Senior US Commerce Official Opens Burma Trade Office

By Andrew D. Kaspar 6 June 2014

RANGOON — With a delegation of American companies in tow, US Secretary of Commerce Penny Pritzker christened a new trade office in Burma on Friday as she sought to deepen economic ties between the two long-estranged nations.

Along with the secretary’s opening of the Commercial Service Office at the US Embassy in Rangoon, two companies showcased investments in Burma—an already operational power plant outside Mandalay, and an aluminum can manufacturing facility in the Thilawa Special Economic Zone outside of Rangoon, expected to be up and running in 2015.

Pritzker on Friday promoted the business delegation’s visit as an opportunity to foster development in Burma, and encourage further political and economic reform in the Southeast Asian nation.

“Responsible investment can facilitate broad-based economic growth and economic prosperity for your people,” Pritzker told reporters and businesspeople at the embassy. “We have communicated to your government the need to build on the progress that has been made by implementing measures that increase inclusive economic development, promote government transparency and accountability and safeguard labor rights and human rights.”

The Commercial Service Office will serve as a resource to American companies hoping to export to Burma or invest in the country.

“Our Commercial Service officers help to increase opportunities globally, for our businesses and for yours,” she said, adding that US companies would bring technical know-how and a commitment to corporate social responsibility.

That commitment may soon be put to the test, with Friday’s announcement that Ball Asia Pacific would open up an aluminum can manufacturing plant next year in Thilawa, an area that is expected to be a hub for foreign investment but has been plagued by allegations of forced displacement of local residents, inadequate compensation and unacceptable living conditions at relocation sites. A formal complaint was lodged this week with the Japanese government, which is taking a lead in the project’s development.

The visit also comes a day after the US Campaign for Burma (USCB), a Washington-based advocacy organization, issued a “report card” on companies already working in Burma, scoring the firms’ adherence to the US State Department’s “Reporting Requirements for Responsible Investment in Burma.” The evaluation rated five out of six companies that have submitted reports to the US State Department as either “irresponsible” or “questionable” in their handling of human rights and corporate social responsibility reporting obligations.

American companies that invest more than US$500,000 in Burma are required under US law to submit annual “responsible investment” reports “to encourage and assist them to develop robust policies and procedures to address a range of impacts resulting from their investments and operations in Burma.”

The reports require information on any security arrangements that a company might have in place, how property was acquired and disclosure of any dealings with the Burmese military, among other things.

“Burma’s corrupt business environment has been controlled by a brutal and repressive military regime for decades,” USCB Policy Director Rachel Wagley said in a press release on Thursday. “The Report Card is part of US Campaign for Burma’s effort to hold companies accountable for their public reporting.”

Scott Morrison, Ball’s chief financial officer, told The Irrawaddy that the firm was working with the Thilawa SEZ’s management committee and JICA, the Japanese government’s development agency, to address concerns related to the project.

“We met with them recently,” Morrison said. “We’re happy with how they have a plan to compensate the people and provide new housing, new training, things like that, to international standards. Everything that we’ve seen so far seems to be that they’re very transparent and fair and operating under the highest international standards.”

Gihan Atapattu, president of Ball’s Asia-Pacific subsidiary, added that the company’s 134 years of experience would be an asset in ensuring the protection of human and labor rights.

“We think that our example, as being one of the first in Thilawa, is going to be a good change agent, to say, ‘This is the standard that is expected in that zone,’” he told The Irrawaddy.

Pritzker’s visit comes at a time of increasing US engagement with Burma, from tentative links between the two countries’ militaries to aid projects funded by the US Agency for International Development (USAID). The growing relationship has also been dramatically manifest on the economic front, where US sanctions had long prohibited American companies from doing business with Burma under the former military regime.

The opening of the Commercial Service Office follows the 2012 decision by US President Barack Obama to suspend most economic sanctions against Burma in recognition of reforms enacted under President Thein Sein’s government. Since then, US companies from corporate heavyweights Coca-Cola and Ford to Manhattan-based law firms and small-time restaurateurs have moved to set up shop in the formerly off-limits country.

Trade between the two countries is also on the rise, up from just $9.7 million in 2010 to $176 million in 2013.

Still, for both countries, the other is hardly an indispensable economic partner for the time being. Total US investment in Burma stands at $244 million, a figure that pales in comparison to Burma neighbors China and Thailand, which from 1988 through 2013 had invested more than $14 billion and $10 billion in the country, respectively.

Burma and the United States last year signed a Trade and Investment Framework Agreement (TIFA), intended to serve as “a platform for ongoing dialogue and cooperation on trade and investment issues between the two governments,” according to a release from the US trade office. That development came just one day after Thein Sein paid a landmark visit to his American counterpart in Washington.

Next up in the progressing relations may come a decision from Washington to grant Generalized System of Preferences (GSP) status to Burma. GSP allows privileged, duty-free access for exports to the United States from developing countries. Pritzker on Friday said the matter was under review and was a “priority” for the US government, but declined to say if or when she thought the designation might be granted.

A press release from the US Embassy said the secretary met with Thein Sein, Speaker of the Union Parliament Shwe Mann and opposition leader Aung San Suu Kyi, as well as several cabinet ministers and Burmese civil society leaders, during her two-day visit. Burma was the last leg of a three-nation tour that also saw her visit Vietnam and the Philippines earlier this week.