US embassy cable - 04RANGOON497

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