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Trade sanctions by EU, US unlikely: analysts

Analysts are not expecting the European Union or the US to revoke Myanmar’s tariff-free access to their markets over the coming quarters.

Following a United Nations report implicating the Tatmadaw in human rights abuses against ethnic minorities in the states of Rakhine, Kachin and Shan in September last year, the EU announced a month later that it was considering trade sanctions against Myanmar. If imposed, the sanctions would potentially revoke Myanmar’s tariff-free access to the EU.

According to a February 22 report by Fitch Solutions Macro Research, those trade sanctions are unlikely because they would significantly weaken the economy and likely undermine Myanmar’s civilian government.

“The human rights abuses at issue have been attributed to the Tatmadaw and Western policymakers have long expressed concern that imposing blanket trade sanctions would primarily harm ordinary citizens, weaken support for civilian leaders and push Myanmar firmly into China’s sphere of influence,” the report said.

Despite adding another seven individuals from the Tatmadaw to its targeted sanctions list in December, the EU has so far not yet triggered a formal s ix-month review of Myanmar’s status under its ‘Everything But Arms’ trade initiative.

Meanwhile, the US, too, has not imposed new sanctions on the country in recent months. “The US under President Donald Trump has made far wider us e of trade sanctions, its most sweeping sanctions have been deployed to support a policy of regime change and there is little to suggest that the US administration sees regime change in Myanmar as a policy goal,” Fitch noted.

Nevertheless, the research firm in January downgraded its growth forecast for Myanmar to 6.3 percent for the 2019 fiscal year from 6.6pc previously, citing waning investor sentiment as a result of the crisis in Rakhine.

“Even without sweeping trade sanctions, the government’s implication in human rights abuses has generated significant reputational risks to doing business in Myanmar. Anecdotal evidence suggests that tourism from Western countries has been curtailed severely and would-be investors have stepped away due to wariness of reports surrounding Myanmar’s internal conflicts,” the report said.

However, Fitch noted that if the NLD government “can rein in the Tatmadaw’s dominance, Myanmar may be able to gradually rebuild outsider confidence in the government, which would offer upside potential to its economic outlook.”

The firm expects that the NLD could turn more “assertive” in its actions as the General Election approaches next year. This year so far, NLD legislators have already proposed forming a committee to change the constitution, with most party members wanting to remove provisions guaranteeing the Tatmadaw’s control over the home, defense and border affairs ministries and allotment of 25pc of seats in the legislature.

SOURCE: MYANMAR TIMES

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