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EU preparing to revoke Myanmar GSP: UMFCCI


PHNOM PENH, Cambodia – The European Union (EU) may be preparing to revoke the Generalised System of Preferences (GSP) status granted to Myanmar, according to U Zaw Min Win, chair of Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI).

U Zaw Min Win said he was informed of the developments by the ambassadors of the EU and UK but did not know the extent of pressure for it. He was speaking during a meeting with Vice President U Myint Swe earlier this week.

The EU began considering a withdrawal of the GSP, granted to Myanmar in 2013, after an outbreak of violence against Muslims in Rakhine at the end of 2018. These privileges grant Myanmar duty-free trade with the EU, which mainly consists of garments.

Subsequently, a GSP study team from the EU also visited Myanmar and met with business persons and labour organisations.

Of the products exported by Myanmar to EU member countries, 60 percent is from the cut-make-pack (CMP) garment sector.

Duty-free exports to the EU from Myanmar rose from €535 million in 2015 to an estimated €2.3 billion in 2018. Of the 2018 exports, 70pc consisted of garments. If the GSP is withdrawn, the most affected sector will be garments.

Should those privileges be withdrawn, U Myint Soe, chair of Myanmar Garment Manufacturers Association told The Myanmar Times that Myanmar will have no choice but to find new markets and continue to export.

“We can’t stop of the GSP is withdrawn. Our electricity situation has improved and if other sectors like shipping and productivity improve, we can still compete in the global market even without duty-free opportunities,” he said.

He added that banking services and international fund transfers need to improve, too.

Nevertheless, if Myanmar no longer enjoys GSP access, CMP exports will be taxed from 12pc to 15pc, according to the Myanmar Garment Entrepreneurs Association.

“It is not easy for a business to enjoy profit margins of 5pc or 1pc. Adding that to not having GSP benefits, we will have to take measures to stay competitive,” said U Myint Soe.

EU has given GSP to Laos, Cambodia, Vietnam, Myanmar and Bangladesh and if Myanmar’s privileges are revoked, the country will have to compete with those who still enjoy GSP in the market, he added.

“EU will only go for cheaper prices and they are only buying from Myanmar because of its competitive price. If the prices increase because of tariffs, they will not buy from here anymore,” he said.



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