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"US Sanctions on Myanmar - An Economic Equation", a Commentary by Moe Thuzar

Commentary 2016/61, 15 September 2016

The big news for many Burma/Myanmar watchers today is the lifting of remaining US economic sanctions on Myanmar. The US  limited its economic and trade relations with Myanmar since 1989. Recent years have seen the easing of some of these restrictions to boost the US’s trade and investment profile in Myanmar.  

Policy Timeliness

The lifting of the remaining trade sanctions comes at a timely moment in Myanmar’s normalisation. The NLD government announced its 12-point economic policy in July 2016 and is now preparing implementation plans.  One of the policy’s priorities highlights the importance of creating a stable and welcoming environment for foreign direct investment.
Progressive easing

Starting 2012, the US has progressively eased restrictions to ‘match action for action’ to encourage Myanmar’s democratization.  Australia was the first to lift sanctions, however, followed by the European Union, but both retain arms embargoes.  

The US also retains its arms embargo, and other sanctions related to 'functional issues’ including human and drug trafficking, money laundering, and religious freedom, among others. Neither has it repealed sanction measures enacted into Federal law.

The current move is thus limited to trade sanctions which have affected the US investment footprint in Myanmar. The top five investors in Myanmar today are China (and Hong Kong), Singapore, Thailand, the United Kingdom, and South Korea. Japan ranks 11th and US 14th .

So, targeted easing – and targeted sanctions – now seem the way to go for US sanction policy towards Myanmar.  This reflects pragmatic considerations on both sides, motivated by economic interests.

Pragmatism Prevails

The US has increasingly acknowledged that past blanket coverage of sanctions had affected the ordinary Myanmar people more than the junta and corrupt business entities that were the intended targets of the sanctions.  Daw Suu, Myanmar’s de facto leader facing a daunting array of priorities to move the country’s political and economic transformation, is also showing much more of her pragmatic side.  The US Senate has also proved pragmatic by passing the Burma Strategy Act 2016, coinciding with Daw Suu’s Washington visit. This new Act undertakes to  support the NLD’s government’s key policy priorities to complete the country’s transition, and may act as some sort of leverage to dialogue with Myanmar on sensitive issues related to human rights.

Close consultation between the US and NLD administrations will be important in shaping future discussion on the remaining restrictions – particularly those that relate to human rights. Myanmar has benefitted from the limited window before the 2016 US presidential elections the outcome of which will affect future considerations.  A Clinton presidency will certainly see a new form of the ‘matching action for action’ policy which she had initiated as Secretary of State.  However, the business interests of a Trump presidency cannot be discounted. Either way, Myanmar's economic opening looks likely to benefit.

Moe Thuzar is Fellow and Lead Researcher at the ASEAN Studies Centre, ISEAS – Yusof Ishak Institute.  She has 10 years of service at the ASEAN Secretariat.

The facts and views expressed are solely that of the author/authors and do not necessarily reflect that of ISEAS – Yusof Ishak Institute.  No part of this publication may be reproduced in any form without permission.