U.S. timber companies imported nearly 1,600 metric tons of teak from Myanmar last year, circumventing sanctions and channeling millions of dollars in revenue to the country’s junta, according to a new report.

As violent crackdowns rocked Myanmar in the wake of its February 2021 coup, the U.S. placed sanctions on the military-controlled Myanma Timber Enteprise (MTE) in April. The state-owned enterprise, which regulates all harvesting and sales of Myanmar timber, including exports to international markets where it takes a percentage of revenue, is one of the “key economic resources for the Burmese military regime that is violently repressing pro-democracy protests,” officials said at the time.

Sanctions against MTE make it illegal for U.S. businesses to import any timber from Myanmar. Yet the new report, released by advocacy group Justice for Myanmar, counted 82 timber shipments from Myanmar to the U.S. between February and November 2021, “consistent” with previous years.

“The evidence shows that the sanctions have not stopped the flow of teak to the US, and therefore have not stopped the flow of funds from the timber trade to the illegal military junta,” said the report, which relied on shipping records from global trade database Panjiva.

The shipments, which largely consisted of Burmese teak (Tectona grandis) board and scantling used for shipbuilding, outdoor decking and furniture, amounted to 1,565 metric tons of teak. By far the largest importer was East Teak Fine Hardwoods (ETFH), which accounted for half of imports, the report found. South Carolina-based ETFH, which specializes in hardwood decking, imported 765 metric tons of teak boards and scantling in 44 shipments during the 10-month period, the report said. ETFH did not immediately respond to a request for comment.

To circumvent sanctions, U.S. firms have been buying timber from private companies acting as brokers in Myanmar instead of directly from MTE, the report added. After these brokers win bids at MTE auctions, they export their timber to the U.S. either directly or via intermediate countries like China.

“While the data analysed for this feature only captured teak exports directly from Myanmar to the United States, it is likely that even more teak is being exported to the US via third countries such as China,” the researchers wrote.

Burmese teak has long been prized by yacht builders for its high silicon and resin content, which makes it more durable in wet environments. With the wealthy looking to sail away from their pandemic worries, the superyacht industry has been booming in recent years, boosting demand for the tropical hardwood.

In the U.S., the international timber trade is regulated by the Lacey Act, which requires companies to take due care to ensure the timber they purchase, including from overseas sources, has been harvested legally. The law, aimed at addressing illegal logging, does not prohibit funding illegitimate military leaders, but requires supply chain transparency and disclosures that, properly enforced, ought to stop companies from importing Myanmar timber, the researchers said.

“In Myanmar, all legally harvested timber for export passes through MTE. So, compliance with the Lacey Act should — even inadvertently — lead companies to MTE. And this should lead to the conclusion that timber should not be lawfully imported to the United States due to the current sanctions against MTE,” they wrote.

With MTE now under military control, timber auctions have become more opaque, making it difficult to take action against companies circumventing sanctions, the report added. Before the coup, MTE used to announce details of upcoming timber auctions and disclose auction outcomes; now, such information is no longer publicly available, it said.

According to the Extractive Industries Transparency Initiative, a global watchdog group, Myanmar received almost $100 million in revenue from taxes and royalties on the timber trade in the 2017-2018 financial year.

Since the coup, the military has killed more than 1,400 civilians and imprisoned 11,000 more, the report said.

“The companies who are aiding the Myanmar military and trading with the entities it controls, are complicit in the crimes committed by the Myanmar military,” the researchers said.

Banner image of fresh teak logs in Nongdao, Myanmar. Image courtesy of EIA.

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