The BurmaNet News: April 5, 1998

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"Appropriate Information Technologies, Practical Strategies"   
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The BurmaNet News: April 5, 1998 (Weekend Edition)
Issue # 975

SPECIAL EDITION:  SANCTIONS, BUSINESS, AND AID

HEADLINES:    
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AWSJ: US STATES AND CITIES INCREASE USE SANCTIONS
US DEPT. OF STATE:  PRESS GUIDANCE ON UNDCP PLEDGE
THE NATION: WORLD KNOCKS AT ASEM'S DOOR
THE NATION: ASEAN, EU CHART WAY ROUND BURMA ISSUE
THE NATION: JUNTA LEADING BURMA IN RIGHT DIRECTION
THE NATION: CITY SPACE CROSSES BORDERS
XINHUA: BRITISH-MYANMAR FIRM TO SET UP SOAP FACTORY
XINHUA: DALIAN LOCOMOTIVE PLANT INCREASES EXPORTS

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ASIAN WALL STREET JOURNAL: US STATES AND CITIES INCREASE USE OF TRADE
SANCTIONS
April 2, 1998
Robert S. Greenberger, Staff Reporter

Massachusetts' Law Banning With Myanmar Troubles Industry Groups and
Trading Partners

BOSTON - When state lawmaker Byron Rushing (passed the) Myanmar sanctions
bill through the Massachusetts legislature, he had no idea it would cause
so much anger.

The 1996 bill effectively denies state contracts to any US or foreign
company doing business in Myanmar, formerly Burma, a nation ruled by a
brutal military regime. European countries and Japan, some of whose
companies seek work in both Myanmar and Massachusetts, immediately squawked
to the US State Department -- and now threaten to take their case to the
World Trade Organisation, which enforces international trading rules.

Washington, which would have to defend Massachusetts at the WTO, is upset
by the bill. And a worried US business group is ready to file the first
lawsuit challenging the legality of U.S. state and local sanctions on
international trade.

More trouble lies ahead. In the post-Cold War world, where international
disputes rarely warrant military action, US economic sanctions are
proliferating, especially at the state and local level.

A decade ago, these were aimed primarily at South Africa's racist policies.
Now those penalties have gone, along with apartheid. But states and cities
learned they could affect America's foreign policy and, since 1995, at
least three dozen new sanctions have been put on their books to punish
various nations for assorted human rights transgressions.

Thus, 18 other governments also sanction Myanmar. Oakland, California, has
sanctions on Nigeria while Dade County, Florida, has some against Cuba. And
business executives worry there could be a new wave of state and city laws
targeting China for alleged religious persecution, affecting many American
companies that operate there.

Just last week, New York City and New York state officials decided to delay
for now sanctions against three Swiss banks that agreed, for the first
time, to negotiate a global settlement with Holocaust victims over gold
stolen by the Nazis.

This patchwork of penalties, often driven by a few activists, confuses US
trading partners which already are upset by federal sanctions against
companies doing business in Cuba and Iran. "What we feel very uncomfortable
with is that we get conflicting signals about who determines U.S. foreign
policy and what the content of U.S. foreign policy is," says Bernd
Langeheine, trade counsellor in the European Commission's Washington office.

SEEKING ATTENTION

U.S. officials also are worried. When Stuart Eizenstat, the State
Department's under-secretary for economic affairs and point man on
sanctions, met some weeks ago with European officials to discuss further
national-level action against Myanmar he was told there won't be any
further cooperation until the Massachusetts situation is resolved, says a
U.S. official.

"We're doing this to get Burma on the foreign-policy screen," explains Mr.
Rushing, a former civil-rights activist and a state lawmaker since 1982.
And indeed, he has.

The sheer improbability of Massachusetts conducting a trade war against
Myanmar was evident in February in a conference room near Mr. Rushing's
tiny State House office. Those present, and very uncomfortable at seeming
to be in negotiations with a mere state, were a senior European, Union
official, a diplomat from the British embassy in Washington, and Britain's
consul general in Boston, plus, there to monitor things, a U.S. State
Department bureaucrat. The Europeans wanted Mr. Rushing to amend his bill,
which they say violates international trade law. He said he would, provided
the EU itself imposes new, tough sanctions on Myanmar. The Europeans said no.

Neither side would budge.  So, says Mr Rushing , with an eye on historical
irony, they discussed the American Revolution in their room near the Boston
Common, where British soldiers once trained and some were buried, back when
Massachusetts was a troublesome British colony. 

The bill in Massachusetts grew from a chance meeting in September 1993
between Mr. Rushing and a constituent, Simon Billenness, at a news
conference announcing the end of sanctions against South Africa. Mr.
Billenness, who works for Franklin Research & Development Corp., which
specialises in "socially responsible investing," was shopping for new ways
to penalise Myanmar. Mr. Rushing had played an active role in the campaign
against apartheid but "the only thing I knew about Burma was that a Burmese
guy had once been head of the United Nations," he recalls, referring to
former Secretary-General U Thant.

But he knew a lot about so-called selective purchasing sanctions, under
which states and localities decide who can be their suppliers.
Massachusetts, for example, imposes a 10% penalty on all bidders that
business in Myanmar.

Mr. Rushing had authored such rules against apartheid, which eventually
were imposed under the governor's executive authority, after a
Massachusetts prisoner sent fruit bought for the prison system that came
from South Africa.

Not many other Massachusetts legislators knew much about Myanmar, either.
But work on apartheid had established Mr Rushing's credentials, and
colleagues, who felt little political pressure either way, were willing to
go along. Two years later, the bill became law.

Almost immediately, such companies as Apple Computer Inc, Eastman Kodak
Co., and Hewlett-Packard Co. pull out of Myanmar, citing the law.

QUESTION OF LEGALITY

This entangled Mr. Rushing in the netherworld of what he calls
"diplogarbage," such as using the State Department as a backchannel to deal
with Europeans and holding meetings that are never called negotiations.  At
issue is an international agreement -- applying to the U.S. and many other
WTO members -- that says laws like the Massachusetts' Myanmar sanctions are
illegal if they involve procurement contracts above $500,000 for goods and
service or $7 million for construction.

Mr. Rushing says he didn't know the WTO measure pushed the statute.  Now he
is willing to have it conform if the Europeans get tougher on Myanmar in
return.

In fact, the EU has taken some measures, including suspending high-level
contacts and imposing an arms ban, but that isn't enough for Mr. Rushing.
(Last year, US President Bill Clinton imposed a ban on new investment in
Myanmar.)

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US DEPARTMENT OF STATE:  PRESS GUIDANCE ON BURMA/UNDCP
April 2, 1998

[BurmaNet Editor:  Current U.S. policy on Burma restricts the U.S.
government form giving any direct grant to the Government of Burma.
However, it is allowed to fund UN agencies, such as the UNDCP, UNICEF, and
UNDP. Under Cohen-Feinstein, enacted by President Clinton on May 20, 1997,
the Secretary of State must certify such programs as crop substitution
assistance and counter- narcotics assistance to the appropriate committees
that "the (Government of Burma) is fully cooperating with the US
counternarcotics efforts, and the programs are fully consistent with US
human rights concerns in Burma and serve the US national interest, and,
assistance promoting human rights and democratic values."]

Q. Reuters has reported that the U.S. pledged $3 million to a United
Nations Drug Control Program in Burma following a two-day seminar in
Rangoon on eradication of opium poppy.  Why did the U.S. make this
contribution?  Does the U.S. separate the narcotics issue from other
political issues in dealing with Burma?

A. Of the amount pledged to UNDCP in 1997, $3.3 million was earmarked for
the alternative development program in Burma.  The aim of the program is to
reduce drastically opium cultivation in the Wa ethnic area of north Burma.
The U.S. and other donors worked with UNDCP over a long period to develop a
program with reasonable benchmarks and effective oversight.  The funding
goes to UNDCP and the project in the affected area, not to the Government
of Burma.  The U.S. believes alternative development has the potential to
reduce drug cultivation and trafficking in the Golden Triangle region,
traditionally a leading source of illegal opiates in the United States.

In developing a counternarcotics policy for Burma, the U.S. takes into
account the overall political situation.  The U.S. provides no
counternarcotics assistance to the Government of Burma.  The U.S. remains
concerned about the lack of democracy and human rights in Burma, and
concerned as well about the commitment of the GOB to fight narcotics.
Nevertheless, the U.S. wishes to limit the damage narcotics produced in
Burma can inflict on the U.S. and the rest of the world.  One channel to
address the problem is UNDCP, which has experience in alternative
development projects in areas of the world where U.S. access is limited. 

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THE NATION: WORLD KNOCKS AT ASEM'S DOOR
April 3, 1998
Kavi Chongkittavorn

In the absence of clear criteria, future enlargement of the Asia-Europe
Meeting could be further complicated as more and more countries, now up to
20, have filed official applications to the join the young economic club.

The Asem leaders will address this issue when they meet for lunch today to
determine what should be done about the expansion of Asem. Enlargement is a
highly sensitive issue because each original member has its own preferences
for the choice of new members and conditions for joining Asem. Also,
without a consensus, it is hard to agree on new members.

At the Asem foreign ministerial meeting in Singapore in February 1997, it
was agreed that Asia would nominate new Asian members and Europe members
from the continent. Both sides would then make a final decision by consensus.

However, the admission of Burma into Asean last July raised new questions
related to the status of membership in Asem. Before the first Asem in
Bangkok, Asean membership meant automatic Asem membership.  Vietnam was
admitted into Asean in 1995 and it took part in the first Asem eight months
later.

Would Burma and Laos -- the latest members of Asean -- be able to
automatically join Asem? The Asem leaders finally decided that membership
of new Asean members would have to be decided collectively by all Asem
members.

Because of its violation of human rights and political suppression, Burma's
future in Asem is the most uncertain. The EU has applied sanctions against
Burma while it has welcomed Laos into the Asean-EU cooperative agreement.
Although the discussions among Asem leaders today will not name names, they
will attempt to gain a general feeling about whether it is time yet to
admit new members, or whether the Asem process needs to be further
consolidated among the existing members.

A senior Thai official, who follows the membership issue, said that a total
of 20 countries had written to Thailand, as the coordinator of Asem, and
specifically stated that they want to join Asem. They include Australia,
New Zealand, India, Pakistan, Bangladesh, Uzbekistan, Burma, Laos, Taiwan,
Russia, Switzerland, Hungary, Czech Republic, Romania, Slovakia, Bulgaria,
and Ukraine.

He said that apart from Burma, the other country which will make Asem
expansion more complicated is Taiwan. Taiwan's application would be
certainly scorned by China, which has made it clear that Asem is not a
forum for the so-called "economies" to participate like the Asia Pacific
Economic Cooperation. It is for sovereign states. Taiwan is considered part
of mainland China.

There is a strong prevailing feeling among the majority of Asem for four
more candidates -- Australia, New Zealand, India and Pakistan -- to be
admitted for the third Asem in Seoul in 2000, but there have been some
barriers as some Asean countries have strongly opposed the move to admit
Australia and New Zealand, which they say do not belong to Asia.

The Thai leaders, including Premier Chuan Leekpai, support the inclusion of
the four for the next Asem and want Asem senior officials to work on the
timing and modalities for the enlargement before new memberships are taken
up for consideration.

Australia and New Zealand are caught in a Catch-22 dilemma. They are
considered members of the political West but are geographically located in
Asia. In the past the two identified with the industrialised countries but
now they say that their destiny is tied to Asia.

But the problems of Asem membership expansion do not stop there. How can
one define the geographical location of Europe and Asia -- where it starts
and where it ends? Are the new EU members to be included in the Asem? How
about Russia?

Put all countries together from the two continents, including Oceania, and
Asem would be a mini-United Nations and become the biggest economic
consultative forum outside the UN system.

Russia has its own dilemma as it claims to be both a European and Asian
power with a land mass that stretches across 11 time zones. But the
European members of Asem are not that enthusiastic at this juncture to see
the big bear join as they would prefer to work with the former Eastern
European countries of Poland, Hungary and Czech Republic, which are
preparing to join the European Union.

Admitting Russia will also split Europe into two distinctive groups: the EU
and new EU groups. Together with the EU Commission's presence in Asem,
Europe would have three representatives, making it harder still to speak
with one voice.

If the Asem leaders decide to move on with the enlargement issue, the
senior officials will have a year to work and agree on the timing and
modalities.  Their recommendations will be considered by the Asem foreign
ministers, who are scheduled to meet in Germany early next year.

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THE NATION:  ASEAN, EU CHART THEIR WAY ROUND BURMA ISSUE
April 5, 1998
Yindee Lertcharoenchok

LONDON -- Asean and the European Union are trying to work out a formula to
break the current deadlock which has hindered their annual bilateral
dialogue as a result of Burma's admission into Southeast Asian grouping
last July. 

Deputy Foreign Minister Surin Pitsuwan said yesterday that he had proposed
a formula to Manuel Marin, vice president of the European Commission,
during their bilateral meeting on Friday, but he declined to disclose what
the formula was, saying that this would be premature as Marin has yet to
discuss it with the 15 European Union foreign ministers. 

Surin said the meeting of Asian and European ministers on Thursday had
agreed that both sides should quickly resolve the deadlock in "a creative
way."

Following Burma's admission into Asean last July, the European Union has
refused to take part in an annual Asean-EU joint committee where a Burmese
delegation would participate as an Asean member. The European grouping
opposed Burma's membership in the regional grouping unless there was
political progress in the country.

Although Burma recently attended a meeting of an Asean-EU working group in
the Philippines, Surin said the working group had been a small structure
and that Asean was keen to resume the annual bilateral meeting, which was
at the level of director-generals. 

The ministers agreed that both Asean and EU had "to adjust and be flexible"
in order to resolve the problem. 

He quoted Marin as saying that the matter was of a "sensitive" nature as
the admission of Burma into the joint Asean-EU committee would need
approval from the European Parliament. 

However, the European ministers are equally keen now to find a way around
the stumbling block so that both sides can proceed with their regular
consultations, he added. 

Asem leaders on Friday suggested that there were similarities in the
situations in Cambodia and Bosnia, pointing out that in both cases there
was uncertainly, unpredictability and fast political development. 

During a closed-door discussion on international political issues, Prime
Minister Chuan Leekpai said that despite progress being made in Cambodia to
move the peace process forward and the scheduled 26 July general elections
the situation there was still unstable. 

Japanese Prime Minister Ryutaro Hashimoto said that he agreed and expressed
hope that Prince Norodom Ranariddh and all other politicians would be able
to participate in the election. 

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THE NATION:  JUNTA IS LEADING BURMA IN THE RIGHT DIRECTION
April 4, 1998

Letter to the Editor
Pat James
"A Texan in Burma"

(BurmaNet Editor's Note: You can response directly to The Nation at:
Fax: 66-2-317 2077
E-mail: editor@xxxxxxxxxxxxxxxxxxxxxx)

Aung San Suu Kyi is wrong. Open attacks upon companies seeking to invest in
Burma and the ongoing attempts to embarrass companies already in Burma with
distorted facts are not the proper procedures for someone who is attempting
to be a future leader. It almost appears as if she is trying to starve to
death the very people she wishes to lead. 

Foreign investment in Burma will create thousands of new jobs and provide
technology transfer to the people. 

The people of Burma need food on their table today, not in the distant
future. 

How many generations must suffer due to her clinging on to an idea, which
is serving only her own personal goals. 

What is wrong with thinking that it is possible for an open capitalist
market -- Asian style -- to operate within the cultural, traditional and
economic values of Burma? 

Many other countries of the world have watched as their people have
suffered due to ill-conceived sanctions and other forms of punishment
simply because their views were not shared equally by all. 

I have lived in Burma for more than eight years. 

During this time I have witnessed personally, not through the media, the
many changes taking place. 

There is no doubt in my mind that the progress and development which has
taken place here since the opening of Burma -- infrastructure development,
private businesses, health care and all other sectors falling under the
responsibility of the government -- have improved dramatically each year
since 1988. 

Burma is a safe place to raise a family while offering a quiet and peaceful
lifestyle. Burma is the Thailand your parents have spoken to you about when
they were children. 

Burma is a place to visit before having your ideas shaped by media reports
of reporters listening only to political exiles. 

Considering the options faced by the military in 1990, they made the
correct choice. 

Yes, there have been mistakes made, mistakes that have been corrected or
are in the process of being corrected. 

Even the great USA is changing laws and policies monthly as required to
co-exist in this ever-changing new global economy. 

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THE NATION:  CITY SPACES CROSSES BORDER
April 3,1998

Bangkok-based design firm, City Space, is targeting expansion into Cambodia
and Burma to complement its activities in Thailand. 

The interior design firm believes there are strong growth prospects in the
emerging neighbouring economies of Cambodia and Burma. 

''The Thai market has been spectacularly successful for us over the last
three years, but as it has matured and become more competitive we can only
keep growing at our historic rate by diversifying,'' said company director
Walter Tinyow. 

"Although Cambodia and Burma are not yet as politically stable as Thailand,
we believe things have started to move in a positive direction and we are
well positioned to assist international investors who are exploring
opportunities there,'' he noted. 

City Space recently established a subsidiary in Phnom Penh and has already
worked on projects in both Cambodia and Burma. 

In Burma, City Space has designed the first Rover/BMW dealership, while in
Cambodia, the firm designed and project-managed Mobitel's operational and
sales facility. 

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XINHUA:  BRITISH-MYANMAR FIRM TO SET UP SOAP FACTORY IN YANGON
April 3, 1998 (A Chinese Newspaper)

YANGON - A British-Myanmar joint venture company -- Myanmar Cole and Win Co
Ltd -- will set up a soap factory in Yangon, and 40 percent of its products
will be exported, the New Light of Myanmar newspaper reported Friday.  The
factory is to be established in the Hlaingtharya Industrial Zone in the
northwest of Yangon, one of the five such zones developed in the capital in
recent years.

Under the land-lease contract signed here Thursday between the joint
venture company and the Human Settlement and Housing Development Department
of Myanmar Construction Ministry, the company will build a soap powder and
liquid factory on a 0.47-hectare plot of land in the zone to produce
household toilet requisites and chemicals to be used in manufacturing soap,
the report said.

The 453-hectare Hlaingtharya Industrial Zone was initially developed by
local entrepreneurs who set up such industries as food processing, textile,
engineering, electrical goods, chemicals, forest products, and animal
foodstuffs.

The development of the zone was later joined by multi-national foreign
firms including those from Britain, France, Japan, Singapore and Thailand,
as well as by Myanmar-foreign joint ventures, leasing land in the zone and
running dairy products, galvanized iron sheet, and sanitary and garment
factories.

Thanks to improvement of infrastructure in the zone, local developers are
applying for more industrial land, and at the same time attracting more
foreign entrepreneurs to invest in export-oriented industries.

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