WASHINGTON — When the Obama administration lifted economic sanctions on Myanmar
last year, encouraging American investments after decades of treating
the nation as a pariah, it did so with a significant caveat.
For the first time, effective on Monday, American companies investing in
Myanmar must detail in public reports the steps they have taken to
respect human and labor rights, to protect the environment and to avoid
corruption in an economy warped by international isolation and military
dictatorship.
The reporting requirement represents a novel and, to some, controversial
effort by the administration to shape business practices in an emerging
economy that has embarked on a remarkable though hesitant opening under
Myanmar’s reform-minded president, U Thein Sein.
Officials said the effort could become a model for other countries that
might someday emerge from sanctions, like Cuba and Iran. It could also
be used, they said, for countries with shoddy records of corruption or
other abuses that have come under heightened scrutiny after disasters like the one in a Bangladesh factory in April that killed 1,129 workers.
“While these have been tailored to Burma,” said Daniel B. Baer, a deputy
assistant secretary of state, referring to Myanmar by its other common
name as a matter of American policy, “a similar set of issues would
apply in other places — not only other countries emerging from sanctions
but really any place where businesses are operating and investing.”
The requirements have generated considerable criticism. Business and
industry groups have complained that they are onerous and make American
companies less competitive than their European counterparts, which are
also surging into Myanmar.
Human-rights advocates argue that they are not strong enough — and lack
explicit penalties for companies that do not comply — to manage a
headlong rush to invest in an impoverished country afflicted with ethnic
conflicts and still dominated by the military and state-owned
enterprises that operate with little transparency.
The U. S. Chamber of Commerce lobbied against the rules as the
administration drafted them after President Obama’s decision to lift
sanctions last July. American investment in Myanmar “should be
encouraged, not hindered,” said John Goyer, the chamber’s senior
director for the region. The organization has called on the
administration to extend trade privileges to Myanmar.
“Other countries are not putting similar obligations on their own
companies, so it is an additional requirement that our competitors do
not have,” Mr. Goyer said. “Larger companies can put forth the resources
necessary to adhere to the reporting requirements, but for smaller
companies, it is much more difficult to do so.”
The administration imposed the requirements using the legal authority it has from a raft of economic sanctions
that were imposed after Myanmar harshly repressed the opposition
movement led by Daw Aung San Suu Kyi, refusing to recognize her party’s
victory in elections in 1990. Her party has since been legalized, and
last year she won a seat in the country’s Parliament.
Mr. Obama has welcomed the initial steps to loosen the military dictatorship and met Mr. Thein Sein in the White House
in May, but the sanction laws remain on the books and can be reinstated
if the reforms are reversed. The president used his authority to waive
the sanctions and grant companies licenses to operate there. The State
Department then spent months drafting the requirements after holding
public hearings and inviting comments from companies and advocates.
The requirements apply to any company investing more than $500,000, and
to all investments with the country’s state energy monopoly, Myanma Oil
and Gas Enterprise.
In addition to ensuring the rights of workers and providing protections
for the environment, the companies must report any payment exceeding
$10,000 to government agencies or officials, any contact with Myanmar’s
military, arrangements with private security companies and the details
of any purchase of land or real property.
Companies are required to submit their reports within 180 days of
reaching the threshold and by July each year thereafter. The reports
will be made public on the Web site of the newly reopened American Embassy
in Yangon, also known by its colonial-era name, Rangoon. Companies can
separately submit to the State Department a report with any privileged
competitive information that will not be made public.
American companies are already subject to laws governing foreign
investments, including the Foreign Corrupt Practices Act, and the
Securities and Exchange Commission now requires companies to report on
investments in oil, gas and mineral industries overseas under the
Dodd-Frank legislation that Congress adopted in 2010. But the
requirements for Myanmar are the first to apply to investments across
the entire economic spectrum.
While there are no explicit penalties for not reporting, the State
Department expects that most companies will comply to avoid public
criticism from advocates for human rights and the environment who are
closely watching Myanmar’s political and economic opening.
“It puts companies in the uncomfortable spot of saying they’re not doing
anything,” said Lisa Mosol, a researcher at Human Rights Watch, which reports regularly on Myanmar. “It might cause companies to slow down and think harder.”
The extent of American investment in Myanmar so far remains unclear, but
officials and experts expect it could expand significantly given the
country’s population of nearly 60 million and the dearth of American and
European products after so many years of international isolation.
Dozens of American companies have already announced investments,
including prominent ones like Coca-Cola, General Electric and Ford,
which is opening its first franchise dealership in Yangon, selling
Ranger trucks made in Thailand and F-150s made in America.
John F. Kwant, Ford’s director of international government affairs for
Asia and Africa, said the lifting of decades of sanctions had happened
so quickly that companies had little certainty about the requirements
for receiving licenses to invest. He said the State Department’s
requirements clarified the parameters for investors and, at least in
Ford’s case, did not seem burdensome.
“We don’t find the reporting requirements onerous,” he said, adding that
big companies were well versed in laws like the Foreign Corrupt
Practices Act. “Those are all things we do as a matter of course.”
Michael H. Posner, who was assistant secretary of state for human and
labor rights until joining the Stern School of Business at New York
University this year, said the intent of the requirements was to force
companies to examine the murky connections between the business and
power in “a very embryonic system,” with undeveloped institutions and
regulations.
“This is part of a greater trend — not only in the business world, but
in our world generally — toward transparency,” said Mr. Posner, who
helped draft the requirements while at the State Department. “I think
it’s a very healthy trend.”
source: NY Times
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