THE BURMA-THAI BORDER TRADE CHRONICLES: PART II,

C O N F I D E N T I A L SECTION 01 OF 02 RANGOON 000497

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STATE FOR EAP/BCLTV, EB
COMMERCE FOR ITA JEAN KELLY
TREASURY FOR OASIA JEFF NEIL
USPACOM FOR FPA

E.O. 12958: DECL: 04/21/2014
TAGS: ETRD ECON PREL PGOV PHUM BM TH
SUBJECT: THE BURMA-THAI BORDER TRADE CHRONICLES: PART II,
THE FRIENDSHIP BRIDGE

REF: A. RANGOON 488

B. RANGOON 138 AND PREVIOUS

C. 03 RANGOON 1552

D. 03 BANGKOK 7434

Classified By: DCM Ron McMullen for Reasons 1.4 (B,D)


1. (C) Summary: A recent visit by Bangkok and Rangoon
Econoffs to Mae Sot and Myawaddy, the largest trading point
on the Burmese-Thai border, shows trade volumes that are
flourishing despite U.S. sanctions and increasingly ludicrous
Burmese trade policy. Even more than it does the sleepy
Kawthaung-Ranong border (ref A),Rangoon relies on Mae Sot as
a source of daily consumer items as well as more crucial
industrial inputs -- like diesel. Coming the other way, more
than 2500-4000 Burmese a day cross legally into Thailand at
this border point, with many more crossing illegally across
the trickle of a river that demarcates the border. Some come
as day laborers, others looking for more permanent illegal
work. Though the business environment is tough, both Mae Sot
and Myawaddy businesspeople look forward to a long and
profitable relationship between the two sides -- whatever it
takes. End Summary.

Crossing By Land


2. (U) To assess the current environment along the Thai-Burma
border, Bangkok and Rangoon Econoffs traveled to two of the
three major border trade points. The first of these was
discussed in ref A (septel will look at broader border
issues). The second -- Mae Sot, Thailand and Myawaddy, Burma
-- is 140 miles east of Rangoon and 240 miles northwest of
Bangkok and is separated only by a trickle of a river. This
crossing, the largest by trade volume of the three, has a
long history of legal and illegal commerce. The third
crossing is in northern Thailand at Mae Sai and Tachileik (in
Burma's Shan State).


3. (U) Mae Sot-Myawaddy, joined seven years ago by the
"Friendship Bridge," is a classic land border crossing with
trucks stuffed with consumer goods rumbling into Burma's
still somewhat unstable Karen State, toward the Andaman Sea
coast or Rangoon. Coming in the other direction are some
Burmese agricultural products and raw materials and about
2,500-4,000 Burmese workers -- mostly ethnic Karen, Mon, and
Burman -- per day. Many more Burmese likely cross illegally
into Thailand near Mae Sot across the Moei River.

Trucking to Rangoon: Mae Sot and Myawaddy


4. (U) Unlike the somewhat shaky state of the
Kawthaung-Ranong dynamic, the Mae Sot and Myawaddy economic
relationship is extremely vigorous and hugely in Thailand's
favor. The road west from Myawaddy to Rangoon is still poor,
running one way on alternating days, and passing through
regions still controlled by insurgent groups. It is
nonetheless the closest border crossing to Rangoon and is
thus a magnet for exports to Burma -- often illegal -- from
Mae Sot, elsewhere in Thailand, and from third countries via
Bangkok. The Mae Sot Chamber of Commerce estimated that only
30 percent of goods that cross into Burma at Mae Sot
originate locally in Tak Province. These goods are trucked
to Mae Sot, over the bridge (or across the shallow Moei
River) into Myawaddy, and then hauled on Burmese vehicles
onward to Moulmein or Thaton on the Andaman coast or to
Rangoon.


5. (C) According to Thai Customs and Mae Sot Chamber of
Commerce numbers, the total trade volume is now about 800
million baht (USD 20 million) per month with 95 percent of
that Thai exports. Official statistics show the trade made
up of Thai consumer products, vegetable oil, MSG, plastic
pellets, textiles, construction inputs, and diesel fuel
trading for Burmese frozen and dried seafood, livestock,
peanuts, bamboo, non-teak wooden furniture, and fish maw.
Burmese legal exports were cut in half in 2003 when the RTG
banned the import of teak furniture and teak logs without a
GOB certificate of origin. Thai businesspeople had been
secretly sending Thai teak, the cutting of which is currently

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banned, to Burma to be re-imported as "Burmese" furniture or
logs.


6. (C) Smuggling is a major component of the Mae Sot-Myawaddy
trade. Because the GOB bans most of what Thailand exports to
Burma (especially consumer goods),only 10 percent of the
Thai exports, mostly construction inputs, enter Burma at the
GOB Customs checkpoint on the Friendship Bridge. The
remaining 90 percent is checked out of Thailand legally at
one of the 16 RTG Customs docks stretching 5 km along the
Moei River, and then smuggled into Burma on the other side.
Smuggling is not as active coming from Burma, though Thai
businesspeople estimate that contraband teak products and
gems add another 10-20 percent per month to the Thai import
numbers. Thai Customs told us that there are also periodic
seizures of amphetamines -- including a shipment in October
2003 of 9.4 million pills. Strangely, Myawaddy
businesspeople complained it was necessary to smuggle Thai
cement into the border areas, as RTG authorities purportedly
ban this border trade to avoid giving the GOB material to
build bunkers.


7. (C) Another boon to Mae Sot and Myawaddy border traders is
the weaker GOB hand in Karen State. Though the Friendship
Bridge is controlled by the Burmese army and "NaSaKa"
inter-agency border force, the smaller riverine border trade
crossings and the transportation network once inside Burma
have been left in the hands of the ethnic Karen armed groups
-- especially the pro-Rangoon Democratic Karen Buddhist Army
(DKBA). Though there are countless DKBA and anti-Rangoon
Karen National Union (KNU) checkpoints on the
Myawaddy-Rangoon road, Thai exporters and Burmese importers
alike say they are content with the arrangement as a single
payment to an ethnic broker in Myawaddy is usually adequate
to ensure a safe journey. Contrast this to trade routes
firmly in the GOB's hands such as Kawthaung where, Burmese
importers complain, multiple payments are required though
they do not guarantee hassle-free passage. Thai exporters
were unanimous, though, that business would be even better if
there were a cease-fire agreement completed between the SPDC
and the KNU.

Comment:


8. (C) The relentless movement of goods from Mae Sot to
Myawaddy is one of the major sources of lifeblood for Burma's
troubled economy and government (ref C). Though the trade
flows we examined are solidly in Thailand's favor, the
products sold are generally not unique and are easily
replaced -- even in Myawaddy's marketplaces -- by Chinese
goods. Thailand's border entrepreneurs often look westward
for natural resources off limits or not available
domestically or from other bordering states. Thus, a
Thai-Burma border closing, as occurred in 2002, would hurt
the Mae Sot Thai exporting community as much or more than the
Burmese. End comment


9. (U) This is a joint Embassy Rangoon-Embassy Bangkok cable.
Martinez