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A CONFLICT OF INTERESTS

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A CONFLICT OF INTERESTS

    A CHOICE FOR CHINA

    Ending the destruction of Burma’s northern frontier forests

    A Briefing Document by Global Witness. October 2005.

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1 RECOMMENDATIONS

THE INTERNATIONAL COMMUNITY

The international community bears a responsibility for guaranteeing the fundamental arights of all the people of Burma. It is essential therefore, that the international

    community supports moves towards a more democratic and inclusive Burma and the end of military rule. The international community should also encourage the development of civil society through its participation in the decision making process and promote transparency and freedom of information at all levels.

    The international community must ensure that its demand for timber and timber products does not provide funding to a regime that represses people who oppose it. It should also ensure that this demand does not lead to an increase in poverty amongst Burma‟s rural poor or to large-scale destruction of Burma‟s northern frontier forests,

    the focus of this report.

The International Community should:

    ; Adopt legislation to prohibit the importation and sale of timber, which has been bharvested, transported, bought or sold in violation of national laws. This

    should include timber imported either directly from the country where the

    timber was logged or via intermediate countries.

    ; Establish a working group with representatives from the SPDC, ceasefire

    groups, civil society, United Nations agencies and the Chinese authorities to

    facilitate measures to combat illegal logging in northern Burma and support

    initiatives to promote sustainable development in Kachin State.

    ; Support independent assessments of the extent of illegal logging and forest loss,

    and the extent and composition of the forest resource base, in Kachin State

    through a combination of satellite imagery and photography, aerial

    photography and ground-truthing.

    ; Facilitate a forest value assessment for Kachin State, under the auspices of the

    working group referred to above, to be followed by participatory forest zoning

    (see „Box 7: Forest Values‟, page 28).

    ; Help rebuild society at a local level in northern Burma through the promotion

    of educational projects including environmental awareness, encourage the

    continuation of sustainable resource use and protection, and support grassroots

    environmental initiatives.

     a The military government renamed Burma as Myanmar in 1989 and this name is used by the United Nations. In this report, however, Global Witness will use Burma, and Myanmar will only be used where

    it is quoted by name. b It is currently entirely legal to import and market timber and timber products, produced in breach of the laws of the country of origin, into all timber importing countries including China. China should lead the way in rectifying this anomaly.

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    ; Support Thai proposals for the creation of a new „Southeast Asian Regional

    Law Enforcement Network to Combat Nature Crimes‟, including measures to c tackle the illegal trans-boundary timber trade.

Timber importing companies should not:

    ; Import timber, or processed timber products, that have been produced from

    wood illegally exported from northern Burma to China.

THE GOVERNMENT OF THE PEOPLE‟S REPUBLIC OF CHINA

    The Chinese authorities at a national, provincial and local level should ensure that economic development in China, particularly in Yunnan Province, is not detrimental to Burma‟s peoples.

    In relation to the management of Burma‟s forests the government of the People‟s Republic of China should:

    ; Suspend the importation of logs and processed timber across the China-Burma

    border pending a review of the legality of all logging operations in Kachin State.

     Make data relating to the importation of timber from Burma publicly available. ;

    This should include timber volume, value, legal provenance and details of the

    contracting parties.

    ; Help the ceasefire groups carry out Environmental and Social Impact

    Assessments (ESIAs) for all current and future development projects and for

    any commercial activities concerning the exploitation of natural resources that

    involve Chinese companies operating in areas under their control. Such a

    process should include meaningful public consultation.

    ; Abide by international environmental commitments including the Convention

    on International Trade in Endangered Species of Wild Fauna and Flora

    (CITES), and end the illegal importation of Himalayan Yew trees from

    northern Burma.

The government of the People‟s Republic of China, in accordance with its

    commitments made in the September 2001 East Asia Forest Law Enforcement and Governance (FLEG) Declaration, should:

    ; Take immediate action to strengthen bilateral cooperation with the Burmese

    Forestry Department, and establish a dialogue with relevant officials within

    ceasefire group administrations, to address the issue of illegal logging in

    northern Burma, the illegal timber trade with China and corruption linked to

    this timber.

     c In his address at the opening ceremony of the 13th Meeting of the Conference of the Parties to CITES on 2 October 2004, Prime Minister Thaksin Shinawatra proposed that Thailand take the lead in the formation of such a network and to host a meeting in 2005 to work out the details for creating this network.

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    ; Play a more proactive role in the Regional Taskforce on Forest Law

    Enforcement and Governance, which was established to advance the objectives

    of the FLEG Declaration.

    ; Develop mechanisms for the effective exchange of experience relating to forest

    protection and forestry, and information including log and timber import data.

    ; Encourage the participation of the Burmese Forestry Department, relevant

    officials within ceasefire group administrations, and civil society in the FLEG

    initiative (see ‟13 Appendix I, pages 89-91).

THE STATE PEACE AND DEVELOPMENT COUNCIL

    In order to bring about an equitable, long-term solution to the conflicts, natural resource management and effect a transition to civilian rule the SPDC must enter into a meaningful and inclusive dialogue with all political parties and the armed opposition groups.

    The SPDC‟s failure to stop illegal timber exports to China in particular has resulted in widespread forest destruction, and a corresponding increase in concern amongst local people in Kachin State. A minority, many of them soldiers under the control of the SPDC Northern Command, have enriched themselves at the expense of the majority.

In relation to the management of forests in Burma the SPDC should:

    ; Stop the illegal and unsustainable logging facilitated by SPDC troops in Kachin

    State, and end the illegal cross-border timber trade with China.

    ; Ensure that natural resources, including forests, are managed in an equitable,

    sustainable and transparent manner.

    ; Increase aid and development to the ceasefire areas, and other impoverished

    border regions, and ensure that the local economies are not reliant on

    unsustainable natural resource exploitation.

THE CEASEFIRE GROUPS IN KACHIN STATE.

    Widespread forest loss is leading to serious environmental and social problems, and is ultimately undermining development in the ceasefire areas and beyond. The ceasefire groups bear a responsibility for helping to end this illegal and destructive trade, particularly logging operations in areas under their control and timber exports that pass through their territory.

The Ceasefire Groups in Kachin State should:

    ; Notify the relevant authorities in both Burma and China of all illegal timber

    transportation as and when it passes through areas under their control and prior

    to its export to China. This information should also be made available to the

    international community, particularly to members of the East Asia FLEG

    Regional Taskforce, and to the public.

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    ; Suspend logging activities, development projects and commercial operations

    that are unsustainable or are of questionable economic and social value.

    ; Ensure the equitable distribution of the benefits of any development project, or

    commercial activity involving the exploitation of natural resources in ceasefire

    areas.

    ; Give full support and access to grassroots initiatives that aim to protect the

    environment and to other sustainable development activities at a community

    level.

2 TABLE OF CONTENTS

    A CHOICE FOR CHINA ............................................................................. 1

    1 RECOMMENDATIONS .......................................................................................... 2

    2 TABLE OF CONTENTS ......................................................................................... 5

    3 PREFACE ................................................................................................................ 7

    4 INTRODUCTION .................................................................................................. 10

    5 EXECUTIVE SUMMARY .................................................................................... 11

     Box 1: Key Findings………………………………………………………………..11

    PART ONE: THE CASE FOR CHANGE .................................................. 13

    6 REGIONAL STABILITY AND TRADE ............................................................... 14

    Box 2: Khin Nyunt‟s fall from power .................................................................... 16

    6.1 Chinese government leadership: the key to conflict-resolution in Burma? ........ 17

    Box 3: Chinese foreign policy and conflict in Burma ............................................. 19

    6.2 Unsustainable logging, conflict and instability on the China-Burma border ...... 20

    6.3 The spread of HIV/AIDS ................................................................................. 21

    6.4 Opium, drug abuse and logging ....................................................................... 22

    7 THE ILLEGAL BURMA-CHINA TIMBER TRADE ............................................ 23

    7.1 Chinese demand and illegal logging ................................................................. 24

    7.2 China‟s international commitment to end illegal logging and associated trade .. 26

    Box 4: EU Action to combat illegal logging in Burma ........................................... 27

    7.3 Illegal timber exports from Burma to China a statistical analysis ................... 28

    7.4 The illegal nature of the Burma-China timber trade (Chinese law) ................... 30

    7.4.1 Illegal importation of CITES-listed Himalayan Yew trees from Burma to

    China ................................................................................................................. 31

    Box 5: Logging and the Beijing Olympics ............................................................. 32

    7.5 The illegal nature of the Burma-China timber trade (Burmese law) .................. 33

    Box 6: Forest law enforcement in Burma ............................................................... 34

    8 THE ENVIRONMENTAL AND SOCIAL IMPACTS OF DESTRUCTIVE LOGGING IN NORTHERN BURMA ...................................................................... 35

    8.1 China‟s environmental commitments in the Greater Mekong Sub-Region (GMS)

     .............................................................................................................................. 36

    8.2 The ecological importance of Burma‟s frontier forests ..................................... 37

    8.3 Environmental impacts in northern Burma ....................................................... 38

    8.3.1 Flooding ................................................................................................... 39

    Box 8: A personal account of the impacts of logging ............................................. 40

    8.4 Impacts on development in northern Burma ..................................................... 41

    8.4.1 Hollow promises of development .............................................................. 41

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    PART TWO: GLOBAL WITNESS RESEARCH AND INVESTIGATIONS

     .................................................................................................................. 42 9 THE TIMBER TRADE ON THE CHINA-BURMA BORDER .............................. 43 9.1 Nujiang Lisu Autonomous Prefecture .............................................................. 44

     9.1.1 Liuku ........................................................................................................ 44

    9.1.2 Pian Ma .................................................................................................... 45 9.1.3 Fugong ...................................................................................................... 46 9.1.4 Gongshan .................................................................................................. 46 9.2 Baoshan Prefecture .......................................................................................... 47 9.2.1 Tengchong ................................................................................................ 48 9.2.2 Gudong ..................................................................................................... 49 9.2.3 Guyong ..................................................................................................... 49 9.2.4 Houqiao .................................................................................................... 49 9.2.5 Dian Tan ................................................................................................... 49 9.2.6 Tze Tze ..................................................................................................... 50 9.3 Dehong Dai Jingpo Autonomous Prefecture ..................................................... 50 9.3.1 Ruili .......................................................................................................... 51 9.3.2 Zhangfeng ................................................................................................. 52 9.3.3 Ban Li ....................................................................................................... 52 9.3.4 Yingjiang .................................................................................................. 52 9.3.5 Car Zan ..................................................................................................... 52 9.3.6 Sudien ....................................................................................................... 53 9.3.7 Longling ................................................................................................... 53 10 KACHIN STATE ................................................................................................. 53 10.1 A brief history of conflict in Kachin State ...................................................... 54 10.2 The nature of the ceasefire deals .................................................................... 55 10.3 Kachin nationalist movement in turmoil ......................................................... 57 10.4 Logging in Kachin State ................................................................................ 58 Box 9: Logging and the new constitution. .............................................................. 59 10.4.1 Territorial control and logging within Kachin State ................................. 60 10.4.2 The KIO and logging in Kachin State ...................................................... 61

    Box 10: Power stations in exchange for logging rights ................................... 62 10.4.3 The NDA(K) and logging in Kachin State. .............................................. 64 10.4.4 The expansion of KIO and NDA(K) logging interests ............................. 66

    10.4.4.1 The Southern Triangle ...................................................................... 66

    10.4.4.2 NDA(K) expansion into KIO-controlled areas south of Gongshan .... 67 10.4.5 The SPDC and logging in Kachin State ................................................... 68 10.4.6 The N‟Mai Hku (Headwaters) Project ..................................................... 70 10.4.7 Kachin-run logging companies operating in Kachin State ........................ 72 11 WA STATE.......................................................................................................... 74 12 CONCLUSION .................................................................................................... 76

    Appendices: BACKGROUND ................................................................... 77 13 Appendix I: CONFLICT AND POLITICS IN BURMA ....................................... 78 Box 11: Power and control in Burma ..................................................................... 80 13.1 Recent developments ..................................................................................... 80 13.1.1 Recent internal political developments ........................................................ 81 13.1.2 External relations ........................................................................................ 83 14 Appendix II: FORESTS AND FORESTRY IN BURMA ...................................... 85 14.1 The economic importance of the timber trade................................................. 88 14.2 The scale of world timber imports from Burma .............................................. 92

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14.2 The scale of timber exports from Burma worldwide. ...................................... 94

    14.3 Illegal timber exports from Burma worldwide a statistical analysis ............. 96

    15 APPENDIX III: FOREST LAW ENFORCEMENT AND GOVERNANCE

    (FLEG) .................................................................................................................. 99

     East Asia FLEG Ministerial Declaration ................................................................ 99

    16 APPENDIX IV: The G8 in 2005: priorities for action on illegal logging (joint NGO statement) ................................................................................................................ 106

    17 GLOBAL WITNESS‟ PREVIOUS PUBLICATIONS ........................................ 110

    18 REFERENCES ................................................................................................... 114

3 PREFACE

This report makes the case for ending the illegal logging in Burma‟s northern forests.

    Although the management of Burma‟s forests is primarily the responsibility of the relevant authorities in Burma, the vast majority of the timber cut in northern Burma is subsequently exported illegally to China. The Chinese authorities are, therefore, ideally placed to help the Burmese end the illicit trade. It is also in China‟s long term self-

    interest to end destructive logging in northern Burma (see „Part One: The Case for

    Change‟, pages 11-36).

    For these reasons this report is aimed largely at the Chinese authorities, both in Yunnan Province and in Beijing. In particular the report is aimed at the Chinese Ministry of Commerce, which is responsible for trade, and the Ministry of Foreign Affairs. The General Administration of Customs, and the Administration of Quality Supervision Inspection and Quarantine (AQSIQ), also have a role to play in stopping the illegal importation of Burmese timber into China (see „7.4 The illegal nature of the Burma-

    China timber trade (Chinese law)?, pages 23-24).

    The Chinese State Forest Administration (SFA), on the other hand, has no power to halt the illicit cross-border trade except in relation to enforcement of CITES (see

    7.4.1 Illegal importation of CITES-listed Himalayan Yew trees from Burma to China‟,

    page 25) but it could advise the armed ethnic opposition groups about good forest management.

Abbreviations

AAC Annual Allowable Cut

    ADB Asian Development Bank

    AFPFL Anti-Fascist People‟s Freedom League

    AIDS Acquired Immune Deficiency Syndrome

    APEC Asia-Pacific Economic Cooperation

    ATS Amphetamine Type Stimulants

    AQSIQ Administration of Quality Supervision Inspection and Quarantine

    ASEAN Association of Southeast Asian Nations

    ASEM Asia-Europe Meeting

    BOCOG Beijing Organizing Committee for the Games of the XXIX Olympiad

    BSPP Burma Socialist Programme Party

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CEP Core Environment Program

    CPB Communist Party of Burma

    CPC Communist Party of China

    CITES Convention on International Trade in Endangered Species of Wild Fauna

     and Flora

    DDSI Directorate of Defence Services Intelligence DZGD Dry Zone Greening Department

    EIU Economist Intelligence Unit ESIA Environmental and Social Impact Assessment FLEG Forest Law Enforcement and Governance FSC Forest Stewardship Council

    GDP Gross Domestic Product

    GMS Greater Mekong Sub-region

    HIV Human Immune Deficiency Virus IFI International Finance Institution IFM Independent Forest Monitoring ITTO International Tropical Timber Organization KDA Kachin Defence Army

    KIA Kachin Independence Army (The armed wing of the KIO) KIO Kachin Independence Organisation

    KNA Karen National Association

    KNCA Kachin Nationals Consultative Assembly

    KNU Karen National Union

    KSC Kachin Solidarity Council

    MCSO Myanmar Central Statistical Office

    MoF Ministry of Forestry

    MI Military Intelligence

    MTE Myanmar Timber Enterprise

    NATALA Ministry for the Development of Border Areas and National Races

    NCFP Natural Forest Conservation Programme NCGUB National Coalition Government Union of Burma NDA(K) New Democratic Army (Kachin)

    NDF National Democratic Front

    NGO Non-Governmental Organisation

    NLD National League for Democracy

    OSS Office of Strategic Studies

    PRC People‟s Republic of China

    RWE Round Wood Equivalent

    SFA Chinese State Forest Administration SLORC State Law and Order Restoration Council SPDC State Peace and Development Council

    SSA(S) Shan State Army (South)

    SSNA Shan State National Army

    UMEHL Union of Myanmar Economic Holdings Limited MEC Myanmar Economic Corporation

    UNAIDS United Nations Programme on HIV/AIDS UNDCP United Nations International Drug Control Program USDA Union Solidarity & Development Association UNODC United Nations Office of Drugs and Crime UWSA/P United Wa State Army/Party

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WHO World Health Organization

A note on methodology:

    Global Witness conducted primary research along the China-Burma border in 2004 and 2005 and interviewed people from many different backgrounds. To the best of our knowledge, this report reflects the reality of timber trade in these border areas.

A note on sources:

    Not all of the information contained in this report was witnessed at first hand by Global Witness. Global Witness has also relied on media reports from trusted sources and interviews with individuals familiar with logging in Burma. Where possible the identity of these sources has been made clear, although many of these individuals remain anonymous to maintain their safety. It should be noted that accounts of natural resource exploitation in Burma might be politically biased. Global Witness has therefore treated such information with caution, and has attempted to convey this in the text. Furthermore, the opinions expressed by some of the interviewees do not necessarily reflect the opinions of Global Witness.

A note on statistics:

    Where appropriate, to facilitate comparison between timber statistics, wood volume data has been converted to Round Wood Equivalent (RWE) volume. This has been done by multiplying wood volume by standard conversion factors, such as 1 for logs, 1 1.8 for sawn wood, and 2.3 for plywood.

    Various sources of such data were consulted. The data selected for analysis are those that we regard as being from the most representative source. It should be noted however, that there appears to be little correlation between a number of these sources. In addition it is often unclear which products have or have not been included in a given dataset, or indeed which units of measure are being used. Consequently, the analysis presented in this report should be considered as indicative rather than precise.

    A lack of clear, reliable and disaggregated data is another sign that Burma is not in a position to manage its forests sustainably. Unfortunately, the provision of incomplete, inaccurate, contradictory and confused data is a global problem.

A note on conversion rates:

    Unless otherwise stated, the conversion rate of the Myanmar kyat and the Chinese yuan, to the United States dollar is based on the unofficial 2004 exchange rate of US$ 1 = 900 kyat or 8.4 yuan. All currencies are stated to two significant figures.

    Burma uses the unusual measurements of Cubic Ton and Hoppus Ton to measure timber volumes. 1 Cubic ton = 50 cubic feet = 1.416 cubic metres. For logs, 1 Hoppus 1Ton is equal to 1.8027 cubic metres.

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4 INTRODUCTION

    The earth, water, mountain forests and climate are the basic resources of a country. If the mountain forests are destroyed, the earth and water will be degraded. This in turn will lead to climate deterioration. Hence forest destruction must be prevented and looked at with caution. Amongst all our basic resources, forests are the most 2important.” Senior General, Than Shwe, October 1993

    Burma is made up of temperate and tropical landscapes that range from the Himalayas in the north and east to the lowland forest, mangroves and coral reefs in the south. Rugged mountain ranges form a horseshoe surrounding the fertile plains of the Irrawaddy River in the centre, whilst in the west the Arakan Yoma mountain range extends almost to the Irrawaddy Delta creating a barrier between Burma, India, and Bangladesh. In the east, the Shan Plateau and the Bilauktaung mountain range comprise part of the border with Thailand. In the far north, the border with China follows the line of the Gaoligongshan Mountains.

    Part of Burma‟s global conservation significance derives from the fact that it contains ecotypes, such as lowland peninsular rainforest, that are already depleted in neighbouring countries. The forests of this region are unusually rich in plants and animals, and as such are protected in China. In northern Burma however, these frontier forests are under threat from illegal, unsustainable and destructive logging. The vast majority of the resultant timber is illegally exported to China.

    Burma‟s Kachin State, sandwiched between China and India, has been described as some of the most valuable real estate in the world, due in large part to its forests, but also its jade, gold and mineral reserves. The forests of Kachin State form part of an 3area said to be “very possibly the most bio-diverse, rich, temperate area on earth;”

    they also suffer from the highest rate of deforestation in Burma.

    This report, based largely on investigations carried out in China and Burma during 2004 and 2005, details both the mechanics and scale of logging in Kachin State and the associated illegal cross-border timber trade with China. It also looks at the impact that the logging is having on the livelihoods of forest-dependent communities, and how it is undermining the prospect for future sustainable development in Burma‟s northern

    border areas.

Readers familiar with the issues contained in „A Conflict of Interests - the uncertain

    future of Burma‟s forests‟, published in October 2003, will find Part One: The Case

    for Change of particular interest. The Case for Change argues that bringing about an end to the illegal logging in Kachin State is ultimately in the best interests of the Chinese authorities in both Yunnan Province and in Beijing. Not only will ending this destructive trade benefit the Chinese authorities directly, it will also improve their international standing, their relationship with the people of Burma, with other countries in the region and beyond.

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