Localities Targeting Firms With Links to Myanmar
Motorola Inc., Swedish giant LM Ericsson and Japan’s Mitsubishi Heavy Industries share one thing that has put them on a collision course with a tough new law passed by the city of San Francisco.
They’re accused of doing business in a troubled Southeast Asian nation called Myanmar, which could jeopardize their bids for a $40-million emergency radio communications system and a $140-million light rail system for San Francisco International Airport.
Commercially speaking, Myanmar is not exactly South Africa. But human rights abuses in the country formerly known as Burma have spawned a potentially costly web of selective purchasing laws at the local and state levels that recall the effective anti-apartheid boycott of South Africa--and they are posing tough economic decisions for an international roster of companies.
While Clinton administration officials debate whether to levy tougher economic sanctions against Myanmar’s military rulers, multinational companies are already running afoul of so-called selective purchasing laws passed by seven U.S. cities and states in the last two years.
Thus, Apple Computer Inc. just pulled out of Myanmar to keep its name off a prohibited list being draw up by Massachusetts, which last month became the first state to pass a similar law banning business with companies that have investments or employees in Myanmar.
And Unocal Corp., the largest U.S. investor in Myanmar, faced a review this summer of its contract to provide bus fuel for Santa Monica. The City Council eventually agreed to continue the contract after determining that a suitable replacement could not be found.
Although El Segundo-based Unocal has held firm, others, including Levi Strauss & Co., Eddie Bauer, European brewers Heineken and Carlsberg and financier George Soros, have already pulled money or employees out of the country.
There is also evidence that the campaign to undermine Myanmar’s repressive military government has picked up steam since last weekend’s arrest of up to 800 members and supporters of the opposition party headed by Nobel laureate Aung San Suu Kyi.
The United States issued a ban on visits by members of Myanmar’s ruling State Law and Order Restoration Council (SLORC), which responded Friday by banning U.S. visitors.
Now New York, Takoma Park, Md., and California’s Alameda County are considering selective purchasing laws. And the European Union is debating whether to cut off trade privileges to Myanmar.
The selective purchase strategy is being pursued by other human rights groups. The city of Oakland has targeted Nigeria’s military government along with Myanmar. And 22 states and 33 cities and counties have provisions barring them from investing in companies that practice employment discrimination in Northern Ireland.
This acceleration of unilateral economic sanctions is viewed with alarm by the U.S. Chamber of Commerce, the National Foreign Trade Council and other business organizations.
John Howard, the chamber’s chief international strategist, argues that such measures don’t achieve their goals because they simply penalize U.S. firms while freeing up the targeted markets for foreign competitors.
“It remains to be seen if Burma compares to South Africa in the interest it generates,” he said. “But collectively, [these sanctions] add up to a big problem.”
Even foreign companies are beginning to voice concerns, albeit much more quietly, because some of these measures are nationality-blind.
Rep. Nancy Pelosi (D-San Francisco), one of Congress’ most outspoken human rights proponents, said these laws send a powerful message to giant Japanese firms such as Mitsubishi and Mitsui that have played a key role in Myanmar’s economy.
“There are many Asian investors who are looking to do business in the United States,” she said. “If they do business with the SLORC, then they have less opportunity here.”
The Washington-based Investor Responsibility Research Center said it has experienced a jump in calls from executives worried about appearing on its widely disseminated list of companies doing business in Myanmar.
Ken Bertsch, director of the center’s social issues program, said his group gets lobbied by companies wanting to be taken off the list. But he said his group simply collects information, which it always attempts to verify before passing it on.
“Looking back at the campaign against apartheid in South Africa, the selective purchasing laws had the most impact because it hit companies where it hurt,” said Simon Billeness, a senior analyst at Boston-based Franklin Research & Development Corp., a firm promoting socially responsible investing.
Over the last two decades, globalization has given these laws more bite, because U.S. companies are increasingly dependent on overseas markets and foreign companies have a larger stake in this country.
In its effort to grab a larger share of the global telecommunications explosion, Schaumburg, Ill.-based Motorola frequently finds itself in countries where the political and economic stability fluctuates from day to day.
Larry Barton, Motorola’s director of international operations, said his firm follows the federal government’s lead on doing business abroad and does not believe city or state governments should venture into this complex arena.
Motorola, which does business in 45 countries, has had “very small sales” in Myanmar and has one employee there evaluating the market, according to Barton.
The company’s immediate stakes are much higher in San Francisco, where it is bidding against Ericsson Inc. for a $40-million emergency radio system. Ericsson’s parent company, LM Ericsson of Sweden, also does business in Myanmar.
San Francisco is reviewing both bids in light of their ties to Myanmar. The Myanmar selective purchasing law can be waived if its imposition would cause major financial harm to the city or if there are no other qualified bidders.
The city also is reviewing Mitsubishi Heavy Industries of America’s bid for a $140-million airport light rail contract.
