EU imports from Myanmar surge despite sanctions

Some say that EU imports are essential in providing a livelihood to ordinary people, while others argue it plays into the junta's narrative that it's business-as-usual in Myanmar

EU's growing trade with Myanmar increased by almost 80% last year compared to 2021 (Photo: DW)
EU's growing trade with Myanmar increased by almost 80% last year compared to 2021 (Photo: DW)
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DW

The European Union last week imposed its seventh round of sanctions on individuals and companies associated with Myanmar's military junta that orchestrated a brutal coup in February 2021.

The latest sanctions means that almost all ministers of the State Administration Council (SAC), the junta's formal name, have now been impacted, as have many local companies with links to the military regime.

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

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

More than two years on from a coup that ousted a democratically elected government led by the democracy icon Aung San Suu Kyi, international experts say time is running out to affect real change in the country, with some of them saying the political situation in the country has been ignored due to the ongoing war in Ukraine.

At least 6,000 civilians have been killed since February 2021, found a report published last month by the Peace Research Institute Oslo.

Between trade and sanctions

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

"These governments and their allies," it added, "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 latest tranche of sanctions, these restrictive measures come in addition to "the freezing of all EU assistance that may be seen as legitimizing the junta."

However, some observers think increasing EU-Myanmar trade does just that. Despite the coup, Myanmar hasn't lost its trade privileges under the EU's Everything But Arms scheme.

The EU imported goods worth €4.3 billion ($4.75 billion) from Myanmar in 2022, up from €2.6 billion the previous year, nearly an 80% increase, according to the European Commission figures.

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

EU exports to Myanmar also increased slightly last year, from around €300 million to €368 million.

Some European companies that remain active in Myanmar have come under criticism for allegedly funding the junta through taxation.

In April, Justice For Myanmar reported that Dutch-based Heineken and the Danish-owned Carlsberg, two alcohol companies, have paid tens of millions of dollars in tax to the Myanmar military junta.

The following month, IndustriALL Global Union, a Switzerland-based global union federation that has previously called on the EU to cancel its trade privileges for Myanmar, wrote a public letter to the European Parliament calling on more economic measures.

"All economic activity by European companies brings foreign exchange into the country," it argued. "EU consumers, by buying products made in Myanmar, are inadvertently funding the regime."

As well as revenue for the military regime, some analysts argue that increased trade with the EU also inadvertently supports the junta's claims that it can ensure business-as-usual in the country.

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

Although the EU only accounted for 7% of all Myanmar exports in 2021, the junta is using such trade flows for "propaganda purposes in order to normalize its rule," Kironska added.

Responsibility to protect

Linn Thant, the NUG's envoy to the Czech Republic, one of its first representative offices in Europe, was more diplomatic.

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

One of the NUG's aims is to stop the flow of revenue and taxes obtained from both local and foreign trade "that can provide advantage to the military junta and are directed towards destruction for the country," he added.

"We aim to encourage the emergence of accountable and responsible investment businesses to prevent irresponsible and excessive extraction of natural resources."

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

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

According to Ranieri Sabatucci, the EU's ambassador to Myanmar, around 700,000 individuals rely on jobs in the country's export-focused apparel industry, of which almost 370,000 depend on trade with European buyers.

More than two-thirds of those workers are young women, and the majority are migrant workers.

"So, there are several hundred thousand, mostly rural, families depending on these incomes. Half a million children," Sabatucci told DW.

"Consider the implications if these livelihoods disappear. The effort of the EU is to maintain and protect these jobs."

The issue of taxation is also more complicated than the headline numbers suggest, Sabatucci noted.

Myanmar doesn't have an export tax on most goods, while domestic taxes paid by the sectors that export goods to European markets are minimal. Almost all workers, except managers, are below the threshold for taxable income, Sabatucci reckoned.

As such, the junta is gaining far less revenue from these export industries than it does from the energy sector, which the EU has already imposed sweeping sanctions on.

Analysts also say that not all taxation goes straight into the pockets of the military leaders or, indeed, funds its atrocities against civilians.

Time running out

Nonetheless, there is a growing sense that the international community, including the EU, needs to do more to affect real change in Myanmar.

Tom Andrews, the UN special rapporteur on Myanmar, recently demanded that the international community "step-in in a much more significant way" to support those fighting against the military junta, he told British media.

"Yes, there are lots of expressions of concern, but people can't survive on expressions. They need help and support," he added.

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