By  on May 21, 2013

WASHINGTON — The U.S. and Myanmar signed a Trade and Investment Framework Agreement here on Tuesday, launching a formal dialogue that could pave the way for the two countries to work toward a more comprehensive trade arrangement.

The U.S. is taking steps to renew economic ties with the country, formerly known as Burma, after the government made some reforms, including the release of political prisoners, enactment of labor laws permitting the formation of unions and passage of 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 the country, according to industry experts. Myanmar could be a potential new apparel sourcing destination for companies that have been grappling with rising labor costs in China and other Asian countries. However, many industry officials expect investment and sourcing to be a slow-moving process because serious concerns remain about workers’ rights and safety.

“The United States supports reforms that lay the foundation for a peaceful and prosperous future,” said Demetrios Marantis, acting U.S. Trade Representative. “Economic reforms and trade are mutually supportive. Stronger institutions, transparency and rule of law create stronger foundations for commercial transactions, trade and investment.”

The move to launch a TIFA, which can serve as a blueprint for potential free-trade negotiations, follows the Obama administration’s lifting of a nine-year-old import ban in November after the Southeast Asian nation took steps to reform its government and human rights record. On Monday, Obama hosted Myanmar President Thein Sein, a former general, marking the first time in 47 years that the country’s head of state has been formally welcomed to the White House.

“Obviously, during this period in between there have been significant bilateral tensions between our countries,” Obama said. “But what has allowed this shift in relations is the leadership that President Sein has shown in moving Myanmar down a path of both political and economic reform.”

Obama added that the steps toward reform have “allowed the United States and other countries and international institutions to participate in engagement with the Myanmar government about how we can be helpful in spurring economic development that is broad-based and that produces concrete results for the people of Myanmar, and that includes the prospect of increasing trade and investment in Myanmar, which can produce jobs and higher standards of living.”

Activists and lawmakers remain wary of the nation, which is still ruled by a military-backed government, and its continuing poor record on human and labor rights, could complicate trade discussions. The USTR office said Tuesday labor rights in Myanmar continue to be an area of concern. The TIFA agreement “recognizes the importance of respecting, promoting and realizing in each party’s laws and practices the fundamental labor rights as enumerated by the International Labor Organization and of effectively enforcing their respective laws and regulations on worker rights,” USTR said.

The agency pledged to work with the Myanmar government to improve the protection of worker’s rights. USTR said bilateral trade remains small, but has increased since the easing of sanctions in 2012. Through March, bilateral trade totaled $90 million, including $89 million in U.S. exports to Myanmar and $1 million in U.S. imports from the country. In 2012, Myanmar’s total two-way goods trade with the world was about $20 billion.

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