Lifted Sanctions on Myanmar: Implications for the Jewelry Industry
In September of this year President Obama announced that the U.S. would be lifting economic sanctions on Myanmar, also known as Burma. The decision brought about a shockwave of political criticism on one side and support on the other. It also facilitated a great deal of economic speculation, much of which is still ongoing today.
Located in Southeast Asia, Myanmar is a country abounding in oil, natural gas, jades and other gemstones. It’s because of these latter two resources that the luxury good and jewelry industries have taken a keen interest in Myanmar’s economy. Opening up trade with a previously ostracized nation that’s rich in gemstones makes for potentially lucrative trade deals, ones that could benefit not only the struggling country of Myanmar, but global economies as a whole.
If reciprocal commercial success were the only thing on the horizon, then there would be no debate over the lifting of sanctions and the opening of free trade. But Myanmar’s military history, infamous human rights violations and widespread poverty create an atmosphere of uncertainty and controversy.
With all this being said, what does free trade with Myanmar mean for the global jewelry industry?
Why There Were Sanctions in the First Place
Myanmar’s history is an extensive one. Though it’s important to educate ourselves on this topic, it’s not the overarching goal of this post. To put it briefly, Myanmar’s history has been chaotic.
In the late 19th century, Myanmar became a British province and remained under British colonial rule until the 1940’s during WWII. Captured by Japan in 1942 and then re-claimed once again by Britain in 1945, various nationalist parties began rising to power. This set the stage for ensuing bloody conflicts in the groups’ attempts to gain control over the newly independent country.
The 1960’s saw Myanmar turned into a one-party dictatorship after a series of political assassinations and a subsequent military coup. Being operated as a socialist state and having taken considerable infrastructural damage during WWII, Myanmar’s economy suffered drastically. Widespread poverty and persecution of minority groups by the government and military regime created only despair and travesty.
In response to seemingly endless violence, political strife and human rights violations, the U.S. placed economic sanctions on Myanmar in 1982 in an effort to stifle the power of the Burmese military. These sanctions were further developed and re-worked in the decades to come. The September announcement of the majority of these sanctions being lifted has sparked recent interests.
*As noted, this is an incredibly brief overview of Myanmar (Burma)’s history. We urge you to read more about the country’s past and current situation*
The Myanmar Economy
The controversy over the elimination of sanctions stems from the reason of their creation in the first place. Hindering the Burmese military regime is one thing, but this also directly affects the entire population’s economic opportunities, not just the “bad guys”. With a significantly crippled export system, that vast amount of natural resources mentioned earlier are of limited value.
Myanmar is one of the poorest countries in Southeast Asia and its income gap is among the widest in the world.
If trade is opened though, what will happen?
- Flooding the luxury goods marketplace with rare gemstones could make jewelry cheaper but at the same time would it make it less desirable?
- Will we see anti-industry sentiment from consumers who object to diamond/gemstone trade with an underprivileged and struggling country?
- Who will see the economic benefits on Myanmar’s domestic front?
- Will day workers and semi-skilled laborers view this as blessing or a curse?
- Will open trade lead to further income inequality and abuse of governmental power?
These are tough questions and we don’t know the answers. The above link mentions how some sanctions will still be enacted, “though many companies will now enjoy lower tariffs, there are some sanctions which remain in place. These include a ‘blacklist’ of at least 100 companies and individuals with links to the former military junta, as well as trade in jade and rubies”.
In an industry that has already seen criticism for the use of “blood diamonds”, how will this shape public opinion and demand? Without question, if new sources of gemstones are made available, the global economy will want to capitalize on it.
In stark contrast to the violence of Myanmar, there is indeed another source of diamonds and rare gemstones that involves no conflict whatsoever. I’m talking, of course, about lab-grown gemstones.
With the demand for diamonds slated to outweigh demand by “5-6% by 2019” and a lack of a natural supply, lab-grown diamonds could be the way of the future. This is of particular importance as of late due to new advancements in lab-grown technologies.
Similar lab-grown methods are utilized in the creation of gemstones, as well. Nearly indistinguishable from natural sources, as the demand for lab-grown diamonds and gemstones increases, the demand for natural diamonds might diminish.
There are those who view lab-grown diamonds and gemstones as something reminiscent of Frankenstein’s monster – inorganic, unnatural and against the course of nature. But there are those who view them as a blessing. These opinions are subjective, but all things must be considered when weighing potential economic and human impacts.
This post is meant to be speculative and thought provoking, not definitive. The jewelry industry has oscillated in recent years and we’re always hearing of new advancements or demand changes. In my opinion though, the lifting of Myanmar’s economic sanctions has brought about another prevalent question…In moving forward, what source will be used to fill the demand for diamonds and gemstones?
While not necessarily the determining factor in the equation, the lifting of Myanmar’s sanctions produces speculative and polarizing questions. While natural supplies of these resources do exist, man-made and renewable versions are being created as well. We must consider the impacts that gemstones have not only on the jewelry industry, but on the lives of the laborers mining for them. While it's unclear which route the industry will take in the coming years, there is one thing we can be certain of...
Regardless of which method of gemstone supply is chosen, there will be changes in how things are done.
Thanks for reading our blog post. We know that this is a polarizing topic and would love to hear your thoughts. Feel free to voice your opinion and comment below!