EU halts sanctions but little relief for exporters

By Zaw Win Than
Volume 32, No. 624


EU High Representative for Foreign Affairs and Security Policy Catherine Ashton talks to the press in Luxembourg on April 23.
Pic: AFP

BUSINESS leaders have welcomed the European Union’s decision to suspend sanctions but urged the reinstatement of trade preferences to assist the country’s job-creating export industries.

The EU’s Foreign Affairs Council announced the widely anticipated suspension at a meeting in Luxembourg on April 23, saying the move was intended to encourage the reform process. Only an arms embargo will remain in place.

The bloc’s High Representative for Foreign Affairs and Security Policy Catherine Ashton said in a statement that the Foreign Affairs Council “took a decision to open a new chapter in our relations”.

The council “welcomed the truly remarkable changes we have seen in the country in recent months, including the by-elections, the release of some of the political prisoners and efforts that are being made for national reconciliation”, she said.

While the council also supports reinstating the Generalised System of Preferences, which would reduce tariffs on Myanmar’s exports to the EU, as soon as possible, it could only do so following an assessment by the International Labour Organisation, she said.

U Aung Lwin, a vice president of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI), told The Myanmar Time last week that the sanctions suspension was a “very positive step” for encouraging economic development in Myanmar.

“As a primary move the EU suspended sanctions on Myanmar but after the assessment of the ILO they may [reintroduce] GSP for Myanmar. The suspension of sanctions is a very positive step for future economic development in Myanmar,” U Aung Lwin said.

He said European companies interested in investing in Myanmar would face stiff competition from their counterparts from Japan, China, Vietnam, South Korea and Thailand.

“We are very busy with business delegations from different countries. They are interested in almost every sector,” he said.

U Myint Soe, chairman of Myanmar Garment Manufacturers Association, said the suspension of EU sanctions would have a “huge impact on economic development” once the GSP suspension was lifted.

“After the GSP suspension is lifted we will have more business opportunities in Myanmar,” he said.

Economist Dr Maung Aung said the move would open up another export market to Myanmar businesses and encourage greater investment from European firms, even in sectors that have not been subject to EU sanctions.

“Before we exported our products mainly to regional countries but the suspension of the EU sanctions will open up Myanmar’s export products, such as forestry … and gems, to European countries. It means we now have new markets to export these products,” he said.

“The EU sanctions on Myanmar blocked the investment opportunities … the suspension of sanctions will also attract more investors from EU countries to Myanmar.”

Ms Ashton, who was due to visit Myanmar from April 28 to 30, said the EU wanted to see the government take further steps, including the release of remaining political prisoners and the removal of all restrictions placed on those already released.

The council also raised concerns about ongoing conflict with armed ethnic groups, access to Kachin State for humanitarian organisations and the status and welfare of the Rohingya group. “Of course reforms in that country need to continue – we need to see further progress, in particular the unconditional release of all political prisoners and efforts to end ethnic conflicts,” Ms Ashton said in the statement.

She said the EU had announced a significant increase in funding for Myanmar targeting economic and social development, democratic transformation and the strengthening of civil society and government capacity.

“We are ready to assist with these efforts as well as with economic and social development. We have 150 million euros (about US$200 million), half of which is new money. Over the course of the next few months we’ll see about 100 million euros ($133 million) available for health, for education, alleviation of poverty, support for civil society and so on,” she said.

“We will continue to support the democratic transition, including through electoral assistance and we are encouraging trade and investment in the country.”

British Prime Minister David Cameron said in a statement that it was “right for the world to respond” to positive changes in Myanmar.

“President Thein Sein has taken important steps towards reform in Burma,” he said, according to AFP. “But those changes are not yet irreversible, which is why it is right to suspend rather than lift sanctions for good.”

While sanctions could be reinstated in one year, Derek Tonkin, chairman of the non-profit Network Myanmar, said it was unlikely.

“To reinstate EU sanctions would require the unanimous consent of all 27 EU members,” he said in a statement. “Without the support of all EU members, sanctions would remain suspended.”

He also said the Foreign Affairs Council had “dodged” the GSP issue in its statement. “The withdrawal of GSP primarily affected export sectors like garments and seafood from private, non-crony enterprises where there is no forced labour and for that reason withdrawal should not have been imposed in the first place.”