US considers end to tariffs in Myanmar: Too soon?

President Barack Obama's chief trade negotiator, Demetrios Marantis, had a message for Myanmar this week as he met with government officials and toured a downtown Yangon bazaar, just weeks after the government was criticized for its handling of deadly minority clashes in the heart of the country:

“I’ve seen your beautiful lacquer and the other amazing products that you produce here,” Ambassador Marantis told an audience of local and foreign journalists at the American Center, tucked away on a quiet street away from the growing traffic of downtown Yangon. “And I know Americans will buy them.” 

The United States is considering a move to drop tariffs on Myanmar-made imports, another reflection of the surprisingly rapid progress of American engagement with Myanmar. But it comes at an awkward time. 

President Thein Sein’s reformist government is facing scrutiny over its handling of anti-Muslim tensions in this largely Buddhist country, which erupted into communal violence that left more than 40 dead in the central Myanmar town of Meiktila last month.

And just as Myanmar scored another huge economic victory this week, when the European Union announced an end to political and economic sanctions other than an arms embargo, international nonprofit Human Rights Watch threw allegations of “ethnic cleansing” at the government, saying it was complicit last year in reported massacres of the Rohingya, a displaced Muslim minority.

The cognitive dissonance creates a difficult political needle for Western officials to thread as they seek to turn the political promise of last year, when President Obama made history by visiting the former pariah state, into a more comprehensive relationship. Marantis was also in town negotiating a new trade and investment framework with the Myanmar government that would help eager American corporations sell their goods in this country of 60 million as it emerges into the world economy after decades of isolation.

Many human rights and governance observers say the quick ramp-up in Western engagement is too much of a reward, too soon. 

But the US ambassador here, Derek Mitchell, argues that helping Myanmar’s economy through programs like trade preferences is key to prodding along other reforms. 

“In fact, the ability to engage economically and provide opportunity, provide jobs, provide development is essential to the success of reform – broader reform, political reform, social reform – not just economics,” he says.

The US government has already suspended and relaxed several restrictions on US companies doing business with Myanmar – which the US government still refers to as Burma (though Obama used both terms in November, and US officials seem to get around the awkwardness by referring to “you” and “your country” in speeches here.) 

If the United States grants Myanmar trade privileges under the Generalized System of Preferences (GSP), it would slash duties on about 5,000 types of products from Myanmar, said Marantis, who has been acting US Trade Representative since Ron Kirk stepped down earlier this year. 

The US government revoked Myanmar’s GSP privileges in 1989 over concerns about the military regime’s forced labor and labor rights. And Marantis expects tough questions from members of Congress. Labor rights were a key point of discussion during his talks with high-level officials in the capital city of Naypyidaw.

Myanmar-made products may amount to small change, however, compared with the profits US companies hope for in Myanmar.

Along with new press freedoms and the release of more political prisoners, economic reforms have been quickening – the government is considering foreign bids for oil and gas exploration blocks and nationwide telecom licenses – and American companies have been visiting Myanmar in increasing numbers.

“Geopolitics are at play, as well. Your position at the crossroads of Asia,” Marantis said in his speech at the American Center, “makes you a very attractive partner for the United States.”