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Italian firms defy EU rules to trade in illegal Myanmar timber, report says

Italian traders are exploiting the country’s inadequate enforcement to ship timber to the rest of Europe and circumvent the EU’s sanctions and timber regulations, the researchers wrote.

Negligible fines and inadequate enforcement are turning Italy into a hotspot for illegal Myanmar timber in spite of EU sanctions and regulations against the latter’s timber trade, according to a new report.

The EU has long prohibited sales of illegal timber products in its markets under its 2013 EU Timber Regulation (EUTR). Not all Myanmar timber comes from illegitimate sources, but the industry’s history of poor governance, lack of documentation, and corruption make conducting adequate due diligence an impossible task. Member states therefore developed a common position in 2017 acknowledging imports of Myanmar timber to be against the law.

In recent years, heightened scrutiny on the illegal timber trade and heavier penalties on errant firms have deterred shipments from Myanmar to many EU countries. But Italian companies have continued to import large quantities of high-value Burmese teak (Tectona grandis), according to the report from U.K.-based watchdog Environmental Investigation Agency (EIA). Even after European authorities imposed sanctions on the trade for funneling cash to Myanmar’s military leadership and decimating forests, Italian timber traders showed no signs of stopping, it said.

The EIA’s report, published in September, identified 27 Italian firms that have been importing Burmese teak into the EU. Some of these companies continued to import timber products following the coup in Myanmar in February, researchers said.

From March to May this year, Italian firms imported more than €4.31 million ($5.09 million) worth of wood from Myanmar, according to trade data. Teak, often used for luxury yacht decking, comprised the vast majority of the imports, making up more than 80 per cent of the total value.

“There has been a call from the people of Myanmar to assist in preventing the flow of funds that support the military coup,” Faith Doherty, head of the forests campaign at the EIA, said in a statement. “By continuing the trade, these companies are effectively supporting the military junta and its brutal repression of the Myanmar people as well as the destruction of the country’s forests.”

Between 2001 and 2020, Myanmar lost tree cover roughly the size of Switzerland, according to data from Global Forest Watch. Logging of teak and other valuable hardwoods helped drive this degradation, with the forestry sector providing critical funding to the country’s military rulers for decades.

In 2011, the military ceded some power to a quasi-civilian government that began ramping up efforts to save Myanmar’s forests. Exports of raw timber logs were banned in 2014, coupled with significant reductions in annual logging limits set by the state. Before the coup, the government had also been working with the private sector to improve processes for verifying timber legality.

The EU is the third largest market for Myanmar timber, accounting for 19 per cent of imports by value. India and China, the two biggest markets, together account for 53 per cent, based on data from the EIA.

Italy has been the largest importer of Myanmar timber products among EU member states since 2013. Its dominance in the market grew further after EU authorities developed a common position against Myanmar timber imports in 2017. As Germany, the Netherlands and others clamped down on illegal trade, conducted raids and issued heavy penalties, Italy imposed minimal fines.

Among the 27 timber traders, CF Wood, which supplies raw wood materials to yacht builders, has been fined twice for importing Myanmar timber. Penalties available to enforcement authorities go up to €1 million ($1.2 million), but CF Wood paid a total of €8,675 ($10,253) for its offenses — roughly 1 per cent of the value of Burmese teak it imported from 2018 to 2020, the researchers found.

The EU member states, and in particular Italy, need to stop turning their backs on the people of Myanmar, get serious and put a stop to this shameful situation.

Faith Doherty, senior investigator, Environmental Investigation Agency 

In 2020, Italy imported nearly €24 million ($27.4 million) of timber products from Myanmar, making up 66per cent of total Myanmar timber imports into the EU. A few large importers are responsible for most of Italy’s imports, the report said, including Timberlux, Sangiorgi Legnami, GTH Italia and TWB Solutions. Yet the sizes of their workforces do not match their scales: Timberlux and GTH Italia each list only one employee, while TWB Solutions has two, according to the report.

Further investigations of Timberlux’s and TWB Solutions’ shipments showed a significant portion of the companies’ timber was destined for other countries in Europe, including Belgium, Germany, the Netherlands and Denmark.

“This leads EIA to believe that GTH Italia, Timberlux SRL and TWB Solutions are a conduit for importing Myanmar teak,” the researchers wrote, with traders exploiting Italy’s inadequate enforcement to ship timber to the rest of Europe and circumvent the EUTR.

GTH Italia’s lawyer told the EIA that its timber was procured in accordance with the EUTR. Timberlux and TWB Solutions said they had “never shirked responsibility” in collaborating with authorities, and any allegations that they were responsible for illegal imports of Myanmar timber were “absolutely false, unfounded, spurious, exploitative and devoid of any foundation.”

In correspondences with investigators, Italian traders acknowledged they were unable to comply with the EUTR as they could not ensure Myanmar timber came from legal sources. In June, the EU further imposed sanctions on Myanma Timber Enterprise (MTE), a military-linked state-owned company that, according to local regulations, is the only possible source of legal timber in the country. Yet, traders did not confirm they would stop imports, the report said.

“Various rulings have made it perfectly clear that it is impossible to import teak and other timbers from Myanmar and remain in compliance with the [EUTR], even before sanctions directly targeting the exploitation of Myanmar’s natural resources were put in place earlier this year to reinforce the prohibition — and yet here we are,” Doherty said.

“The EU member states, and in particular Italy, need to stop turning their backs on the people of Myanmar, get serious and put a stop to this shameful situation.”

This story was published with permission from Mongabay.com.

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