The embargo on gems is the latest U.S. move to apply financial pressure on the junta. Many Western nations have instituted economic and political sanctions against the military government, which seized power in 1988, violently suppressed pro-democracy demonstrations by monks last September and hindered foreign aid after a devastating cyclone in May.

The U.S. bill bans all import of gems from Myanmar. U.S. officials say Myanmar had been evading earlier gem-targeting sanctions by laundering the stones in third countries before they were shipped to the United States.

The United States has also been trying to persuade the U.N. Security Council to consider introducing international sanctions, and has demanded that the junta release opposition leader Aung San Suu Kyi from house arrest.

Exiled Myanmar pro-democracy activists hailed the new U.S. measure.

"This legislation sends a strong signal to Burma's military regime that the United States stands firmly on the side of my country's democracy movement," said Aung Din, co-founder of the Washington-based U.S. Campaign for Burma, which lobbies for political change.

However, the junta has not issued an official response. And local officials have privately told foreign diplomats the embargo will have no effect on the sector's foreign sales unless the wider international community joins in.

Such a move seems unlikely anytime soon. Although the European Union has edged closer to the punitive U.S. position toward Myanmar's military rulers, Yangon's regional trading partners - China, India and members of the Association of Southeast Asian States - have argued that engaging the junta will be more productive in the long run than isolating it through sanctions.

Foreign diplomats have also pointed out that sanctions would primarily impact disadvantaged minorities, who live in many of the gem mining areas of Myanmar.

So the gem trade continues to thrive. Myanmar's rubies, and particularly the rare "Pigeon Blood" stones, are highly prized on international markets because of their unique deep color. The country's precious jadeite deposits produce the dark green "Imperial Jade" that is sought-after in China and other countries in the region.

The junta holds regular gem auctions for foreign merchants during which it sells thousands of lots of valuable stones, which are said to generate upward of $100 million in foreign currency per sale. The last such event, held in November, drew more than 3,600 foreign buyers.

"We are not concerned" by the U.S. embargo, Myint Myint Cho of the Min Thiha Jewelry Shop in downtown Yangon told a reporter. "We are not thinking of it at all."