsible purchasing organizations will need to be aware of such issues and should be ready to adjust their purchasing policy accordingly.

Sources Linked to Human Rights Violations—Relevance for Responsible Purchasers

Examples of issues identified by the UN organizations that should be considered in a responsible purchasing policy include
- the systematic violation of human rights, including civil, political, economic, social, and cultural rights;
- extrajudicial killing, rape, and other forms of sexual violence carried out by members of the armed forces;
- torture;
- political arrests and detentions, including those of prisoners whose sentences have expired;
- forced relocation, the destruction of livelihoods, and forced labor;
- denial of the freedoms of assembly, association, expression, and movement;
- discrimination on the basis of religious or ethnic background;
- wide disrespect for the rule of law and lack of independence of the judiciary;
- unsatisfactory conditions of detention and systematic use of child soldiers; and
- violations of the right to an adequate standard of living, in particular to food, medical care, and education.

This set of indicators can be used to identify specific regimes, countries, or companies which, if sourced from, would directly undermine the overall effort to source responsibly. Furthermore, sourcing from such entities or places may undermine the wider integrity of the organisation.

It is arguable that it is possible to source forest products responsibly from such places, but this would require that the purchasing organisation identify and prove the benefits of such trade to the people of the country involved, while at the same time proving that the trade does not directly support the regime under scrutiny. This may not be possible in practice. It is extremely important that a purchaser that would choose to source from controversial regimes or countries first consult its stakeholders to ensure that such a policy has the required degree of integrity and support. If this approach is adopted, it is extremely important that consulted stakeholders’ viewpoints be taken into account and acted upon.

Particular attention was drawn to Burma/Myanmar, where forest products were directly associated with many of the issues identified above.

Guidance note on sourcing forest products from Myanmar (Burma)

RECENT POLITICAL AND ECONOMIC CHANGES

Since holding its first elections for 20 years in 2010, Myanmar has moved from a military dictatorship to a democratic system and launched major economic reforms. Under the government of President Thein Sein, political prisoners have been freed, media censorship lifted, and civil freedoms reinstat¬ed. A raft of liberalising measures has included a managed currency float, greater budget transpar¬ency, a newly autonomous central bank, and the passing of new investment, agricultural and land laws. Despite facing some serious threats, notably ethnic conflicts in Kachin and Rakhine states, Myanmar’s reforms have won strong international support. The EU and US have lifted most of their sanctions, and Myanmar’s creditors have cancelled the bulk of its $11.3 billion foreign debt. A surge in overseas aid and investment has pushed GDP growth to 6.3% in 2012 and a forecast 6.5% in 2013.

STATUS OF INTERNATIONAL SANCTIONS
Most economic sanctions against Myanmar have now been lifted. Those that remain target arms exports, other forms of military assistance, and transactions with certain individuals and entities.
•    European Union: In April 2013, after a one-year suspension, the EU lifted all sanctions against Myanmar except for embargoes on arms and related materials. The EU has also reinstated My-anmar’s access to the Generalised Scheme of Preferences (GSP).
•    United States: In August 2013, President Barack Obama issued an executive order rescinding a broad ban on imports from Myanmar. Restrictions on imports of certain products (notably jadeite and rubies) remain in place, as do an arms embargo and sanctions against certain individuals.
•    Others: Australia lifted all remaining travel and financial sanctions against Myanmar in 2012. Only an arms embargo remains in place. Canada suspended most of its economic sanctions in 2012, except for an arms embargo and financial sanctions against certain individuals and entities.

TIMBER PRODUCTION AND TRADE
Myanmar remains the only country in the world producing high-quality teak from natural forests. Over the past four years, however, harvest quotas for teak and other hardwoods have been scaled back in response to rapid forest decline. In 2012, the government announced a ban on log exports effective in April 2014, along with plans to increase support for domestic processing, draft a new forestry law, and strengthen law enforcement. The lifting of sanctions has reawakened interest in international timber markets and their requirements. A new and expanded committee has been set up to finalise a national forest certification scheme, and discussions are being held with the EU about possible FLEGT measures such as a Voluntary Partnership Agreement (VPA).

These moves, although promising, will take time and political will to succeed. The UN Office on Drugs and Crime estimates that 85% of Myanmar’s timber exports are illegal. Logs from northern Myanmar continue to be trafficked overland to China in violation of a 2006 bilateral accord. Logs exported from Yangon port under the authority of the state-run Myanmar Timber Enterprise (MTE) – technically the only legal route – mostly come from natural production and conversion forests where controls are weak, allowing illegal timber to be mixed into supply chains. Systems exist to track timber from the forest of origin to the point of export, but they are complex and only patchily implemented. Recent assessments point to a lack of data on forest resources and production, limited management capaci¬ties, and fragmented and politicised decision making, as the main hurdles to ensuring legality.

India is currently the main buyer of Myanmar teak and other hardwoods. Other importing countries include, in descending order of importance, China, Thailand, Bangladesh, Vietnam, Taiwan, Malaysia and Singapore. There is evidence that teak from Myanmar is re-labelled in some regional importing countries as coming from domestic sources, allowing for processing and onward export without revealing its true origin. It is possible, though unknown, that this practice has declined now that sanctions have been lifted.

RECOMMENDATIONS
The lifting of economic sanctions means there is in principle no longer any legal barrier to trading in timber from Myanmar. However, some countries still prohibit dealing with certain Myanmar individuals and entities, some of whom may be involved in the timber trade. Buyers should contact their relevant government agency to check who is on the sanctions list before making any transaction. This advice applies to US buyers in particular, as the Myanmar Timber Enterprise is on the US government’s Specially Designated Nationals (SDN) list (see: http://sdnsearch.ofac.treas.gov/Details.aspx?id=2994)

Myanmar’s new reforms promise to put its forestry sector on a more sustainable footing, but will take time to work. Evidence suggests 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. At this time, therefore, timber from Myanmar should be considered unwanted material unless stringent checks are made to ensure it has been legally harvested, traded, exported and imported; and that it is not the result of conversion, especially of high conservation value forests. Buyers are also advised to be vigilant when considering high-quality teak at competitive prices originating from countries other than Myanmar.

GFTN will continue to monitor the situation in Myanmar with a view to updating this guidance within one year.

BIBLIOGRAPHY
Australian Government (2013) Myanmar country brief. Department of Foreign Affairs and Trade. (link)
Canby, K. (2013) International Markets for Verified Legal Wood Products. Presentation at Workshop on the EC FLEGT Action Plan: Challenges and Opportunities for the Forest Sector in Myanmar, 16–18 July 2013, Nay Pyi Taw, Myanmar. (link)
Canby, K. & Woods, K. (2012) Myanmar: Same Same, Burn-Out or Great Opportunity? Presentation at 19th Illegal Logging Update and Stakeholder Consultation, 9–10 February 2012, London, UK. (link)
Cho, B. (2013) Current status quo and issues of formulation of TLAS in Myanmar. Presentation at 3rd Sub-Regional Training Workshop on Timber Legality Assurance System (TLAS), 22–24 April 2013, Kuala Lumpur, Malaysia. (link)
Council of the European Union (2012) Burma/Myanmar: EU sanctions suspended. Press Release, 14 May 2012. (link)
Council of the European Union (2013) Council conclusions on Burma/Myanmar. Press Release, 22 April 2013. (link)
EIA (2012) Appetite for Destruction: China’s Trade in Illegal Timber. Environmental Investigation Agency (EIA), London. (link)
Eleven Myanmar (2013) More illegally logged timbers from Myanmar trafficked to China. Eleven Myanmar, 31 March 2013. (link)
ETTF (2012) Seeds sown for Myanmar-EU timber co-operation. European Timber Trade Federation. (link)
European Commission (2013) EU re-opens its market to Myanmar/Burma. Press release, 18 July 2013. (link)
Government of Canada (2013) Canada-Burma relations. (link)
IMF (2013) Myanmar Takes Wide-Ranging Steps Toward Economic Reform. IMF Survey, 28 February 2013. (link)
IMF (2013) World Economic Outlook Database, April 2013 Edition. (link)
Ingles, A., Hurd, J. & Wardojo, W. (2013) Exporting legal timber products from the Asia Pacific region – it can be done. The Jakarta Post, 28 June 2013. (link)
ITTO (2013) Report from Myanmar. Tropical Timber Market Report 17 (14): 7, 16–31 July 2013. (link)
Kollert, W. & Cherubini, L. (2012) Teak resources and market assessment 2010. FAO Planted Forests and Trees Working Paper FP/47/E, FAO, Rome. (link)
Kurlantzick, J. (2013) Myanmar's Alarming Civil Unrest. Council on Foreign Relations, 9 April 2013. (link)
Kurlantzick, J. (2013) Too fast, too soon: Why Obama's embrace of Myanmar is putting the cart before the horse. Foreign Policy, 21 May 2013. (link)
Kurlantzick, J. (2013) Myanmar’s Religious and Ethnic Tensions Begin to Spread Across the Region. Asia Unbound, Council on Foreign Relations, 14 June 2013. (link)
Lawson, S. & MacFaul, L. (2010) Illegal Logging and Related Trade: Indicators of the Global Response. Chatham House, London. (link)
Myanmar Times (2013) Myanmar to enshrine central bank independence. Myanmar Times, 11 July 2013. (link)
Robinson, G. (2013) Myanmar signs deal with foreign creditors. Financial Times, 28 January 2013. (link).
Su Hlaing Tun (2012) Myanmar government plans log export ban, targets value-added growth. Myanmar Times, 5 November 2012. (link)
Turnell, S. (2013) Economic Reform in Myanmar: The Long Road Ahead. Asia Society, 6 February 2013. (link)
Turnell, S. (2013) Myanmar has made a good start to economic reform. East Asia Forum, 27 March 2013. (link)
U Shwe Kyaw (2013) Status of Myanmar's Efforts at Improving Timber Traceability. Presentation at Workshop on the EC FLEGT Action Plan: Challenges and Opportunities for the Forest Sector in Myanmar, 16–18 July 2013, Nay Pyi Taw, Myanmar. (link)
UNODC (2013) Transnational Organized Crime in East Asia and the Pacific: A Threat Assessment. United Nations Office on Drugs and Crime (UNODC), Vienna. (link)
US Department of the Treasury (2013) Issuance of New Burma Executive Order. Press release, 7 August 2013. (link)
Win Myint (2011) An overview of teak resources and plantations in Myanmar. Presentation at Conferencia Mundial de Teca, 31 October – 2 November 2011, San José, Costa Rica. (link)
Woods, K. (2013) Political Economy of Timber Trade Flows in Burma / Myanmar. Presentation at 22nd Illegal Logging Update and Stakeholder Consultation, 8–9 July 2013, London, UK. (link)
Woods, K. & Canby, K. (2011) Baseline Study 4, Myanmar: Overview of Forest Law Enforcement, Governance and Trade. Forest Trends for FLEGT Asia Regional Programme, Kuala Lumpur. (link)


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