The European Union (EU) is to suspend most of its sanctions against Burma/Myanmar for the next year in recognition of what it says are the "historic changes" that have taken place in the country over the past 12 months and in a bid to encourage the reforms to continue.

The decision announced yesterday (23 April) by the European Council, will take effect later this week and include trade and economic sanctions, but will not include the embargo on arms sales, which will be retained.

The Council also said it would continue to "monitor closely the situation on the ground, keep its measures under constant review and respond positively to progress on ongoing reforms."

Noting the "vital contribution" the private sector has to make to the development of Burma, the EU said it would welcome European companies exploring trade and investment opportunities in the country.

The Council also voiced its support for reinstating the Generalized System of Preferences (GSP) for Burma "as soon as possible" once the International Labour Organization (ILO) has assessed its labour standards.

If GSP tariff preferences were reinstated, products such as clothing made in Burma would be eligible for duty-free access to the EU.

However, while acknowledging that progress has been made in Burma, the EU still acknowledged the need for further reforms, including freeing remaining political prisoners and removing restrictions on those already released. There are also ongoing concerns about human rights abuses.

It is also worth noting that the EU has suspended - rather than ended - sanctions, which suggests they could be reimposed if reforms stall.

But a trade group representing European retailers, brand companies and importers, says the European retail sector is strongly interested in strengthening commercial links with Burma - especially when it comes to sourcing.

"The Burmese leaders need to shape a conducive framework to attract investment and accelerate the opening of the domestic industry," said Jan Eggert, director general of the Foreign Trade Association (FTA).

"Then Burma could become an interesting sourcing country for European retail again."

While by-elections held in Burma on 1 April were overwhelmingly won by pro-democracy leader Aung San Suu Kyi and members of her National League for Democracy party, they have refused to take up seats in the parliament in a dispute over a parliamentary oath. Instead of promising to "safeguard" the constitution, they want to change the oath of office to "respect" the constitution.

The US, meanwhile, is moving more slowly than the EU in lifting sanctions. Earlier this month Secretary of State Hillary Clinton said some travel restrictions would be relaxed, and that there would be "a targeted easing of our ban on the export of US financial services and investment as part of a broader effort to help accelerate economic modernisation and political reform" in the country.