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 officials.

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 and cities.

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."

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