Trade war over Burma
In These Times magazine, February 17, 1997
A national grass-roots campaign against corporations that
invest in Burma has heated up in recent weeks, provoking the European
Union and the Japanese to rattle their sabers in what could turn
into a trade war.
The EU and Japan take exception to an ordinance enacted by
the state of Massachusetts in June that bars state agencies from
contracting with companies that do business in Burma. In These
Times has obtained a January 22 letter from the EU to the U.S.
State Department insisting that the law is an infringement of
free trade. The letter threatened that the EU may appeal the case
to the World Trade Organization in Geneva. Representatives from
the Japanese consulate in Boston have also exerted pressure on
the state, threatening to approach the WTO, according to Massachusetts
In the last year, Massachusetts and 10 cities, including San
Francisco and Oakland, Calif., have adopted local ordinances that
bar business with Burma or financially penalize companies that
invest there. The Massachusetts legislature is also considering
a law aimed at companies that invest in Indonesia, which has a
history of human rights abuses in East Timor even worse than that
of Burma's military regime.
As a result of Massachusetts' restrictions, Apple Computer
pulled out of Burma in October, followed shortly there after by
Hewlett-Packard, Motorola and Eastman Kodak. Now the ordinances,
known as selective-purchasing laws, threaten powerful multinational
corporations such as Los Angeles-based Unocal and France's Total,
who will reportedIy share $200 million in profit from a joint
venture to build a gas pipeline in Burma. The Japanese consulate
responded so vehemently to Massachusetts' selective-purchasing
law because 30 Japanese companies, including Mitsubishi and Toyota,
showed up on the state's Burma blacklist.
"Now that these laws are hitting the companies where
it hurts, the companies realize this is a serious threat to their
business," says Simon Billeness, a senior analyst at the
Boston-based investment firm Franklin Research and Development
and coordinator of the Massachusetts Burma Roundtable, a human
rights group that advocated the bill.
Burma's military junta seized power in 1988 after crushing
a pro-democracy uprising led by students. Commonly known as the
State Law and Order Restoration Council, or SLORC, the regime
is responsible for egregious human rights violations, including
torture, rape, forced labor and suppression of free speech.
The chance is "very high." says Mike Dolan of Public
Citizen's Global Trade Watch, that a case considered by the WTO
could result in nullification or weakening of the Massachusetts
law. "Under the WTO, those kinds of laws become nontariff-based
barriers, which invite WTO challenges," Dolan explains. In
January 1996, the WTO threatened the United States with trade
sanctions if it didn't abrogate the Clean Air Act to allow Venezuela
to export gasoline that didn't meet U.S. emissions standards.
Because WTO rules allow only national government representatives
to dispute claims, Massachusetts will have no recourse if the
Clinton Administration makes a deal over its head.
The EU's missive is only the latest in a series of protests
received by the State Department from foreign entities, according
to Dr. Thaung Htun, the U.N. representative of Burma's exiled
democratic government. The State Department's Burma desk officer
would not return calls for comment.
Critics of the Burmese military regime are concerned that
opposition to the Massachusetts law could not only affect existing
laws but also corrode support for initiatives in other states
Human rights advocates point to the brewing trade war as evidence
of the way democracy has been undermined by global free trade
agreements. Afraid of retaliatory trade sanctions, nations are
effectively ceding veto power over their laws to the WTO. That,
says Dolan, "is the new jurisprudence of international commerce."