Mr. Obama had moved in May to ease a broad array of sanctions that barred American citizens and companies from doing business with Myanmar, loosening restrictions on state-owned banks and entities.

But, at that time, he left in place an official government finding of a state of emergency for Myanmar, which calls the country an “extraordinary threat.” Earlier on Wednesday, Mr. Obama sent Congress official notice that he was restoring trade benefits to Myanmar that were revoked in 1989 because of concerns over worker rights, allowing it to qualify for a program that allows poor countries to export thousands of products duty-free to the United States.

The decision to go a step further, and scrap the sanctions entirely, reflects Mr. Obama’s belief in using diplomacy paired with sanctions relief to prod former foreign adversaries toward greater openness. That principle was at the heart of Mr. Obama’s agreement last year with Iran to relax sanctions in exchange for restraints on the country’s nuclear program, and has been the driving force behind the opening of a dialogue with Cuba.

Since taking power six months ago, Ms. Aung San Suu Kyi has moved to heal ethnic conflicts that have long plagued Myanmar. She invited a team led by Kofi Annan, the former United Nations secretary general, to begin investigating the plight of the Rohingya, a group of about a million Muslims living in dire conditions in western Myanmar.

Yet Ms. Aung San Suu Kyi had declined to use the term “Rohingya” to describe the persecuted Muslim population that has lived in Myanmar for generations, angering rights activists who had hoped she would reverse discriminatory policies that have marginalized the Rohingya and prompted many to flee.

And crucial political changes have yet to be made, like amending Myanmar’s Constitution to remove the military’s control over 25 percent of parliamentary seats, its ability to dissolve Parliament in times of national emergency and its control over the nation’s security, defense and border ministries.