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Sanctions lifting could revive Myanmar industry

Published: Sunday, July 5 2015 1:25 p.m. MDT

In this photo taken Saturday, April 21, 2012, young workers use sewing machines at a garment factory in Yangon, Myanmar. On Monday, April 23, 2012, the European Union confirmed it was suspending most of its sanctions against Myanmar to reward the country's recent wave of political reform. The suspension of trade sanction could help revive the nation's industries, restoring some of the 80,000 garment industry jobs lost here over the past 10 years.  (Sakchai Lalit, Associated Press) In this photo taken Saturday, April 21, 2012, young workers use sewing machines at a garment factory in Yangon, Myanmar. On Monday, April 23, 2012, the European Union confirmed it was suspending most of its sanctions against Myanmar to reward the country's recent wave of political reform. The suspension of trade sanction could help revive the nation's industries, restoring some of the 80,000 garment industry jobs lost here over the past 10 years. (Sakchai Lalit, Associated Press)

YANGON, Myanmar — Looking across a sea of young workers perched behind rows of buzzing sewing machines, factory owner Myint Soe has one main hope for Monday's suspension of European sanctions on Myanmar — the restoration of some of the 80,000 garment industry jobs lost here over the past 10 years.

A complex web of Western trade embargoes imposed on the Southeast Asian nation since the late 1990s was meant to punish its iron-fisted former military rulers for years of misrule and human rights abuses. But the poorest unskilled laborers suffered far more than the regime, and many lost crucial jobs that could sustain entire families.

On Monday, the European Union confirmed it was suspending most of its sanctions to reward Myanmar's recent wave of political reforms. The announcement is the biggest rollback yet, and many here are hoping rekindled trade ties with the West will yield badly needed growth.

"For us, it's simple. This means new job opportunities for our people," said Myint Soe, who also chairs Myanmar's Garment Manufacturers Association. "We're hoping for new contracts, new orders ... we're hoping to open more factories."

In this photo taken Saturday, April 21, 2012, young workers use sewing machines at a garment factory in Yangon, Myanmar. On Monday, April 23, 2012, the European Union confirmed it was suspending most of its sanctions against Myanmar to reward the country's recent wave of political reform. The suspension of trade sanction could help revive the nation's industries, restoring some of the 80,000 garment industry jobs lost here over the past 10 years.  (Sakchai Lalit, Associated Press) In this photo taken Saturday, April 21, 2012, young workers use sewing machines at a garment factory in Yangon, Myanmar. On Monday, April 23, 2012, the European Union confirmed it was suspending most of its sanctions against Myanmar to reward the country's recent wave of political reform. The suspension of trade sanction could help revive the nation's industries, restoring some of the 80,000 garment industry jobs lost here over the past 10 years. (Sakchai Lalit, Associated Press)

Sanctions on Myanmar ostracized the country's former army rulers and drastically diminished lucrative investment and trade with the United States and Europe. Bans on international financial transactions were so strict that even today, top international hotels in Yangon can only accept cash, not credit cards.

In recent months, though, the West has begun rewarding Myanmar's new government for its widely praised progress toward democratic rule, including freeing political prisoners and holding April 1 by-elections which were deemed free and fair — and were overwhelmingly won by opposition leader Aung San Suu Kyi's party.

The process has not been glitch-free. Suu Kyi's party refused to take its new seats in the parliament Monday because part of the oath of office pledges to "safeguard" the constitution — which they want to change.

They would prefer it said "respect" the constitution. President Thein Sein said he was open to the possibility of revising the wording, and members of Suu Kyi's party said they believe the matter will be resolved soon.

In this photo taken Saturday, April 21, 2012, young workers use sewing machines at a garment factory in Yangon, Myanmar. On Monday, April 23, 2012, the European Union confirmed it was suspending most of its sanctions against Myanmar to reward the country's recent wave of political reform. The suspension of trade sanction could help revive the nation's industries, restoring some of the 80,000 garment industry jobs lost here over the past 10 years.  (Sakchai Lalit, Associated Press) In this photo taken Saturday, April 21, 2012, young workers use sewing machines at a garment factory in Yangon, Myanmar. On Monday, April 23, 2012, the European Union confirmed it was suspending most of its sanctions against Myanmar to reward the country's recent wave of political reform. The suspension of trade sanction could help revive the nation's industries, restoring some of the 80,000 garment industry jobs lost here over the past 10 years. (Sakchai Lalit, Associated Press)

So far, Washington has eased travel bans against relatives of former junta leaders, and relaxation of some financial restrictions has enabled U.S.-based groups to do charity work in the impoverished country. The U.S. may also ease restrictions on American investment and financial services.

In Luxembourg on Monday, the EU announced the suspension of most sanctions except an arms embargo against Myanmar for six months to a year while it assesses the country's progress. The restrictions currently suspend some development aid and target more than 800 companies and nearly 500 people.

Alfredo Perdiguero, a senior economist at the Asian Development Bank, said the EU move would spur investment and trade and create new markets. But he said its overall effect would be limited because Myanmar has already dramatically boosted economic ties with its neighbors, including China and Thailand.

Still, he said the EU's suspension will have "a huge psychological impact" on the country.

In this photo taken Saturday, April 21, 2012, young laborers work at a garment factory in Yangon, Myanmar. On Monday, April 23, 2012, the European Union confirmed it was suspending most of its sanctions against Myanmar to reward the country's recent wave of political reform. The suspension of trade sanction could help revive the nation's industries, restoring some of the 80,000 garment industry jobs lost here over the past 10 years.  (Sakchai Lalit, Associated Press) In this photo taken Saturday, April 21, 2012, young laborers work at a garment factory in Yangon, Myanmar. On Monday, April 23, 2012, the European Union confirmed it was suspending most of its sanctions against Myanmar to reward the country's recent wave of political reform. The suspension of trade sanction could help revive the nation's industries, restoring some of the 80,000 garment industry jobs lost here over the past 10 years. (Sakchai Lalit, Associated Press)

The EU sanctions removed Myanmar from the Europe's so-called General System of Preferences, or GSP, which entitled garments produced in Myanmar to be exempt from import duties. The loss of that status meant doing business in Myanmar cost more, which dramatically decreased trade ties.

Myint Soe said Myanmar's return to the GSP could yield as many as 25,000 new jobs in the textile industry alone in 2012. It's an expansion the government hopes will be repeated across other industries, including timber.

Myint Soe says Myanmar's garment industry used to rely on the United States for about 75 percent of its business, and Europe for much of the rest.

Sanctions imposed by Washington in 2003 crushed the industry, though, banning anything made in Myanmar.

Myint Soe said he was forced to lay off about 80 percent of his factory's 500-strong work force.

"It was painful. Each one cried and asked 'why?'" he said in an interview. "The sanctions targeted the government, but it didn't affect them. It was the people, the workers, who really got hurt."

In this photo taken Saturday, April 21, 2012, a young worker sews a shirt at a garment factory in Yangon, Myanmar. On Monday, April 23, 2012, the European Union confirmed it was suspending most of its sanctions against Myanmar to reward the country's recent wave of political reform. The suspension of trade sanction could help revive the nation's industries, restoring some of the 80,000 garment industry jobs lost here over the past 10 years.  (Sakchai Lalit, Associated Press) In this photo taken Saturday, April 21, 2012, a young worker sews a shirt at a garment factory in Yangon, Myanmar. On Monday, April 23, 2012, the European Union confirmed it was suspending most of its sanctions against Myanmar to reward the country's recent wave of political reform. The suspension of trade sanction could help revive the nation's industries, restoring some of the 80,000 garment industry jobs lost here over the past 10 years. (Sakchai Lalit, Associated Press)

Since then, Myanmar's garment industry has been able to regain jobs and markets as companies shifted their focus to Asia, where trade is unrestricted. Myint Soe said the apparel industry could emerge even stronger than before if it succeeds in moving back into its old markets in Europe and the U.S.

There has been debate over the value of sanctions, but many longtime opponents of the military regime say they have been effective, shaming the nation's rulers and preventing them from traveling to some countries like the United States.

Hkun Tun Oo, a senior politician representing the ethnic minority Shan party who was released from jail in a mass amnesty in January, said the EU's temporary suspension was the right move.

"It's quite an appropriate action, because if things do not improve within a year, sanctions can be renewed. The threat is still there," he said. That means the international community "can still influence the government."

In this photo taken Saturday, April 21, 2012, young laborers work at a garment factory in Yangon, Myanmar. On Monday, April 23, 2012, the European Union confirmed it was suspending most of its sanctions against Myanmar to reward the country's recent wave of political reform. The suspension of trade sanction could help revive the nation's industries, restoring some of the 80,000 garment industry jobs lost here over the past 10 years.  (Sakchai Lalit, Associated Press) In this photo taken Saturday, April 21, 2012, young laborers work at a garment factory in Yangon, Myanmar. On Monday, April 23, 2012, the European Union confirmed it was suspending most of its sanctions against Myanmar to reward the country's recent wave of political reform. The suspension of trade sanction could help revive the nation's industries, restoring some of the 80,000 garment industry jobs lost here over the past 10 years. (Sakchai Lalit, Associated Press)

For garment factory workers who make $120 per month or less, the eventual end of sanctions will be a big deal.

For Phyu Phyu Swe, 33, who was sewing a stack of uniforms bound for Japan, it will mean job security, and possibly more money in bonuses.

"I have family members depending on my income, and this is the only skill I know," she said. "So I always hope and dream that this industry will get back on its feet."

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