"Burma does not yet have the safeguards in place to protect citizen's rights and assure the rule of law, especially in resource-rich minority regions," said Jennifer Quigley, executive director of the U.S. Campaign for Burma.
"We do not support reinstatement of GSP for Burma at this time," she told a panel of Obama administration officials at a hearing on whether to make Myanmar eligible for the U.S. Generalized System of Preferences program, which waives import duties on goods from developing countries.
The hearing came two weeks after Myanmar President Thein Sein visited Washington for talks with Obama, who has removed a number of sanctions on the impoverished Southeast Asian country in response to reforms it has made.
Sein's quasi-military government has freed democracy leader Aung San Suu Kyi and hundreds of political prisoners, scrapped censorship and legalized trade unions over the past two years.
The United States is considering adding Myanmar to the GSP program to help create jobs in the country and boost bilateral trade.
The United States imported $275 million worth of clothing and other goods from Myanmar in 2003 before an import ban was imposed. In the months since most of the restrictions were lifted, there has been a trickle of imports, including $1.3 million in March and $2.4 million in April.
Sein Win, chairman of the Burma Fund, told the panel that adding Myanmar to the GSP program would only benefit "former and current Burmese military commanders and their cronies," who he said control almost all of the major business entities in the country.
If the United States does decide to reinstate Myanmar in the GSP program, it should require importers to certify that there have been no human rights violations in connections with products they import from the country, said Jonathan Kaufman, legal advocacy coordinator for EarthRights International.
Obama should also withhold eligibility for oil, gas, mining and plantation agriculture products from Myanmar, until the country make progress on what Kaufman said was an "unusually high incidence of human rights abuses in those sectors."
The panel also heard from Myanmar government officials, who said adding Myanmar to the GSP program would help the country continue its political and economic transition.
"Although there remain some challenges, our reform is a systematic and peaceful process and worthy to be noted as a good example and model for other transitions," said Myanmar's ambassador to the United States, Than Swe.
He also stressed the strategic importance of Myanmar, a resource-rich country wedged between China, India and a number of fast-growing countries in Southeast Asia.
Restoring GSP would help lift millions of Myanmar people out of poverty and stop an outflow of economic refugees looking for work in neighboring countries, he said.
(Reporting by Doug Palmer; Editing by Mohammad Zargham)