U.S. Business in Burma: Part of the Problem or Part of the Solution?

Burma is modernizing at a ceaseless pace. An enigma to foreigners for most of the latter half of the 20th century, Burma's rapidly expanding economy is quickly opening its doors to multinational investors. Like their counterparts around the globe, Burmese youth may now quench their thirst with a bottle of Coca Cola, or pose for a selfie with their I-phones next to a Colonel Sanders wax statue at Yangon's KFC. Workers and consumers alike express continued enthusiasm about the influx of foreign investment. But foreign investment also raises the omnipresent specter of exploitation and complicity in ongoing human rights violations. The U.S government has taken, and should continue to take steps to minimize this risk.

The political changes that predated the influx of foreign investment have been stunning. Freedom of association was made legal in 2012 and severe limitations on freedom of speech have been greatly eased. 2015 also marked the first free uncontested elections in the country in over 50 years, resulting in the sweeping victory of Aung-San Su Kyi's NLD opposition party. These changes have led the U.S government significantly scale back its economic sanctions regime against Burma in 2012. This move has made Burma's rapidly growing economy even more appealing to American companies.

But Burma's political transformation is far from complete and in some areas has faltered. Child labor and even compulsive labor continue to be rampant throughout the country -- accounting for around 10% of the work force. Non-Burmese ethnic minorities and union members continue to face pernicious workplace discrimination. Land grabbing by the government without a veneer of due process or compensation has affected Burmese and non-Burmese alike. The country's weak rule of law and ineffective dispute mechanisms ensure that many of these issues are resolved through non-legal means, sometimes involving violence, thus further undermining the reform process.

Foreign investors can be either part of the solution or part of the problem. On the one hand, it is easy to imagine a scenario in which multinational companies keep costs down by becoming complicit in land grabbing or in compulsive labor schemes. This kind of behavior has been documented as one of the chief reasons why earlier reform efforts in Burma and elsewhere in the developing world have faltered. On the other hand, multinational investors can import robust internal grievance and rule of law mechanisms that would reverberate across the Burmese economy, serving as a model and setting a standard for transparent and accountable business practices in the country.

The U.S. government has thus opted to ensure that American investors take the latter route. To this end, the State Department issued disclosure requirements called the "Reporting Requirements" as a precondition to investing in Burma. The Requirements mandate that new investors disclose the policies they have in place to minimize human rights violations, as well as the extent to which these policies apply to local partners and suppliers. Investors must also report on procedures put in place to verify land ownership of their locations in the country. The Requirements are currently under internal review, and there is a real danger that the State Department may do away with them.

The Reporting Requirements are far from perfect. For one, many investors submit excessively short or incomplete answers that are not particularly helpful to monitoring NGOs. Some investors contend that they are not required to report at all. Most Reports are only in English, making it nearly impossible for the country's fledgling labor unions to hold investors accountable to the reported standards. Perhaps most unfortunately, the Requirements do not require investors to reveal the identity of their local partners and suppliers. Absent these disclosures it is impossible for NGOs to verify whether the investor's policies on human rights have any impact beyond its own operations. These disclosures are particularly necessary to ensure that investors are not circumventing the Requirements by contracting with local firms engaged in human rights violative behavior. The State Department thus misses a golden opportunity to broaden its impact on strengthening human rights standards and the rule of law at the domestic workplace level.

But these shortcomings, while palpable, do little to detract from the immense utility of the Requirements. Civil society has on several occasions used the disclosures to independently hold investors accountable to their disclosed standards. In a similar vein, NGOs have also been able to identify investor misrepresentations. The Requirements have thus contributed some measure of transparency to American investment in the country. But perhaps mostly importantly, NGO's are now beginning to build upon the presence of the Reporting Requirements to draft and distribute their own disclosure forms among non-American investors. That dozens of non-American multinationals have cooperated despite not having to do so illuminates the Requirements' unmistakable moral force. Indeed, the Requirement's most laudable contribution thus far lies is their very existence.

With the Requirements currently under internal review, the State Department should not only maintain the Requirements, but also take steps to remedy their shortcomings. In doing so, the U.S government can help ensure that Burma imports our most lucrative commodities - respect for human rights and the rule of law.

* Roee Talmor is a second year law student at the University of Chicago Law School. He has been working on a project on the human rights implications of U.S. investment in Burma in the International Human Rights Clinic in partnership with the Solidarity Center.

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