BURMA SANCTIONS: IF YOU CAN'T BEAT 'EM, CHEAT

C O N F I D E N T I A L RANGOON 001337

SIPDIS

BEIJING PASS CHENGDU
BANGKOK FOR US CUSTOMS SERVICE
STATE FOR EAP/BCLTV, EB
COMMERCE FOR ITA JEAN KELLY
TREASURY FOR OASIA JEFF NEIL
USPACOM FOR FPA

E.O. 12958: DECL: 10/22/2013
TAGS: ETRD ECON BM
SUBJECT: BURMA SANCTIONS: IF YOU CAN'T BEAT 'EM, CHEAT

REF: RANGOON 1184 (NOTAL)

Classified By: CDA a.i. Ron McMullen For Reasons 1.5 (B,D)


1. (C) We've been hearing tales of cheating to circumvent new
U.S. economic sanctions, particularly the ban on importing
Burmese products into the United States. Though we don't
have a sense yet of the volume of this malfeasance, it's
becoming clearer that some exporters of garments and seafood,
unwilling to give up easily, are relabeling their products or
transshipping them through regional countries to the United
States. This is not at all surprising, as the garment
industry in particular, which relied almost exclusively on
the U.S. market, has been hit very hard by the new sanctions.
Though most Burmese seafood goes to Asia and Europe, some
exporters relied on U.S. sales. In CY 2002, $27 million
worth of Burmese seafood was imported into the United States.
In CY 2003, $19 million worth had already arrived in the
United States when the sanctions took effect in late August.


2. (C) Businesspeople with whom we spoke provided second-hand
accounts of local garment manufacturers keeping a fraction of
their workforce in place, sewing "Made in" China, Korea, or
Taiwan labels on garments destined for the United States.
Corroborating this, we've noticed that private shops around
Rangoon selling "seconds" from local garment factories have
started stocking a peculiar number of items labeled "Made in
Korea." As most garments manufactured in Burma are non-quota
items, it seems strange to relabel locally made products
except to evade an embargo. U.S. Embassy officials have also
unexpectedly been denied access to both Burmese and
Korean-operated garment factories in recent weeks.


3. (C) On the seafood side, a longtime expatriate seafood
exporter, who sells exclusively to Europe, told us in
confidence that many of his less scrupulous colleagues were
sending their shrimp and fish to Malaysia or Indonesia for
relabeling and onward shipment to the United States.
Separately, econoff surreptitiously overheard two boozy local
businessmen involved in seafood exporting talking about the
extra expense and difficulties of getting their product to
the United States using a third country.
McMullen