The European Union warned Mynamar on Friday it could lose trade privileges over its "blatant violation of human rights", as the international backlash over the Rohingya crisis grows.
EU Trade Commissioner Cecilia Malmstrom said a fact-finding mission would arrive in Myanmar soon to assess whether the highly preferential tariff arrangement Myanmar enjoys, known as "everything but arms" (EBA), should be withdrawn.
"We can not exclude this outcome and of course the reason is the blatant violation of human rights in Myanmar," Malmstrom told reporters at a meeting of EU trade ministers in Innsbruck, Austria.
"Our trade policy is values-based. These are not just words. We have to act when there are severe violations."
The EBA deal, giving duty-free and tariff-free access to the EU market for all products except weapons and ammunition, was reinstated for Myanmar in 2013 to support political reforms as it moved towards democracy after decades of military rule.
But Western powers and the UN have accused Myanmar's military of waging a campaign of ethnic cleansing against Rohingya Muslims, who are denied citizenship rights.
More than 700,000 members of the minority group took refuge in Bangladesh, fearful of returning to mainly Buddhist majority Myanmar despite a repatriation deal between the two countries.
Malmstrom also announced the EU was taking steps to end "everything but arms" for Cambodia, where July's elections, which returned strongman Hun Sen to power, were widely criticised internationally as undemocratic.
"On Cambodia we are even one step further because we had a high level mission there this summer and there were the elections marked by harassment and intimidation and everything but fair elections," she said.
"So I have notified Cambodia today that we will launch the procedure for withdrawal of EBA."