Industry Leaders Enthused by Reinstatement of US Trade Benefits for Burma

By Kyaw Hsu Mon 15 September 2016

RANGOON — Businessmen, industry leaders and members of government have expressed enthusiasm after statements from President Barack Obama that the US would soon re-admit Burma to the Generalized System of Preferences (GSP).

President Obama notified the US Congress on Wednesday that it would reintroduce Burma to the preferential trade scheme in November, as part of further sanctions relief for Burma in recognition of recent democratic gains. The scheme would relieve the country’s exporters of US import duties in up to 5,000 product categories.

The announcement was made during the visit of Burma’s State Counselor and Foreign Minister Daw Aung San Suu Kyi to Washington DC, where she met with President Obama and requested the removal of remaining sanctions on Burma.

Burma was removed from the GSP in 1989 due its failure to meet international labor rights standards, and in reaction to the military’s bloody crackdown on the 1988 pro-democracy movement.

Industry insiders believe the GSP could help Burma meet the government’s ambitious target of tripling Burma’s export volume by the end of its current term in 2020—although meeting US import standards would present a challenge to underdeveloped sectors in Burma’s economy, including agriculture and fisheries.

Bans on US imports of jade and gemstones from Burma, and on arm sales to Burma, would not be affected by re-admittance to the GSP, and would require congressional approval to overturn.

“It’s really good news for us. Exporters are happy. We’ve been waiting a long time to receive this benefit from the US,” chairman of Hlaing Tharyar Industrial Zone U Myat Thin Aung told the Irrawaddy.

He highlighted the garment, agriculture and fisheries sectors as major export industries that would be boosted by the GSP.

“For garment factories, there will be no taxes in the US when they export. Along with marine and agricultural products, they can better compete with other countries, and wouldn’t need to export through other countries such as Thailand,” he said.

“If US trade benefits could include timber and mineral products such as jade, it would benefit our country even more,” he said.

The Garment Association of Burma claimed it earned US$1.4 billion in 2014, rising to $1.65 billion in 2015. It expects 1,500 factories to be operational in Burma by 2025, with a focus on cutting, manufacturing and packaging.

U Than Aung Kyaw, deputy director general at the Directorate of Investment and Company Administration, told the Irrawaddy that the garment sector was currently among the top recipients of foreign investment in Burma, and would particularly benefit from the GSP.

U Than Aung Kyaw said that, despite the “green light” from the US government, it may take a while for the benefits of the GSP to be felt, due to “internal processes” in the US, but said in the meantime Burmese exporters need to address “product quality.”

He said exporters needed to familiarize themselves with US import standards: “I’m not worried for the garment sector, which has already met quality targets, but for agricultural and marine products, [producers] need to carefully check for quality,” he said.

According to U Yan Naing Tun, director general at the Ministry of Commerce, Burma’s export volume has been increasing year by year, receiving a US$300 million bump from April to the end of August compared to the same period last year, with growth in the garment sector accounting for much of the increase.

He also stressed the need to ramp up quality control, with the participations of concerned government ministries, to fully realize the potential gains of the GSP.

In 2013, the European Union re-admitted Burma to the “Everything But Arms” preferential trade regime, as part of a general relaxation of sanctions against Burma, which has particularly benefited the garment and fisheries sectors.