To avoid paying high import tariffs on those commodities by the Chinese authorities, the number of traders in China resorting to buying from illegal routes has spiked in recent months, resulting in frequent border checks and arrests, which culminated in the ban.

“Border exports of rice, sugar and maize to China have stopped with border guards heavily patrolling the gate at Muse and blocking entry of those goods into China,” said U Win Htay, deputy chair of Myanmar Sugar Cane & Sugar Related Products Merchant & Manufacturers Association.

Only beans and fruits like watermelons have been allowed to pass through the border after taxes are paid.

As a result, stockpiles of the suspended commodities are accumulating in warehouses in Muse, said U Win Htay who is also a sugar merchant in Mandalay. Based on his estimates, there could be as much as 400,000 tonnes of sugar stockpiled. Before the ban, Myanmar exported up to 6000 tonnes of sugar to China daily.

Concerns are rising along the supply chain with little certainty on when trade will resume. Farmers and merchants are worried that the prices of rice, maize and sugar will fall due to the lack of demand. Meanwhile, truck drivers say they could lose their jobs if there is no longer the need to transport the goods across the border.

What can be done?  

U Soe Tun, an executive member of the Myanmar Rice Federation, said the governments of Myanmar and China should collaborate to find a solution to the problem. “The rice harvesting season is coming soon and the price of rice will be good for farmers if exports to China are reinstated before then,” he said.

U Htay Lwin, chair of Mandalay branch of Rice Millers Association, said a quota system specifying how much rice China intends to import and official permits for trade within those limits should be established. “In that way, trade between Myanmar and China can be less complicated and take place more freely,” he said.

Barter system

U Win Htay reckons implementing a barter system could help to fix the trade imbalance. “The current trade system is one-sided. China increases its import taxes excessively on our goods which blocks their legal passage into the country.

The Chinese are collecting as much as 90pc duties on sugar. They are also collecting a large amount for rice imports from Myanmar. As such, the Ministry of Commerce should carry out national-level trade negotiations by approaching China to set up a system identical to a barter system,” he said.

The way he sees it, “if one side is importing goods worth US$100, then a barter system should be established so that the other side can purchase US$100 worth of items. If this system can be implemented then I think things will be smoother. As this is border trading, it will be convenient to negotiate. Other methods will be difficult,” said U Win Htay.

If a barter system can be implemented and say, iron products and household goods are imported from China and agricultural products are exported from Myanmar, no one will suffer losses and it will be beneficial for both sides. It will also help to narrow Myanmar’s trade deficit with China.

In fact, negotiations have been made with the Myanmar Rice Federation to implement a barter system for the export of rice and sugar. “The Yunnan Province government has also submitted their proposal to Beijing to make it a G-to-G agreement. Although Yunnan agrees this has to be resolved, they must still receive instructions from the central government before a decisive agreement can be signed,” said U Khin Maung Lwin.

“We have done our part and are now just waiting for their reply,” he added.

In coming December, the Expo for products of both countries will be held in Muse, Myanmar for five days where related Ministries and traders will attend. Joint Border Trade Cooperation Committee Meeting will be held as well and both Governments will discuss there.

“We have to make more negotiations about the trade there about rice, corns, sugar and so on,” said U Khin Maung Lwin.

Opening up

Will China agree to a barter system though?

Although the barter system will improve trade for Myanmar, China’s side will have an advantage as Myanmar needs more from China than it does from Myanmar. Myanmar needs to import iron, construction materials, pesticides and farming machineries from China. So, such a system, while beneficial, will not be fair, traders agreed.

That is why even though the Chinese government imposed border trade restrictions on Myanmar, our country has not been able to respond, U Win Htay pointed out.

“Whatever the case, the government needs to negotiate bilaterally so that the country can maintain a good relationship with China,” U Soe Tun said.

The border trade spat between the two countries comes as Beijing this week kicked off its China International Import Expo, a week-long showcase meant to rebrand China as a consumption powerhouse and open up its economy at a time when trade relations with the US is souring.

“China is a big market of over 1.3 billion people, and it is our sincere commitment to open the market,” President Xi Jinping said during his opening address at the expo. “China increasing imports will not be a choice of political expediency but a future-oriented step taken to embrace the world.”

Between April 1 and August 17, border trade between Myanmar and China reached over US$2.5 billion, with exports totaling US$1.8 billion versus imports of just US$685.5 million, according to a report from the Ministry of Commerce.

The four border gates linking China are Muse in northern Shan state, Lwejel in Kachin State, Chin Shwehaw in northeastern Shan State and Kanpikete in Kachin State, Muse border gate is the largest trade transaction zone between the two neighbours.

During the period, Myanmar exported rice, fish, timber, beans, sesame, clothing, aquatic products, rubber, minerals and other goods to China. it imported machines, machine parts, electrical devices, electronic gadgets, chemicals, fertilisers, medicine, dairy products and other items from China.

Source: https://www.mmtimes.com/news/trade-myanmar-china-border-standstill-barter-system-urged.html