File photo: A woman works at the Shweyi Zabe garment factory inShwe Pyi Thar Industrial Zone in Yangon AFP

"Some say exports to the EuropeanUnion are essential to provide a livelihood to ordinary people in Myanmar"

Deutsche Welle

Publishedby Dhaka Tribune: July 26, 2023

The European Union last week imposed its seventh round ofsanctions on individuals and companies associated with Myanmar's militaryjunta, which orchestrated a brutal coup in February 2021.

The latest sanctions mean that almost all ministers of theState Administration Council (SAC), the junta's formal name, have beenaffected, as have many companies with links to the military regime.

Brussels says it has been steadfast in cutting off any formof interaction that could be perceived as legitimizing a junta accused ofwidespread human rights violations against civilians.

A disparate group of anti-junta forces, coalesced around theshadow National Unity Government (NUG), have launched a nationwide revolutionto create a new democratic federal state. But questions have been raised aboutthe EU's growing trade with Myanmar, which increased by almost 80% last yearcompared to 2021.

Over two years after a coup that ousted the electedgovernment, led by the democracy icon Myanmar, international experts say timeis running out to effect real change in Myanmar. Some observers say thepolitical situation in the country has been ignored because of the ongoing warin Ukraine.

At least 6,000 civilians have been killed since February2021, according to a report published last month by the Peace ResearchInstitute Oslo.

Between trade and sanctions

While praising the European Union's latest sanctions, thecampaign group Justice For Myanmar argued in a statement last week that thepace of Western sanctions has been "too slow and lacks coordination."

According to Justice for Myanmar, "these governmentsand their allies need to do far more to cut the junta's access to funds, arms,equipment and technology."

According to the European Council's readout on the latesttranche of sanctions, these restrictive measures come in addition to "thefreezing of all EU assistance that may be seen as legitimizing the junta."

Some observers say increasing trade between the EuropeanUnion and Myanmar does just that. Despite the coup, Myanmar hasn't lost itstrade privileges under the EU's Everything But Arms scheme.

The European Union imported goods worth €4.3 billion fromMyanmar in 2022, up from €2.6 billion the previous year, nearly an 80%increase, according to the European Commission.

By comparison, US trade with Myanmar increased by only 4%from 2021 to 2022, according to US data.

EU exports to Myanmar also increased in 2022, from about€300 million to €368 million.

Some EU companies that remain active in Myanmar have comeunder criticism for providing funds for the junta through taxation.

In April, Justice for Myanmar reported that Dutch-basedHeineken and the Danish-owned Carlsberg, two alcohol companies, have paid tensof millions of dollars in taxes to the Myanmar military junta.

The following month, IndustriALL Global Union, aSwitzerland-based federation that has previously called on the EU to cancel itstrade privileges for Myanmar, wrote a public letter to the European Parliamentcalling for further economic measures.

"All economic activity by European companies bringsforeign exchange into the country," the federation argued. "EUconsumers, by buying products made in Myanmar, are inadvertently funding theregime."

In addition to providing revenue for the military regime,some analysts argue that increased trade with the European Union alsoinadvertently supports the junta's claims that it can ensure business as usualin Myanmar.

"What kind of signal is the EU sending to the protesterson the ground? One where the EU does not care about them," KristinaKironska, a Bratislava-based academic who specializes in Myanmar, told DW.

Although the European Union only accounted for 7% of allMyanmar exports in 2021, the junta is using such trade flows for"propaganda purposes in order to normalize its rule," Kironska said.

Responsibility to protect

Linn Thant, the NUG's envoy to the Czech Republic, which wasone of the first EU countries to host an NUG office, was more diplomatic.

"We welcome the EU's targeted sanctions, but it isnecessary to act more and more," Thant told DW.

One of the NUG's aims is to stop the flow of revenue andtaxes obtained from both local and foreign trade that, Thant said, "canprovide advantage to the military junta and are directed towards destructionfor the country."

"We aim to encourage the emergence of accountable andresponsible investment businesses to prevent irresponsible and excessiveextraction of natural resources," Thant said.

But the issue of trade swings on how one defines theEuropean Union's responsibility to protect.

"While I am all for choking off the SAC andmilitary-owned corporations of funds, there is an imperative to keep peopleemployed, especially women who dominate the textile sector," said ZacheryAbuza, professor at the National War College in Washington.

Ranieri Sabatucci, the European Union's ambassador toMyanmar, told DW that about 700,000 people rely on jobs in the country'sexport-focused apparel industry. Almost 370,000 of those jobs depend on tradewith EU buyers.

More than two-thirds of the workers are young women, and themajority are migrants.

"So, there are several hundred thousand, mostly rural,families depending on these incomes, half a million children," Sabatuccisaid.

"Consider the implications if these livelihoodsdisappear," Sabatucci added. "The effort of the EU is to maintain andprotect these jobs."

The issue of taxation is also more complicated than theheadline numbers suggest, Sabatucci said.

Myanmar doesn't have an export duty on most goods. Domestictaxes paid by the sectors that export goods to EU markets are minimal. Almostall workers, except managers, are below the threshold for taxable income,Sabatucci reckoned.

As such, the junta is gaining far less revenue from theseexport industries than it does from the energy sector, which the European Unionhas already imposed sweeping sanctions on.

Analysts also say that not all taxation goes straight intothe pockets of the military leaders or, indeed, funds atrocities againstcivilians.

There is a growing sense that the international community,including the European Union, needs to do more to effect real change inMyanmar.

Tom Andrews, the UN special rapporteur on Myanmar, recentlytold British media that the international community must "step in in amuch more significant way" to support the people fighting the militaryjunta.