BURMA Economic Sanctions continue to increase resulting possibility of being removed from GSP List

I bet you must watch the movie Butterfly Effect or at least heard of it right? Theoretically, a butterfly's wings might create tiny changes in the atmosphere that may ultimately alter the path of a tornado or delay, accelerate or even prevent the occurrence of a tornado in another location. This is the same as International trade. Every drop of different sauce put in this global melting pot will affect the taste of the entire soup. The Suez Canal is stuck for few days, all the shipping line increase their transportation rate dramatically. And it will stay high point for a while

Lately, the US- BURMAN Economic relationship is worsening in the Biden administration era. The Treasury Department’s Office of Foreign Assets Controls has expanded the current sanctions on Burma by designating two military holding companies: Myanmar Economic Holdings Public Company Limited (MEHL) and Myanmar Economic Corporation Limited (MEC).

According to Treasury, MEHL is a vast and secretive military conglomerate with business interests spanning the Burmese economy, from banking, trade, logistics, construction, and mining to tourism, agriculture, tobacco, food, and beverages. MEC is a holding company with businesses in the mining, manufacturing, and telecommunications sectors, as well as companies that supply natural resources to the military and operate factories producing goods for use by the military. As a result, any imported goods from the company with relation to MEHL or MEC will be blocked.

What is more, U.S. Trade Representative Katherine Tai announced on March 29 the suspension of all U.S. engagement with Burma under the 2013 Trade and Investment Framework Agreement until a democratically elected government is in place. The fact is military-owned enterprise has its deep influence on this country and very difficult to change. Burma is possible to be removed from the GSP list. If Burma is being removed from the GSP list, then importers can no longer claim any GSP duty refund back.

GSP is the largest and oldest U.S. trade preference program that provides nonreciprocal, duty-free treatment to developing countries by eliminating duties on thousands of products when imported from designated beneficiary countries and territories. Right now, all GSP program is expired in December 2020 waiting for congress review and approval.

You may say well I don't have a customer in Burma. The word international trade dynamic environment has butterfly effects everywhere. US imports near 75 million dollar footwear, 250 million travel goods and literature, 50 million impression jewelry stones, etc. Who would be the beneficial one if the US places further sanction action on Burma?

A lot of trade issues remain uncertain during the Biden administration. Let us see what happens next.

Reference

https://home.treasury.gov/system/files/126/14014.pdf Executive order 14014 from Department of Treasury