The EU is considering trade sanctions on Myanmar over the Rohingya crisis, potentially stripping the country of tariff-free access to the world’s largest trading bloc, three EU officials said.
The sanctions, under discussion at the European Commission, would include Myanmar’s lucrative textile industry, potentially placing at risk thousands of jobs there, but would not come into effect immediately, giving the EU leverage to stop what the West says is ethnic cleansing of Muslim Rohingya.
Even by triggering a six-month review process on whether to impose trade sanctions, which could be reversed if Myanmar met humanitarian and democratic targets, the bloc would mark a significant shift in policy.
The impetus for the move was a UN report in August, which said that the Burmese military carried out killings of Rohingya with “genocidal intent.”
That, and the rare US step of putting sanctions on two entire military units, have put an onus on the EU to act, officials said.
“We are concerned about the impact on the population from our potential measures, but we cannot ignore a UN report describing the military campaign as genocide,” one EU official said of the debate within the European Commission, the EU executive responsible for the bloc’s trade policy.
Until now, the EU has imposed travel bans and asset freezes on several members of the Burmese military, but has shied away from slapping sanctions on Senior General Min Aung Hlaing, commander-in-chief of the Myanmar Armed Forces, who the UN said should be prosecuted with five others for genocide and crimes against humanity.
Myanmar has rejected the UN findings as “one-sided.”
It says the military action that followed militant attacks on security forces in August last year was a legitimate counterinsurgency operation.
Burmese government spokesman Zaw Htay did not answer telephone calls on Wednesday seeking comment.
He said last month he would not speak to the media over the phone, only at a biweekly conference.
EU officials believe the formal threat of losing tariff-free access would quickly hit foreign investment in the apparel industry, where European manufacturers take advantage of the relatively low labor costs in Myanmar.
“Removing this duty-free access is a measure of last resort, but we must act if other measures are not delivering,” said one EU official involved in the discussions.
“In light of the deteriorating situation on the ground, the commission is currently assessing possible ways of escalating its political and economic response,” a European Commission source said.
European firms sourcing apparel from Myanmar include retailers Adidas, C&A, H&M, Inditex, Next and Primark.
Rights groups say the targeted EU sanctions so far have not forced the military or Burmese State Counsellor Aung San Suu Kyi to protect civilians, resettle refugees or stop attacks on press freedoms that have included the imprisonment of two Reuters reporters for breaching a law on state secrets.
The European Parliament last month called for the commission to review Myanmar’s trade preferences.
Within the commission there are differences, with EU Commissioner for Trade Cecilia Malmstrom leaning toward starting the process of imposing trade sanctions, while EU High Representative for Foreign Affairs and Security Policy Federica Mogherini is more cautious because of EU policy to avoid economic sanctions that can hurt ordinary citizens, the officials said.
European Commission President Jean-Claude Juncker has yet to take a position, they said.
A commission spokesman declined to comment.
Myanmar’s exports to the EU were worth 1.56 billion euros (US$1.79 billion) last year, nearly 10 times their value in 2012, after which the bloc gave Myanmar “Everything But Arms” trade status.
That status means it can sell any goods tariff-free to the bloc, except weapons.
The EU is Myanmar’s sixth-largest trading partner and an important source of foreign direct investment.
Mynamar’s clothing industry is its top export earner after oil and gas, generating more than US$2 billion in exports and 450,000 jobs last year, industry association MGMA said.
Trade sanctions would end an economic opening granted to support Myanmar’s transition to democracy after Aung San Suu Kyi emerged from 15 years of house arrest under military rule and led her party to take both the parliament and the presidency.
One more limited option for the EU could be to exempt textiles, an official said, but given the size of the sector, that would significantly reduce the effect of EU sanctions. Clothing and footwear are worth more than three-quarters of Myanmar’s exports to the bloc.
Both the US and the EU want to spur economic development to underpin democracy and diminish China’s influence, and crushing the economy with trade sanctions could allow China to dominate Myanmar, officials said.
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