TED Case Studies

Teak Trade



          CASE NUMBER:        200
          CASE MNEMONIC:      TEAK
          CASE NAME:          Thai and Burmese Timber Trade 

A.   IDENTIFICATION 

1.   The Issue

     This case analysis examines the growing timber (specifically 
the hardwood teak) trade along the Thai-Burmese border from 1988 
to present.  Dramatic events in these two respective countries in 
late 1987 and 1988 led to a monumental shift in the scope and 
amount of trade among these two partners and their trade relations 
abroad.  The trade has brought about untold suffering to the 
peoples of the region both through state sanctioned human rights 
abuses and the loss of a once vital and abundant ecosystem that 
provided for tribal agricultural practices.  Many unilateral 
policies have been pursued by the Thai government but the 
recalcitrant authoritarian SLORC (Burma's ruling party) has 
profited from the trade and utilized the proceeds for its long 
standing dispute with Thailand over border territories.  More 
recently, ASEAN has taken interest but so far to no avail.

2.  Description

     The changes in Teak trade have led to substantial 
deforestation with accompanying soil erosion and flooding that has 
not only damaged the land for years to come but has resulted in 
deaths of hundreds of citizens.  Additionally the trade has had 
secondary repercussions ranging from military interventions headed 
by despotic and rapacious generals to the birth of a fledgling and 
rapidly growing green movement.  Tertiary repercussions have 
ranged from the routine human rights violations of tribal hill 
populations, to animal rights abuses in the hauling of timber by 
elephants.

     The history of deforestation is long and tragic, but in 
nearing the end of the twentieth century the problem has become a 
virtual epidemic.  Thailand and, more importantly Burma (Myanmar), 
are symptomatic cases of global deforestation.  The sheer 
destructiveness of the trade, in the brief eight years of 
increased teak export in this border region, has gone largely 
without bounds or restrictions.

     Due to the closed nature of the regimes involved and the 
proximity to Western analysis relevant literature and discourse 
have predominated within the regional context.  The Association of 
South East Asian Nation (ASEAN) has made numerous attempts to 
evaluate the scale and depth of the problem.  This culminated in 
the ASEAN Plan of Action for the Environment. The established 
international community through Greenpeace and the World Wildlife 
Fund (WWF) have continually monitored the issue.  The UN has since 
its inception attempted, with varying degrees of success, to 
address the problem.

     With the student led revolt against the authoritarian and 
autarkic regime of the Burmese People's Republic in August 1988, 
there was a tentative opening toward economic development in 
Burma, despite the still reigning despotic military junta. Within 
two years, Thailand became briefly engulfed in a student inspired 
bloodless coup. Prior to the coup the "puppet democracy" in 
Thailand had for decades been controlled by the military generals. 
After the coup, democratic institutions and principles became more 
entrenched and sovereign. This freed the popularly elected 
civilian administration from military intervention.  Concurrently, 
a fledgling green movement began to take root when it became 
publicly apparent that nearly two-thirds of Thailand's teak 
forests had been cleared, and that the state could no longer rely 
on timber as a means toward their successful economic development 
(McDonald 16).  In the past,  the unaccountable generals' has
personally profited from kickbacks  associated with the teak trade.

     Therefore, by the end of 1988 a pattern of trade was 
beginning to take root among these two neighbors.  This was 
compounded when in January 1989 Thailand banned the harvesting of 
timber in the country following the worst flooding there in nearly 
a century).  Thailand, ready to secure its democracy via its
rapidly industrializing  economy, no longer needed raw material
exports as in the past; it was becoming domestically unpopular and
destructive to the environment.  Burma, on the other hand, one of
the poorest nations on Earth was ready to depart from nearly forty
years of a closed economy desperate for economic capital.  The
easiest way to  accomplish this; the filling of the Thai timber
vacuum of exports; the source, Burma's mature and relatively
unspoiled teak forests. 

      Clearly the stage was set between these two neighbors and 
longtime rivals for an expanded exploitation of the Southeast  Asia
rainforest: the world's second largest (Bangkok Post: Aug 24, 
1995).  A briefing document written by the Burmese Government's 
Timber Corp. in February 1989 said that 20 concession areas had 
been contracted along the Thai-Burma border with total exports of 
160,000 tons of teak logs and 500,000 tons of hardwood total.  
Thus in 1989, the rather suspect official Burmese Junta sources 
estimated revenues of $112 million in exports per year (McDonald 
17).

     As Thailand eased and nearly eliminated its harvest of timber 
the Burmese market provided the perfect alternative.  In 1994, 
border trade of timber between Thailand and Burma through 
Thailand's customs station in the North amounted to $184 million, 
about 50% of total Thailand-Burma trade (Bangkok Post Aug 24, 
1995).  More alarming is that the unofficial trade between the two 
states of timber is estimated to be worth as much as 50% of the 
volume of trade through the customs (BP p. 27).

     The exploitation of Burmese timber becomes more apparent once 
the content of trade among these two nations are established.  As 
of two months ago Thailand's exports to Burma include ready-made 
clothes, personal hygiene items, instant food, candies, bicycles, 
motorcycle parts, plastic wares, cosmetics, construction 
materials, and electrical appliances (BP p. 28).  These items are 
clearly manufactured goods that substantiate the elevated nature 
of the Thai economy in regards to its tremendously underdeveloped 
neighbor.  On the contrary, imports from Burma to Thailand include 
teak, timber, wood products, and to a far lesser extent gems and 
livestock (BP p. 28).  Thus the two neighbors share a complimentary
yet highly destructive trade in terms of  environmental
degradation.

     By 1995 teak has become Burma's second most important source 
of foreign exchange, earning almost $200 million from the export 
of more than 300,000 cubic meters every year, according to Burmese 
government figures (Birsel: Reuters Limited [July 18, 1995]).  
Hence, the importance of the teak trade became of such vital 
interest that the Burmese regime would and has violently defended 
its interests.  Although poorly documented, on several occasions 
small scale armed conflict broke out between Thai border police 
and Burmese mercenaries as well as SLORC forces.  The Thai 
government contends that in late 1987 and 1988 Burmese teak 
harvesters reached into Thai territory where export is now banned. 

     As demonstrated the breadth and magnitude of the trade has 
grown enormously over the rather short time period.  Likewise, the 
actors involved have proliferated as well. Intrastate institutions 
such as the State Law and Order Restoration Council (SLORC) is the 
ruling junta whom has served instrumentally as the Burmese entity 
directing trade relations, as well as the more recently 
established Myanmar Investment Commission (MIC) (Tansubhapol: BP 
Feb 22, 1995).  Its counterpart the Ministry of Forestry has 
served as the Thai intermediary.

     Regional and multilateral bodies have recently become engaged 
once the economic and environmental costs have become so great.  
The ASEAN nations have become involved and have sought agreements 
that have incited great acrimony amongst member states over this 
divisive issue (covered in more depth later).

     Nongovernmental organizations have long been involved in the 
issue of deforestation.  In this case the WWF for Nature has been 
routine and vociferous in regards to criticizing this case of 
deforestation--labeling the trade as "unacceptable" (Tickell: The 
Times; June 11, 1994). As a result of cases such as this, the 
environmental movement is now calling for a new superstructure to 
better manage forestry practices.  The WWF has called for the 
creation of an independent certifying organization operating on 
multilateral standards so that eco-conscious consumers would have 
a means to align their timber associated purchases with 
internationally recognized standards. By doing so the world's 
forests would sufficiently supply demand far into the future 
(Tickell: The Times; June 11, 1994).

     Teak has long been prized for its beauty, quality, and
resilience to weathering.  The problem of Burmese exports of this
valued commodity is discerned once the nature of the species is 
discerned.  Teak takes at the minimum 120 years to reach maturity 
from a seedling (Agence France Presse: Dec 23, 1993).  The mature 
teak reserves left in Thailand are minimal while Burma's are still 
substantial.  The current rate of Burmese harvest will render 
Burma, like Thailand in far fewer years than a seedling can hope 
to reach maturity.

     Burma, which is currently one of the world's largest 
exporters of top-quality teak, still has 33 million hectares (81.5 
million acres) of forest cover, according to official statistics. 
The annual harvest of timber, according to official sources, is 
approximately three million cubic meters (Reuter Asia-Pacific 
Business Report: May 30, 1995).

     In May 1995 Burma's Ministry of Forestry called for regional 
cooperation to "tackle the rapid deforestation and the smuggling 
of timber".  The SLORC has marginalized the influence of the 
ministry and some argue that the SLORC is conspiring with the 
smuggling of timber along the border regions with Thailand 
(McDonald 19).  Therefore, as was mentioned earlier, the rates of 
forest depletion are alarming, but the official counts do not 
accurately assess the true loss.

     Thailand has not been the only neighbor expressing great 
interest in Burmese teak.  India currently came to a trade 
agreement with the capital hungry SLORC, much to the chagrin of 
the weak aforementioned Ministry of Forestry, recently increased 
teak imports from Burma further exacerbating the current trend of 
deforestation.  India, like Thailand, enjoys a natural advantage 
over other countries by virtue of the border it shares with Burma. 
Bilateral trade has gone unconstrained because there is no formal 
treaty among the two states establishing limits or any other form 
of regulation (Sharma P4).  In addition, many of the other 
developed Asian economies have increased their import of teak from 
Burma in recent years.  Japan, China, Taiwan, and Korea all seek 
raw teak timber that can be utilized in the production of luxury 
furniture in their respective home economies.

3.   Related Cases

     THAILOG case
     MALAY case
     INDONES case
     VIETWOOD case
     CAMWOOD case
     MANGROVE case

     Keyword Clusters
          (1): Trade Product            = WOOD (teak hardwood)   
          (2): Bio-geography            = TROPICAL
          (3): Environmental Problem    = DEFORESTATION


4.   Draft Authors: Kevin T. Kunkel and Teri Emmons

B.   LEGAL Clusters 

5.   Discourse and Status:  DISagreement and INCOMPlete

     The confluence of official and unofficial actors have made 
all attempts at limiting trade nearly untenable. I will 
chronologically address the regional attempts at legal discourse 
and agreements.

     In 1983 the issue of deforestation among the tropical 
rainforest nations became a subject of international legal action. 
 The International Tropical Timber Agreement sought to establish a 
body of individuals that would assess case be case deforestation 
matters among potential violator states.  The agreement created 
the International Tropical Timber Organization.  Investigators 
would work with the local governmental and business interests in 
the hopes of negotiating sustainable limits on timber harvesting 
(Wellner 20).  This has proved largely ineffective due to the lack 
of authority in managing sub-national actors ranging from local 
tribal uprisings to the ever-expanding black markets.  The sheer 
breadth and complexity of the Burma case significantly challenged 
the agreement.

     The aim of the 1993 agreement was to shore up and control the 
sub-national actors involved in the export. Yet it has not nearly 
reached this level of authority. Some have gone as far as to say 
that the 1993 International Tropical Timber agreement "...is 
foremost a commodity agreement to promote tropical timber in the 
world's market...the signatories have agreed on a draft accord 
that would put forest preservation on par with the commercial 
demands of the global timber industry (Wellner 20).

     Despite the atrocious Burmese record regarding timber 
practices they became signatories to the ITTA, thereby making the 
nation eligible for funds "to continue rapacious logging of teak 
(Wellner 20).  It appears that despite the Organization and the 
agreements' intent little success has been made.  In the twelve 
years since the initial agreement, logging has expanded 
tremendously in Burma therefore relegating the agreement as paper 
rather than law.

     Many regional attempts to address the problem have failed to 
reach a viable agreement as well.  But ASEAN is now directing more 
attention and is developing a Plan of Action for the Environment 
which is to include logging practices and measures which will 
hopefully reach an internationally binding agreement. 

     The United States, as one of the largest importers of Burmese
teak, responded with a relatively mild campaign of consumer
information.  The Sierra Club lobbied Congress to pass a law
requiring hardwood importers to label their product by country of
origin in the hope that this would influence nations to harvest
timber sustainably.  After Myanmar refused to cede power to a
democratically elected new government, Senator Daniel P. Moynihan
(D. N.Y.) sponsored a trade bill urging Bush to restrict imports
until Myanmar honored its elections.

6. Forum and Scope: THAILAND; and BILAT 

7.   Decision Breadth: THAILAND 

8.   Legal Standing:  LAW 

C.   GEOGRAPHIC Clusters 

9.   Geographic Locations 

     a.   Geographic Domain : Asia
     b.   Geographic Site   : South East Asian
     c.   Geographic Impact : border Burma and Thailand 

10.  Sub-National Factors:  YES-Rebel groups

     Rebel groups located primarily on the Burmese side of the 
border have made national enforcement of timber standards, let 
alone international standards and agreements, tenuous at the 
least.  Rebel groups have been active in this region in markets 
ranging from the timber trade to opium poppy growth and export.  
Kuhn Sa, an infamous and powerful regional war lord, has managed 
during the 1980s to consolidate a mercenary force (estimates of 
personnel are as high as 500) which he utilizes to engage in opium 
and timber exports.  Thailand has been unable to prevent Khun Sa 
and other warlords from prosecution sue to their Burmese 
residences and fortresses.  The Burmese are complacent in that 
profits are shared with the cash starved SLORC.  Profits received 
are often used to purchase arms so that these mercenary armies 
rival those of the official governmental forces.  These militant 
economic armies have made the application of law virtually 
untenable (McDonald 19). 

11.  Type of Habitat:  TROPICAL 

D.   TRADE Clusters

     As has been mentioned the Burmese export of teak has 
predominately been exported to Thailand. Lesser importers in have 
been Europe (EC), Japan, Korea, and the United States through 
third markets.  

12.  Type of Measure:  Import Ban  

13.  Direct vs. Indirect Impacts:  INDirect 

14.  Relation of Measure to Environmental Impact
     a.  Directly Related     : YES WOOD
     b.  Indirectly Related   : NO
     c.  Not Related          : NO
     d.  Process Related      : YES  Species Loss Land [SPLL] 

15.  Trade Product Identification:  RAW TEAK

     The United States is one of the four largest importers of
teak, especially used in boat-making.  Burma supplies about 80% of
the world's teak.

16.  Economic Data 

17.  Impact of Measure on Trade Competitiveness:  BAN 

18.  Industry Sector:  WOOD 

19.  Exporter and Importer:  Burma and Thailand 

E.   ENVIRONMENT Clusters 

20.  Environmental Problem Type:  Deforestation [DEFOR] 

     Due to Thai logging of the border forests, Myanmar lost over
1 million acres of forest from 1985-90.  This rate is five times
greater than the period from 1976-80.  Fewer than 50,000 trees were
replanted annually resulting in deforestation and loss of wildlife
habitats.

21.  Name, Type, and Diversity of Species

          Name:          Teak 
          Type:          Plant/tree/hardwood
          Diversity:     NA 

22.  Impact and Effect:  NA 

23.  Urgency and Lifetime:  MEDIUM, and 100s of years 

24.  Substitutes:  Conservation 

VI.  OTHER Factors 

25.  Culture:  YES

     The role of culture is a marginal influence in the sheer 
scope of trade.  The border regions are populated with tribal 
peoples, utilizing different dialects and ancient forms of living 
(such as hunting and agricultural practices).  The ethnic 
differences from the Thai and Burmese populations prevent 
assimilation outside of the mountainous border region.  At times 
these small enclaves have been decimated both through the 
destruction of their habitat as well as through military and 
mercenary sanctioned murder and forced migration when groups 
formed an opposition to logging (McDonald 17). Thus the cultural 
affinity of these groups are tied directly to the health and well-
being of their surroundings and environment, namely the old and 
majestic teak forests. 

26.  Trans-Border:  YES-Burma and Thailand 

27.  Rights:  Yes

     The case of Burma, and to a far lesser extent Thailand, have 
had a massive impact upon the indigenous populations residing in 
the affected forested areas.  The ruling SLORC of Burma has been 
one of the most notorious state-sanctioned human rights violators 
on Earth (Amnesty International: 1990 Yearbook). Besides not 
recognizing the democratically elected officials in 1990, the 
SLORC has suppressed ethnic tribal minorities who object to the 
logging practices exercised by the state.  Indigenous ethnic 
minority populations, such as the Karen and Mol, numbering in the 
hundreds have been rounded up and sent to camps if they did not 
agree with the state's logging policies--those who were persistent 
troublemakers were imprisoned for political reasons (McDoonald 8). 
These are clear violations of international human rights 
standards.

     ASEAN has attempted for many years in its annual meetings to 
address the very divisive issue of human rights--agreement never 
come due to sovereignty reservations often taken by the initial 
states.  In 1991 the issue of human rights took the fore for the 
first time at the annual meeting of ASEAN foreign ministers.  
Virtually all ministers object to any attempt to link human rights 
with trade.  Some Ministers contend that human rights conditions 
(a tact often attempted) as another means of conditionality 
equating to protectionism (Vines 1).  With states such as Cambodia 
and Burma, the problem goes without a regional discourse due to 
their not being a member of ASEAN despite their strong desires to 
do so.

     In 1994 Burma was invited as a guest for the first time to 
the annual ministerial meeting of ASEAN.  Despite centuries old 
tension of domination and intervention, Thailand invited Burma to 
the meeting due to their intensive teak trade relationship.  Other 
ASEAN members resisted the move due to the pervasive authoritarian 
nature of the SLORC regime and their disregard over human rights 
in recent uprisings.  It was believed that Burma's possible 
inclusion or participation in ASEAN would be frowned upon by the 
international community (BP: July 22, 1994).

     The EC has routinely stipulated to ASEAN member states that 
human rights violations need to be addressed, and yet when its 
comes to definitive legal or punitive action the EC bows to other 
economic pressures (Vines 1).

References

Annual Status of Human Rights Yearbook, Amnesty International,
1990.  

Birsel, Robert, "Fighting Flares Over Burma's Precious Teak 
Forests," Reuters, Limited, July 18, 1995, Nexis/Lexis retrieval. 

"Burma Calls for Cooperation on Forestry Problems," Rueters
Limited: Reuter Asia-Pacific Business Report, May 30, 1995,
(lexis/nexis retrieval).

Macek, Paul and Chareonying, Kalaya, "Thailand's Logging Ban," TED
case study  #69, data set #2.

McDonald, Hamish, "Partners in Plunder," Par Eastern Economic
Review; 22 February 1990, vol. 147, No. 8, p. 16.

Sharma, Dinesh C., "India: India Expands Trade Ties with Burma," 
Bangkok Post, February 28, 1995, p.  P4, (lexis/nexis retrieval). 

Tansubhapol, Bhanravee and Chabang, Achara, "Burma: New 
Organization Handles All Investment in Burma," Reuter  textline,
Bangkok Post, February 22, 1995, (lexis/nexis retrieval).  

"Teak Cycle: 120 Years from Seedling to Settee," Agence France
Presse, December 23, 1993, (lexis/nexix retrieval).  

"Teak Plantations in Burma," Modern Asian Studies, May 1994.

Tickell, Oliver, "Kindest Wood Cuts of All," The Times, Limited,
June 11, 1994, (lexis/nexis retrieval).

"Thailand: Report Calls on Thais to Boost Trade Relations with
Burmese," Reuter Textline: Bangkok Post, August 24, 1995,
Nexis/Lexix retrieval.  

"Thailand: Students Government Over Policy on Burma," Bangkok 
Post, July 22, 1994, (lexis/nexis retrieval).  

"War on Teak," Sierra, May 1991.

Wellner, Pamela, "Timber Accord Destroys Forests," New York Times,
February 5, 1994, p. 20.  

Vines, Richard, "EC: Community Moves to ASEAN Allay Fears Over
Trade," South China Morning Post, July 24, 1991.



Go to Super Page 1/11/97