By Andrew Quinn
NEW YORK (Reuters) - Secretary of State Hillary Clinton told Myanmar President Thein Sein on Wednesday that the United States would take steps to ease the U.S. ban on imports from the country, a major boon to the Southeast Asian nation as it emerges from years of political and economic isolation.
"In recognition of the continued progress toward reform and in response to requests from both the government and the opposition, the United States is taking the next step in normalizing our commercial relationship," Clinton told Thein Sein in a meeting on the sidelines of the U.N. General Assembly in New York.
"We will begin the process of easing restrictions on imports of Burmese goods into the United States. We hope this will provide more opportunities for your people to sell their goods into our market."
Clinton's announcement marks a further step in the U.S. rapprochement with Myanmar, which offers economic and strategic benefits to both sides and is a political boost to the former general now leading Myanmar's reforms.
"We now have diplomatic relations at the ambassador level and the people of Myanmar are very pleased with the easing of economic sanctions by the United States," Thein Sein said at the meeting, which took place at a New York hotel.
"We are very grateful for the actions of the United States," he said, handing Clinton a letter that U.S. officials said was addressed to U.S. President Barack Obama.
The U.S. Treasury Department last week removed individual sanctions against Thein Sein, a 67-year-old former junta member who emerged as the unlikely catalyst for a wave of reforms that were unthinkable a year ago.
The next step will remove more of the restrictions that isolated his country for two decades, squeezed its tattered economy and pushed it closer into China's orbit.
A senior U.S. official told reporters the administration would work with Congress to determine how to proceed, but that the process would mirror the sector-by-sector approach of earlier U.S. moves to relax financial sector sanctions.
"It's a process that will take some time," the official said, adding that the easing of the import ban would remove the last major category of U.S. sanctions on Myanmar.
Congress has approved a bill that would allow Obama to waive a ban on U.S. participation in providing development loans from international financial institutions like the World Bank to the former British colony also known as Burma.
But ending the U.S. import ban promises far larger benefits, paving the way for greater foreign investment that could create urgently needed jobs.
"We want people to feel tangible benefits" of the reform process, a second senior U.S. official said.
The European Union set the pace this month by agreeing to grant Myanmar access to its Generalised System of Preferences, a plan that allows poorer countries access to European markets without quotas or duties.
Western sanctions on Myanmar allowed China to command huge influence there and experts say closer U.S. engagement serves Washington's unspoken goal of containing China by courting poorer Southeast Asian countries with close ties to Beijing.
As one of Asia's last untapped frontier markets and with a population of 60 million, Myanmar also offers corporate America plentiful opportunities in energy, extractive industries, financial services, retail, hotels and tourism. PepsiCo Inc, Coca-Cola and GE have already set up in Myanmar.
SUU KYI APPROVES
Thein Sein's reformist, quasi-civilian government took office in March 2011, ending five decades of military rule. It has started overhauling Myanmar's economy, easing media censorship, legalizing trade unions and protests and freeing political prisoners.
The United States has responded with diplomatic and economic gestures, sending Clinton to Myanmar last year as the first U.S. secretary of state to visit in more than 50 years, as well as tentatively easing sanctions this year.
Clinton's New York meeting with Thein Sein - their third face-to-face encounter in less than a year - came a week after she met veteran Myanmar pro-democracy leader Aung San Suu Kyi in Washington, where the Nobel Peace laureate was awarded the highest congressional medal of honor.
Suu Kyi, who was kept under house arrest for 17 years, was released and subsequently elected to parliament in April, and has urged the United States to ease sanctions to support the reform process.
U.S. officials said that despite rapidly improving ties, Washington continues to have concerns about political prisoners in Myanmar, the government's slow steps to reconcile with restive minority groups in border areas, and ties to certain elements of North Korea's military.
But they said they were confident that progress would continue on each of these issues, describing the relationship as one that had moved beyond the blunt instruments of sanctions.
"We want to transition now to a much more normal relationship in which we can talk very frankly about these difficult issues," the first official said.
(Editing by Mohammad Zargham)