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                   Notes on Myanmar(Burma), June 1995   
(A) How does Myanmar pay for its imports?  
Myanmar's declared imports have routinely been worth 50% to 100%
more than its declared exports. This would be highly unusual for
any poor country. Since Myanmar has received virtually no
external financing since 1988, undeclared exports appear to be
paying for one-half to one-third of Myanmar's growing imports, as
well as servicing Myanmar's external debt, e.g., for recent arms
purchases from China reportedly worth over US $1.5 billion.
Since, according to the USDEA, Myanmar is the world's largest
exporter of opiates, much of this very large chronic licit trade
deficit may be covered by narcotics exports. In sum, the best
publicly available data on Myanmar's balance of payments suggest
that its economy in general, and its ability to import in
particular, depend largely and perhaps increasingly on narcotics
Value of Myanmar's exports/imports of goods and services
1985-92 in millions of nominal U.S. dollars                   
(Source: World Bank Debt Tables, 1993-94, pp. 318-19)      
Year      1980 1985 1986 1987 1988 1989 1990 1991 1992           
Exports   556  425  359  308  372  454  620  711  n/a  
Imports   869  733  588  578  585  608 1,203 1,190 n/a  Year    
Imp-Exp   313  308  229  270  213  154   583   479  
Imp/Exp  1.56  1.72 1.63 1.88 1.57 1.33  1.94  1.67  
It is reliably reported that the value of Myanmar's goods and
services imports also consistently exceed the value of its
declared goods and services exports by similarly large margins in
the balance of payments statistics in recent IMF Article Four
reports on Myanmar, the latest of which dates from late 1994, and
contains data through 1993. However, the contents of these IMF
reports are not public.   
(B) Can U.S. trade and investment sanctions harm the SLORC?  
It is often said that Myanmar's economy is booming, and is
getting all the foreign investment it could possibly use.
Moreover, it is pointed out that unilateral US trade and
investment sanctions against Myanmar are unlikely to be joined by
China, the ASEAN states, and perhaps also Japan, Korea and
Taiwan. At most, it is said, the EU states, Canada and Australia
might follow the US lead. From this it is often inferred that US
trade and investment sanctions could hurt the SLORC only
However, the SLORC may be more vulnerable than is commonly
thought to trade and investment sanctions by North America,
Europe and Australia, or even by the USA alone, for three
-- (1) Recent technical studies of Myanmar's economy are much
less optimistic about future growth prospects than such
publications as "Far Eastern Economic Review" and "Asia Week".
These studies stress that Myanmar's shortage of investment
capital hinders its growth. For example:      
     -- (a) The Asian Development Bank's most recent Annual
Outlook (April 1995) noted that Myanmar's industrial growth
slowed in 1994, stated that "sustaining economic growth in the
longer term will require more wide-ranging efforts to improve the
incentive structure for trade and industry," and identified a
continuing shortage of investment capital as a critical
constraint on economic growth.       
     -- (b) The IMF's latest Article Four Report on Myanmar
(November 1994) is reliably said to contain data indicating that
new foreign investment decreased every year from 1990 to 1993,
and that the composition of imports shifted away from capital
goods towards consumer goods during the same period. The report
is said to conclude that conditions for sustainable economic
growth do not yet exist.       
     -- (c) Dr. Khin Maung Kyi, a Burmese economist working as an
associate professor at the National University of Singapore, in
an article entitled "Myanmar: will forever flow the Ayeyarwady?",
"Southeast Asian Affairs" 1994 (pp. 209-230), points out a wide
variety of economic problems, including stagnant productivity in
key sectors, attributing many of these problems to Myanmar's
political impasse.  
-- (2) The Burmese increasingly resent not only the SLORC's
increasing military and political dependence on China, but also
the increasing domination of Myanmar's economy by Chinese
business people, who are immigrating in large numbers. The SLORC
needs to diversify its trading partners and investors in order to
avoid a potentially larger and more politicized recurrence of
Myanmar's 1968 anti-Chinese riots. Since the business communities
of the ASEAN states are dominated by ethnic Chinese, diversifying
to the ASEAN states and Taiwan won't help SLORC.  
-- (3) Burma's recent economic growth is based on exports of
unfinished or semi-finished agricultural products and raw
materials. There is very little labor-intensive export-oriented
manufacturing, which has been the mainspring of growth elsewhere
in East Asia, and which must take off in Myanmar if Myanmar's
recent growth is to be sustained. This is due in part to USG
sanctions since 1988 and the prospect of more to come.
Labor-intensive export manufacturing typically starts with
textiles. However, partly because the US textile market remains
the largest and most profitable in the world, and because the USA
has sharply limited Myanmar's access to the US textile market,
this industry has not developed in Myanmar. As long as the risk
of US trade sanctions is perceived to be high, foreign investors
will build few export-oriented factories in Myanmar in the many
industries for which the US market is important. A high perceived
risk of sanctions may be nearly as effective as sanctions, in
terms of its strictly economic effect.  
(C) What alternatives to trade and investment sanctions, or
modulations of sanctions, are available?  
1. Withdrawing Most Favored Nation (MFN) status from Myanmar,
thereby subjecting many imports from Myanmar to substantially
higher duties, might be almost as effective economically as an
outright trade embargo, but less disruptive of US relationships
with the ASEAN states.  
2. The Departments of State, Commerce and Agriculture use public
funds to promote exports to Myanmar, and even to help actual and
prospective U. S. investors in and importers from Myanmar, as
these agencies are obliged by law to do in almost every country
in the world. Either before, or instead of, or in addition to
restricting the freedom of private Americans to trade with and/or
invest in Myanmar, it might be appropriate to stop public US
Government funds from being used to support some or all trade
with and/or investment in Myanmar. This might include some or all
of the following measures:  
     -- (a) declaring that it is the policy of the US Government
to discourage either (i) imports from and investment in Myanmar,
or, more broadly (ii), all trade with and investment in Myanmar; 
     -- (b) requiring US officials neither to identify or
communicate any business opportunities for, nor in any way to
assist in their business with or in Myanmar, employees of any
business investing in Myanmar, exporting from Myanmar, buying
from Myanmar, or lending to or in Myanmar; 
     -- (c) adding "exporting to Myanmar" to the previous list;
     -- (d) closing the US Commercial Library in Rangoon, an
American Embassy facility that assists firms in Myanmar to export
to and import from the USA; and/or 
     -- (e) requiring that no US official in Myanmar bear the
title, "Commercial Attache" (currently borne by an Embassy
economic officer who does commercial work part-time), so that
there will no longer be a Commercial Attache to the US diplomatic
mission to Myanmar.  
3. In recent years, the SLORC has publicly concluded cease-fires
in place with several armed ethnic groups, such as the Wa, Kachin
and Karenni, under which these groups retain their arms and
control of certain territory, which Myanmar government troops
undertake not to enter without permission. These agreements
appear to constitute a formal acknowledgement by the government
of Myanmar that it neither controls large and well-defined parts
of its national territory, nor is in a state of belligerency with
organizations that are in effective control of these regions.
Consequently, arguably consistent with international law, the
U.S. Government might:  
     -- (a) not apply to such regions, or to goods originating in
such regions, any trade and investment sanctions that it imposes
on the part of Myanmar controlled by the SLORC; and/or 
     -- (b) formally assert that Americans have the right to
trade in and with such regions, and to travel to and in them, and
to overfly them, without leave or hindrance from the SLORC
regime.  This could position (but not commit) the US Government
to make sure that anti-SLORC forces are able to buy food and/or
arms at a later date, to counterbalance SLORC's Chinese arms.