A new report says Russian birch wood is routed through Asia before being shipped to American stores.
Washingtonpost – By Michael Tatarski
Plywood allegedly made from Russian birch is being loaded on a ship in Haiphong, Vietnam, for export to the United States in May 2022. (Obtained by Environmental Investigation Agency)
October 1, 2022 at 2:00 a.m. EDT
HO CHI MINH CITY, Vietnam — Russian birch wood has continued to flow to American consumers, disguised as Asian products, despite U.S. economic sanctions imposed on Russia over its invasion of Ukraine, a new report says.
The Environmental Investigation Agency (EIA), a nonprofit watchdog group based in Britain, has found that most birch products currently being exported from Vietnam to the United States originate in Russia. According to Vietnam customs data, roughly 40,000 cubic meters of birch wood is transported every month from Russia andChina into Vietnam, where it’s assembled into furniture and plywood.
These chairs and bed frames end up on the shelves of major American retailers, the EIA said in a report, which was shared exclusively with The Washington Post.
The group’s investigators spoke to five Chinese companies accounting for 60 percent of China’s birch veneer exports to Vietnam and concluded that over 90 percent of their birch is sourced from Russia. One Chinese wood factory owner told the group that all of the birch their company uses comes from Russia but is repackaged in China and re-exported to Vietnam with China listed as the country of origin.
“They [American importers] don’t track sources of original materials,” the manager told the EIA. “We have been doing this all the time.”
In June, Russia’s Federal Forest Management Agency asserted that the country’s timber industry has not been significantly affected by sanctions.
“The Russian forestry industry complex has already been oriented toward friendly markets and, where the restrictions emerged, it has already partially realigned,” Pavel Chashchin, head of the agency, told Tass, a state-owned news outlet. “The process of establishing new export channels will continue.”
In construction, birch harvested from Russia’s vast forests has long been considered the best source of plywood — a material used in floors, ceilings and partitions, as well as for decorative purposes on items such as doors and cabinets.
Before the invasion of Ukraine, the United States imported hundreds of thousands of cubic meters of birch plywood from Russia annually, trade data shows. Driven by strong demand, these imports surged in the early months of 2022 before changing course in April, when the Biden administration raised tariffs on Russian birch from 10 percent to 50 percent. From March to April, even as direct U.S. imports of Russian birch plunged, birch plywood imports from Vietnam grew by 206 percent, said the Decorative Hardwoods Association, which represents American hardwood industries.
Ngo Sy Hoai, vice president of the Vietnam Timber and Forest Product Association, a nongovernmental trade organization in Vietnam, did not respond to questions on where companies are sourcing their birch, saying only that “Vietnamese plywood producers may import certain volumes of birch wood from various sources for plywood surfacing.”
Phuc Xuan To, a senior policy analyst at Forest Trends who has studied Vietnam’s wood industry for years, confirmed the EIA’s findings. Sawed birch timber imports from China to Vietnam increased in the first half of this year, and it’s highly likely that birch originated in Russia, To said.
Russian birch is also appearing under deceptive labels in markets outside the United States, according to advocacy groups. Companies in Britain have recently received more offers of birch “from the Far East,” said Timber Development UK, which represents companies throughout the timber supply chain in Britain.
“Given that birch forests are concentrated in Northern Russia and Eurasia; it is almost certain the birch contained in the plywood being offered has in fact originated in Russia,” the trade association said in a statement warning members against running afoul of British sanctions.
While China also exports birch, the EIA said the world’s biggest traders widely preferred Russian birch, which is seen as being more consistent and durable.
In March, Earthsight, another watchdog group from Britain,reported that some of Russia’s largest forestry companies are owned by oligarchs with close ties to President Vladimir Putin.
Mining tycoon Alexei Mordashov, who was blacklisted by the European Union in March, holds major assets in Sveza, one of Russia’s biggest exporters of birch plywood, Earthsight said. While Sveza’s direct exports to Europe have declined since the start of the year, company leaders recently told reporters that it has been actively redirecting supply to Asia and Africa. “I have absolutely nothing to do with the emergence of the current geopolitical tension,” Mordashov said in a statement in April.
Telecommunications billionaire Vladimir Yevtushenkov’s family controls Sistema, parent company of Segezha, a logging firm that exports to the European Union and the United States. In April, after being sanctioned by Britain, Yevtushenkov gave up shareholder control over the Sistema conglomerate by transferring 10 percent worth of assets to his son. The Segezha group released a statement around the same time declaring that it did not consider itself affected by British sanctions. “Segezha Group continues its business as usual,” the statement said.
Vietnam has strong political, defense and economic ties with Russia dating to Soviet times. At the U.N. General Assembly in September, Vietnam was among 35 countries that abstained from the vote condemning Russia for its attack on Ukraine.
The abrupt increase of exports from Vietnam at a time of plunging Russian supply caught the attention of the EIA, which has been monitoring the relocation of Chinese manufacturers to Vietnam in recent years, said Alex Bloom, an analyst with the agency.
“We were well aware from previous investigations that enormous amounts of Russian timber, particularly birch, are used in Chinese factories for exported plywood,” she said. “After American anti-dumping tariffs went into effect on Chinese hardwood plywood [in 2017], a lot of those Chinese factories migrated to Vietnam to avoid those tariffs.”
Thomas Chung, an advocate at the EIA who focuses on Vietnam, said the repacking of birch described by Chinese companies not only violates U.S. trade rules and legislation but could also be considered illegal under Vietnam’s timber legality assurance system.
“There is the requirement to know the origin of a wood product as part of a due-diligence process when importing timber or wood products into Vietnam,” he said. “This means that even when intermediary markets are used, the origin should be known. Any rebranding should be considered illegal.”