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Lifting of Burma Import Ban Opens Doors

Country seen as potential sourcing alternative.

WASHINGTON — U.S. apparel brands and retailers are looking at Burma as a viable alternative to manufacturing apparel in Asia after the Obama administration waived a nine-year-old ban on imports from the country now known as Myanmar.

The U.S. State and Treasury Departments moved late last week to lift of a ban on the importation of goods made in Burma. While the ban has been lifted on the majority of products imported from Burma, it remains in place for jadeite, rubies and jewelry containing those precious stones.

The move came as President Obama set out on an Asian trip and made the first by a U.S. president to Myanmar on Monday. The U.S. is taking steps to renew economic ties with the country after the government made some reforms, including the release of political prisoners, enactment of labor laws permitting the formation of unions and passage of a foreign investment laws. Several major apparel and retail firms, many of which had to pull out of Burma in 2003 when the U.S. imposed a ban on imports from the country after a military junta began repressing human rights, are already exploring the new opening in Burma, according to industry experts. Burma could be a potential new apparel sourcing destination for the fashion industry, which has been grappling with rising labor costs in China and other Asian countries.

“I had one retailer tell me this is huge, that Burma will rival Bangladesh because labor costs are low and sewing skills are very good, and the factories have been supplying South Korea and Europe,” said David Spooner, Washington counsel for the U.S. Association of Importers of Textiles & Apparel, and an international trade lawyer at Squire Sanders.

“On the downside, electricity supplies are unreliable, roads are terrible, ports are not up to snuff, and they have to be very careful with whom they do business with because many Burmese nationals are on the Treasury Department’s bad guy list.”

Brenda Jacobs, an international trade lawyer with Sidley Austin LLP, said, “There are [apparel] clients prepared to look at Burma but there is also a concern about a gold rush mentality there now. It’s the Wild West there. Everybody is running in. You can’t even get a hotel room now because the rates are extraordinarily high.”

Jacobs said it will take some time, probably until late 2013, before U.S. companies do their due diligence in finding contractors, creating new relationships and start producing apparel in Burma, but, “I think there is a sincere interest in having that as an alternative to China and Vietnam.”

Kevin Burke, president and chief executive officer at the American Apparel & Footwear Association, said, “We welcome the announcement and look forward to working with our stakeholders in the apparel and footwear industry with some caveats. The first caveat is that companies need to work with factories that have socially responsible conditions, both environmentally and with workers’ rights. If you do business in Burma, make certain you know who you are doing business with and proceed cautiously.”