Burma, China Commit to Bilateral Trade

By Kyaw Hsu Mon & Thit Nay Moe 13 November 2014

NAYPYIDAW —Burma will sign a bilateral trade agreement with China geared toward increasing agricultural cross-border exchange, Union ministers told The Irrawaddy on the sidelines of the 25th Asean Summit in the capital Naypyidaw this week.

While the agreement targets an increase in the general trade volume, it will likely have the greatesteffect on rice exports from northeastern Burma to southwestern China, which are currently illegal.

Minister of Commerce Win Myint told The Irrawaddy that an agreement would be reached during the summit.

“We’re going to commit to working together to increase trade of agricultural products during the days while China’s Prime Minister [Li Keqiang] is here [in Burma],” Win Myint said.

Minister of Information Ye Htut said that President TheinSein also supports the agreement to increase trade and improve border stability.

“President Thein Sein has made a special request to China for them to buy agri-based products from Burma through regulated trade, and China has generally agreed on this issue,” he said.

Chit Khaing, chairman of the Myanmar Rice Federation, welcomed the agreement. He said that the deal indicates a commitment to solving what has in recent months become a crisis for rice farmers, as the criminalization of rice exports has led to seizures of illicit products and severe devaluation.

“China has been taking serious action against rice smugglers, so the agreement will be progress,” he said. Chit Khaing said that he was not privy to the exact details of this week’s agreement, but that China had already agreed to begin legal imports of Burmese rice in January 2015.

China has committed to purchasing 1 million tons of rice from Burma during the next year, priced at US$400 per ton, he said.

China has long been one of Burma’s biggest customers for rice, much of which is harvested in central Burma’s Irrawaddy Delta and shipped over land borders in Shan and Kachin states. Earlier this year, China banned the import of Burmese rice pending new safety and quality control regulations, devastating Burma’s rice market and causing steep and sudden devaluation.

Ninety-five percent of cross-border trade between Burma and China is tax-exempt, making it a highly incentivized trade partner. According to the Ministry of Commerce, 83 percent of Burma’s trade for fiscal year 2013-14 occurred over the Burma-China border.

Burma’s exports to China amounted to about $2.9 billion while imports surpassed $4 billion last year. Local media recently cited the Ministry of Commerce stating that Burma’s national trade deficit reached $3 billion in the first half of the current fiscal year.

Thein Sein’s administration began prioritizing agricultural production in 2011, setting a rice export goal of 4 million tons by 2020. The boost caused a brief and slow increase in exports that has noticeably dipped since last year. According to the Myanmar Rice Exporters Association, exports fell from 1.47 million tons to 1.2 million tons during the 2013-14 fiscal year.

The World Bank has estimated that about 70 percent of Burma’s population relies on agriculture as a primary source of livelihood.