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CHINA AND FOREST TRADE IN THE ASIA-PACIFIC REGION: IMPLICATIONS FOR FORESTS AND LIVELIHOODS NAVIGATING THE BORDER: AN ANALYSIS OF THE CHINA- MYANMAR TIMBER TRADE Fredrich Kahrl Horst Weyerhaeuser Su Yufang FO RE ST FO RE ST TR E ND S TR E ND S COLLABORATING INSTITUTIONS Forest Trends (http://www.forest-trends.org): Forest Trends is a non-profit organization that advances sustainable forestry and forestry’s contribution to community livelihoods worldwide. It aims to expand the focus of forestry beyond timber and promotes markets for ecosystem services provided by forests such as watershed protection, biodiversity and carbon storage. Forest Trends analyzes strategic market and policy issues, catalyzes connections between forward-looking producers, communities, and investors and develops new financial tools to help markets work for conservation and people. It was created in 1999 by an international group of leaders from forest industry, environmental NGOs and investment institutions. Center for International Forestry Research (http://www.cifor.cgiar.org): The Center for International Forestry Research (CIFOR), based in Bogor, Indonesia, was established in 1993 as a part of the Consultative Group on International Agricultural Research (CGIAR) in response to global concerns about the social, environmental, and economic consequences of forest loss and degradation. CIFOR research produces knowledge and methods needed to improve the wellbeing of forest-dependent people and to help tropical countries manage their forests wisely for sustained benefits. This research is conducted in more than two dozen countries, in partnership with numerous partners. Since it was founded, CIFOR has also played a central role in influencing global and national forestry policies. World Agroforestry Centre (ICRAF) (http://www.worldagroforestry.org): In 1978, the International Council for Research in Agroforestry (ICRAF) was created to promote agroforestry research in developing countries. It first operated as an information council focused Africa. In 1991, ICRAF joined the Consultative Group on International Agricultural Research (CGIAR) to conduct strategic research on agroforestry at a global scale, explicitly linking its work to CGIAR’s goals of reducing poverty, increasing food security and improving the environment. In implementing this strategy, the Centre expanded into Latin America, South- and Southeast Asia and China, while strengthening its activities in Africa. ICRAF, which in 2002 changed its name to World Agroforestry Centre, is now recognized as the international leader in agroforestry research and development. The Centre engages in strategic alliances with a range of other institutions, some of them specializing in topics of relevance to agroforestry; others in the effective delivery of research results to farmers fields. SPONSORING INSTITUTION: 1 1 While the Department for International Development has provided financial support for this publication, the findings and views presented do not necessarily reflect UK government policy. NAVIGATING THE BORDER: AN ANALYSIS OF THE CHINA – MYANMAR TIMBER TRADE by Fredrich Kahrl, Horst Weyerhaeuser and Su Yufang Navigating the Border: An Analysis of the China-Myanmar Timber Trade © 2004 Forest Trends. ISBN 1-932928-02-2; Reproduction permitted with attribution Cover photo by Su Yufang ii TABLE OF CONTENTS SUMMARY ................................................................................................. 1 INTRODUCTION ........................................................................................... 3 LOGGING IN MYANMAR: A BACKGROUND...................................................... 4 MYANMAR’S FORESTS.................................................................................. 8 BASIC TRADE GEOGRAPHY ........................................................................... 9 AN ANALYSIS OF AGGREGATE IMPORT STATISTICS, 1997-2002 ....................... 13 THE LOGGING BAN IN YUNNAN................................................................... 17 THE TIMBER PRODUCTION CHAIN: INTRODUCTION......................................... 18 THE TIMBER PRODUCTION CHAIN: EXTRACTION............................................. 19 THE TIMBER PRODUCTION CHAIN: PROCESSING............................................. 24 THE TIMBER PRODUCTION CHAIN: DISTRIBUTION AND EXPORT ........................ 26 TIMBER TRADE TRENDS BY PREFECTURE........................................................ 29 BORDER AND TRADE ADMINISTRATION: CHINA ............................................. 33 FOREST AND TRADE ADMINISTRATION: MYANMAR ........................................ 35 DEVELOPMENTS WITH POTENTIAL IMPLICATIONS FOR THE CHINA-MYANMAR TIMBER TRADE .......................................................................................... 37 CONCLUSIONS AND RECOMMENDATIONS .................................................... 38 REFERENCES ............................................................................................. 43 iii TABLES AND FIGURES Table 1: Points of Origin of China’s Timber Imports from Myanmar..................................... 6 Table 2: Prefectures and Counties in Yunnan that border Myanmar .................................. 10 Figure 1: Map of the Yunnan-Myanmar Border Region...................................................... 11 Table 3: Chinese National-level Checkpoints on the Myanmar Border................................ 12 Table 4: Chinese Provincial-level Checkpoints on the Myanmar Border.............................. 12 Table 5: Primary Seaports Dealing in Myanmar Timber Imports.......................................... 13 Table 6: China’s Timber Product Imports from Myanmar vis-à-vis Total Timber Products Imports............................................................................................................................... 14 Table 7: Composition of and Patterns in China’s Timber Product Imports from Myanmar.. 15 Figure 2: China’s Log and Lumber Imports from Myanmar, 1997-2002 ............................. 16 Table 8: Primary Entry Ports of Myanmar Timber Products Exported to China .................... 17 Table 9: Other Logging and Shipping Fees in Northern Myanmar*..................................... 22 Table 10: Fees Paid by Logging Companies in Fugong County, Nujiang Prefecture............ 23 Table 11: Main Timber Species Imported from Northern Myanmar.................................... 23 iv AUTHOR CONTACTS Fredrich Kahrl ([email protected]) is Visiting Researcher with the World Agroforesry Centre – Yunnan. Horst Weyerhaeuser ([email protected]) is Senior Scientist with the World Agroforestry Centre – Yunnan. Su Yufang ([email protected]) is Research Associate with the World Agroforestry Centre – Yunnan. v SUMMARY China’s trade in timber products with Myanmar grew substantially from 1997-2002, from 295,474 m3 (round wood equivalent, RWE) in 1997 to 947,765 m3 (RWE) in 2002. Despite increased volume, timber product imports from Myanmar comprised only 2.5% of China’s total timber product imports from 1997-2002. However, the small fraction of total imports masks two important features: i) timber imports from Myanmar are primarily logged in slow -growing natural forests in northern Myanmar; and ii) logging activities that support the China-Myanmar timber trade are increasingly concentrated along the border in northern Myanmar’s Kachin State. This greater concentration of the timber trade has begun to have substantial ecological and socio-economic impacts within China’s borders. The majority of China’s timber product imports from Myanmar are shipped overland through neighboring Yunnan Province – 88% of all imports from 1997-2002 according to China’s national customs statistics. Of these, more than 75% of timber product inflows passed through the three prefectures in northwest Yunnan that border Kachin State. Most of these logging activities are currently concentrated in three areas — Pianma Township (Nujiang Prefecture), Yingjiang County (Dehong Prefecture), and Diantan Township (Baoshan Municipality). Logging that sustains the timber industry along Yunnan’s border with Kachin State is done by Chinese companies that are operating in Myanmar but are based along the border in China. Logging activities in Kachin State, from actual harvesting to road building, are almost all carried out by Chinese citizens. Although the volume of China’s timber product imports from Myanmar is small by comparison, the scale of logging along the border is considerable, and border townships and counties have become over-reliant on the timber trade as a primary means of fiscal revenue. As the costs of logging in Myanmar rise, this situation is increasingly becoming economically unsustainable, and shifts in the timber industry will have significant implications for the future of Yunnan’s border region. Importantly, a large proportion of logging and timber processing along the border is both managed and manned by migrant workers. Because of companies’ and workers’ low level of embeddedness in the local economy, border village communities are particularly vulnerable to swings in the timber trade. More broadly, timber trade has done little to promote sustained economic growth along the China-Myanmar border as profits, by and large, have not been redirected into local economies. In addition to socio-economic pressures, the combination of insufficient regulation in China and political instability in northern Myanmar has exacted a high ecological price. The uncertain