in: EIAS Briefing Paper No. 97/02, Brussels, Belgium, 2. Abstract: Both external and internal pressures have built up in terms of the restoration of democracy in Burma. Amongst the external pressures are the US congressional proposals for sanction as well as the recent withdrawal of GSP preferences by The European Union, decided by the EU Council of Ministers on 24th March 1997. This briefing paper analyses the economic impact of such a withdrawal of preferences on the Burmese economy. The paper finds that since Europe?s trade with Burma represents less than 3% of Burma?s total exports, only 31% of which were eligible for GSP treatment, a temporary withdrawal of GSP-preferences will have a very limited economic effect on Burma?s existing reports. There will however, be a political impact, albeit measured: The European Union is sending strong signals to SLORC that the "constructive engagement" approach is no longer supported, and without significant reform, both economic and political, the EU is not prepared to endorse the SLORC regime.