How Myanmar’s Military Coup Will Affect the Footwear & Apparel Trade

How Myanmar’s Military Coup Will Affect the Footwear & Apparel Trade

Early Monday morning, Myanmar’s military announced that it had seized power after detaining Aung San Suu Kyi – the former political prisoner and figurehead of Myanmar’s long struggle against dictatorship. International leaders have widely condemned the coup d’etat while trade experts predict that the regime change will hurt the country’s economic ties to the West.

Myanmar was ruled by the armed forces until 2011, when democratic reforms led by Suu Kyi ended military rule. Following the democratic and governmental reforms introduced in 2011, the country resumed its export of apparel and accessories to the European Union and the US.

A combination of cheap labor, low tariffs, and access to seaports prompted many companies to move work from China to Myanmar. As Western companies began to invest heavily in the fledgling democracy after 2015, garment exports grew $1 billion year on year for the small Southeast Asian nation.

According to US Census Bureau data, trade in goods between Myanmar and the United States totaled nearly $1.3 billion in the first 11 months of 2020, up from $1.2 billion in the previous year. Meanwhile, apparel and footwear accounted for 41.4 percent of total U.S. goods imports, followed by luggage, which accounted for nearly 30 percent.

Soon after Suu Kyi’s election in 2015, the military was accused of waging a genocidal campaign against the Rohingya population. Myanmar is a predominantly Buddhist country and a 2017 military crackdown in Myanmar’s Rakhine state sent more than 700,000 Rohingya Muslims fleeing into Bangladesh, where they are still stranded in refugee camps.

Amnesty International assessed that “the deplorable actions of the military could be part of a widespread and systematic attack on a civilian population and may amount to crimes against humanity.” The actions of Suu Kyi’s government eroded her once impeccable reputation on the world stage, while Myanmar was punished with sanctions that made the country a less attractive trade partner.

In 2017, leading US and European apparel labels and trade associations called on Suu Kyi’s government to respect the rights of the ethnic Rohingya minority. Much like the cotton industry’s negative association with the Uighur crisis in China, the Rohingya crisis proved to be a liability for brands, eroding consumer and investor confidence.

This week’s military power grab will further undo the economic progress made in the late 10 years. President Biden has indicated that the US may resume sanctions saying, “The United States removed sanctions on Burma over the past decade based on progress toward democracy. The reversal of that progress will necessitate an immediate review of our sanction laws and authorities, followed by appropriate action.” He added, “force should never seek to overrule the will of the people or attempt to erase the outcome of a credible election.”

The UN predicts that the coup will make life for the 600,000 Rohingya remaining in Rakhine State, including 120,000 people who are effectively confined to camps, even worse. Meanwhile, sanctions by the international community and diminishing confidence by major brands will continue to hurt Burmese workers at each stage of the supply chain.

Lucas Myers, an analyst with the Woodrow Wilson International Center for Scholars, told Business of Fashion that the coup would exacerbate strains in US-Myanmar ties following sanctions imposed by Washington in December 2019 over the treatment of Rohingyas. “On trade, the Rohingya situation and Myanmar’s troubled human rights record rendered investment less attractive for Western firms as compared with China,” he explained.

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