US Trade Representative Public Hearing on Burma’s Eligibility for GSP Benefits

The cliff notes version of the public hearing to review Burma’s eligibility for US Generalized System of Preferences (GSP) trade benefits

June 4, 2013

US Trade Representative

On June 4, USCB headed to the US Trade Representative Office to testify against allowing Burma into the GSP program, which would waive import duties on Burmese goods. View USCB’s pre-hearing briefing and skip down to the bottom to see USCB’s Executive Director Jennifer Quigley’s testimony. To see the official transcript of the hearing, click here. To see the unofficial cliff notes transcript, read on!

(Some of the hearing’s choicest quotes are highlighted in green below.)

William Jackson, Chair of the GSP Subcommittee and Deputy Assistant US Trade Representative for GSP, started off the hearing with some logistics:

  • The hearing was announced on April 16
  • Each witness is limited to a 5-minute testimony
  • Post-hearing briefs must be submitted by Tuesday, June 26 in which witnesses can expand on testimonies or respond to others’ testimonies as well as respond to the Subcommittee’s further questions

GSP Subcommittee representatives participating in the hearing came from the

U.S. Department of Agriculture (Office of Agreements and Scientific Affairs, Foreign Agricultural Service), the U.S. Department of Commerce (International Trade Administration), the U.S. Department of Labor (Office of Trade and Labor Affairs, Bureau of International Labor Affairs), the U.S. Department of State (Economic and Business Bureau), the U.S. Department of the Treasury (Office of Trade Policy), and the US Trade Representative for Labor Affairs.

The hearing was divided into four panels of witnesses.

Panel 1: Burmese government officials: H.E. Dr. Pwint San (Deputy Minister, Ministry of Commerce, Nay Pyi Taw), H.E. Than Swe (Ambassador, Burmese Embassy, Washington, DC), Mr. Aung So (Deputy Director General, Ministry of Commerce, Nay Pyi Taw), and Dr. Maung Maung Lay (Vice-President, Chamber of Commerce and Industries, Nay Pyi Taw).

Than Swe, Burmese Ambassador to the US, began the panel with a short testimony. We have included some of his statements below (grammatical errors sic erat scriptum):

  • Our reform is a peaceful process…it is a good and moral example for other countries…
  • Burma has released thousands of prisoners, including political prisoners. Some laws are being amended and others are being made to support our reform process or bring them into international law standards…
  • Human rights dialogues are being held with US and Japan…
  • Realization of our media law gives the people a voice…
  • Regarding forced labor, many developments have been taken. In March 2012, Burma signed an understanding of elimination of forced labor by 2015. Many labor organizations are being issued in the country – 523 licenses have been issued to 492 organizations…
  • Burma has an all-encompassing reform process…
  • The US-Burma bilateral relation [now] reaches its peak for the first time in many years…
  • 26% of the Burmese people live under the poverty line. We must work together to free these people…to free from poverty…Almost 3 million of Burmese people are spilling over to other countries looking for jobs. We can bring these people back home. This [bringing back Burmese migrant workers and/or GSP] is a win-win situation for foreign investors and other countries. GSP will play an important part to make that happen…
  • In the past 2 years, many leaders have come to Burma from around the world, and the EU will reinstate their GSP for Burma in the very near future.
  • We need to do this [reinstate GSP] to create win-win situation that I was talking about before.

Panel 1 Q&A with Subcommittee representatives

Chair: Many of the questions we have today for you will be on worker’s rights issues. We also have other considerations, like intellectual property rights.

US Trade Representative for Labor Affairs: Since the labor union law went into effect, many labor unions have started (540 unions have started). Are the labor laws in place operational?

Burmese government panelist: Thank you for your questions. Very interesting, the Burmese labor situation. Since 2002, we are very closely related to the international Labor Organization and we established an officer and we extended our relations with ILO. We have established laws, and any labor group can establish labor organization freely. Freedom of association – we are implementing that.

At the factory level, you can establish labor unions. The second step is the township level then district level then federations. One important thing is labor – who[ever] want to form association, they have freedom or right to have the association. More than 500 labor [organizations] have already been formed according to our labor union laws. This is brief example for our freedom of association, but we will submit details about the law on post-hearing briefing.

Burmese government panelist: Even the ILO is quite impressed that the formations have been quite dramatic. We were warned by neighboring ASEAN countries…in factories nearby, they have 8,000 people but only a few unions. They were warning us to be very careful. The labor unions were demanding so high, so many demands, they say. We have been warned by certain labor organizations and of course the ILO is very impressed with the way we have done the business.

US Trade Representative for Labor Affairs: We’ll take you up on that, asking you more in the post-hearing questions. Have regional labor offices been established?

Burmese government panelist: According to law, we have already formed the Chief registrar, district, and township [offices]. Anyone who wants to do the labor union must register at the office.

GSP Subcommittee representative: And these offices are set up?

Burmese government panelist: Yes.

US Trade Representative for Labor Affairs: ILO has said that organizations have not been allowed to do collective bargaining agreements. How many collective bargaining agreements have been signed to date?

Burmese government panelist: The detailed number we will submit in the post-hearing briefing. [i.e. none]

GSP Subcommittee representative: How are you facilitating collective bargaining?

Burmese government panelist: There are no restrictions about it…But there have been fights between labor activists and government officials…they try to lock the director general inside the room. We [the Burmese government] have been cave dwellers for almost 49 years and now the openings are so much the people are demanding the collective bargaining. They manage to attain what they demand – that’s what we noticed. It’s so encouraging.

The Europeans hope to be our developing partners. They were with I think the ILO chief. They are very impressed. And of course, being sort of a pariah state behind the bamboo curtains, we are starting to learn what the civilized country has to obey. Things are moving very impressively and the ILO is very impressed by it.

GSP Subcommittee representative: Can you talk about union members cases?

Burmese government panelist: Updated information, hmmmm…no cases dismissed. Nearly 100% of collective bargaining cases already [have been] solved peacefully. All factories bargaining from the labor…Some, a few cases, the owner needs to pay because of the law. Maybe a few cases. But the detail, I will submit [in the post-hearing brief]. In Geneva, in a ILO convention, a Burmese delegation is attending.

Burmese government panelist: We are quite open. Those who wish to do on the contrary – they are quite jittery and fearful of the media, which is quite surprisingly quite open.

GSP Subcommittee representative: We’d be interested in hearing what the process is for investigating unfair labor processes or any form of discrimination and how many cases have been undertaken, including prosecution in the courts.

Burmese government panelist: Owners, laborers, and from the government side. We already form on township, district, and central level. Every case between labor and owners has reached township level, so according to [our] problem solving mechanism, that is nearly 100% [success] at that stage. But district level up to central level, there will be few cases. But we will submit the details. I am from the commerce [ministry], [so I’m unsure].

GSP Subcommittee representative: What happens when a worker has been fired before the case reaches the district level?

Burmese government panelist: Oh, we are very transparent….He can report to township level. After we get the information, we will handle the case immediately. He can report [at the] township level or also the district level committee.

GSP Subcommittee representative: We’ll ask how many cases you’ve discovered and what process those cases are at right now for your post-hearing brief.

GSP Subcommittee representative: The settlement of a labor disputes law went into effect in 2012. AFL-CIO has said some employers haven’t done enough, haven’t submitted to arbitration. We’d like to understand how employers are subject to deterrent penalties.

Burmese government panelist: According to the penalties, there are 2 cases. According to the report of the workers, who in their mind there is not a fair judge by district settlement committee, he can submit to high level. Some, very dishonestly, want to get too much compensation. But some cases, from the owner side, they are unfair, and some from labor side, they are unfair. We can solve these cases…some [laborers wanting to unionize] insult physically…these cases we will charge with criminal laws but the disputes we can solve according to rules and regulation. But we have very effective and efficient laws and we can solve the problem peacefully.

GSP Subcommittee representative: What deterrent policies exist for employers who do violate workers rights laws?

Burmese government panelist: There is the punishment, according to administrative procedure, or maybe the fine, or maybe the imprisonment. [The punishment is] according to the law. Updated details in our briefing…not the imprisonment but the administrative rules and regulations, we can fine them with the cash. [Editor’s note: the speaker’s meaning here was unclear.]

GSP Subcommittee representative: The government delegation said your goal is to eliminate forced labor by 2015 and you have a memorandum of understanding with the ILO to that end. What strategies and actions are you taking to implement that commitment?

Burmese government panelist: So there are a lot of measures. According to the instruction by the government, every region will report to the government and government will solve directly to that area but now very few report, so almost nothing comes up for the forced labor. Nowadays there are no cases, almost nothing for the forced labor cases.

Burmese government panelist: Forced labor we’ve been doing since 1989. In 2002, an agreement was signed at Convention 29 Forced Labor Convention to eliminate forced labor…A complaint mechanism was established…In 2015, there will be no forced labor in Myanmar. We already signed ILO. At ILO conference in 2012, most of sanctions imposed by ILO, were lifted or suspended.

GSP Subcommittee representative: Can you provide an example of how that mechanism works, how it was used in recent years to enforce the law in the post- hearing briefing?

GSP Subcommittee representative: I want to ask about the self-reliance policy in the military…Please describe the prosecution of military officials involved in forced labor and the associated penalties.

Burmese government panelist: [VERY LONG SILENCE AS NOBODY TAKES THE QUESTION] Within the army, they have internal instruction to all the regiments so they don’t use the forced labor. Sometime in the past, we have some volunteer work for the road construction; now there is no such a case using the labor by force. So now if we have work, we will use the proper wages for the labor.

Burmese government panelist: The fear by the people has disappeared quite surprisingly. They will report all cases to the media. We are wondering – where the fear has gone. The people don’t want any sort of infringement on their rights. They have realized their rights also; this is the beauty of it.

Burmese government panelist: There shall not be forced labor mechanism, if there is an action, it will be [Editor’s note: reviewed?]…but the mechanism is very effective. Anyone can submit a complaint. Anyone can submit a complaint mechanism.

GSP Subcommittee representative: You describe that anyone can complain through forced labor mechanism. Oftentimes, this [forced labor] would’ve occurred in very rural areas. What processes exist to publicize the availability of the complaints mechanism?

Burmese government panelist: Yes they know. Even villagers at the rural level. Easy question. The officials from the labor level, they make unions even at the village level, the info how to complain. They have the message and information channel to submit their message. I will submit how many complaints and the percentage of complaints from the rural area [in the post-hearing briefing].

GSP Subcommittee representative: Yes, we’ve seen those numbers. What will be more helpful to us would be can you include how to publicize that information to the villagers – how rural people can become informed on the process?

GSP Subcommittee representative: Can you explain how intellectual property rights will be established? There is a law not yet into effect.

Burmese government panelist: Pertaining to the new investment law, most are open to foreign investments. That is the reason most companies are flocking into Myanmar to take part in business ventures here. They are overseeing if we are taking the right path on the road to democracy. We are considering signing the Madrid Protocol as well. Going back to the investment law, there will be no [intellectual property regulations? Editor’s note: unclear]. Frankly speaking, we does [sic] not possess an ability to do that as we were hibernating for almost 49 years so we have no ability. But the rule of law together with Suu Kyi; we are working on implementing the rules and the law in our country.

Burmese government panelist: We noticed IPR [intellectual property rights] is important issue in the GSP. We have Myanmar copyright law in 1949 and TV and Video law and Patent and Design Act in 1939. In the foreign investment law, we can not cover IPR fully. We are drafting a law for IPR. We are drafting a standard. Very soon we are going to design our document. In near future, IPR in Burma will be improved significantly.

GSP Subcommittee representative: Maybe you can submit more details in your briefing on how you’ll address IPR?

GSP Subcommittee representative: Can you explain details on how your government is addressing optimal disc production plans?

Burmese government panelist: We are taking the action by the administrative way. Most of the case is like a video, something like this. That’s the key – we are taking action. We are drafting the law to include all the things to be the international standard.

GSP Subcommittee representative: Does the government have plans to implement the Berne Convention or the WIPO [Copyright] Treaty?

Burmese government panelist: This is [under the] Ministry of Technology…I will confirm and include it in the briefing.

GSP Subcommittee representative: GSP criteria include regulations about American corporations and citizens…[we wonder about the] expropriation of property owned by American companies and citizens.

Burmese government panelist: [Unsure.] There will be no nationalization.

GSP Subcommittee representative: That concludes our questions to you. We’ve already concluded a number of questions for elaboration in the post-hearing brief.

 

Panel 2: Eric C. Rose, Counsel, Herzfeld & Rubin P.C., New York

Mr. Rose testified for a protracted period, deciding to take the subcommittee down “memory lane.” He talked on the basic history of Burma, the Coca Cola investment in Burma, and then spoke at length about the Cambodian textile industry. He vaguely argued that the Cambodian textile industry benefitted from GSP and that the same thing could happen in Burma, though he said that textiles aren’t the main product imported via GSP and that he doesn’t represent any textile companies. Rose also mentioned that the banks in Burma are “in very poor shape. The international community still can’t open banks there. Distribution is being done by third party middlemen who are providing materials but also taking most of the profit. But the manufacturers in Burma don’t know they are paying the middlemen much more than those [manufacturers] in Bangladesh.” Rose’s key quotes include,

  • “Production [in Burma] sucks, frankly.”
  • “I was guy who put the American standard in that region with a factory in Vietnam that created thousands of middle class jobs.”
  • “Just stop me [said to the subcommittee after he had spoken for far longer than 5 minutes]…you get a guy like me talking, and I never stop.”

GSP Subcommittee representative: Can you make your final points?

Rose: In the textile industry alone, the growth has been remarkable. After the granting of GSP in Cambodia, even though most products don’t qualify, the growth is crazy. There are more than a quarter million new employees because of the agreement between the US and Cambodia. Once you grant GSP, other agencies will come in; there may be a bilateral agreement in the future. It will allow the country to become competitive.

GSP Subcommittee representative: Thanks for your information. It was very…um, illuminating.

GSP Subcommittee representative (Agriculture): Have any of your client firms concluded any collective bargaining agreements?

Rose: The answer is no because the law has just been instated in the past year. The law provides for penalties but the penalties are very small, however. The bottom line is a lack of rule of law. If you have enforcement, or an employer, who denies the rights of employee, the employee may go to an arbitration tribunal. People still must believe their rights will be defended. One of my colleagues with the NLD is defending people denied their rights. The employees must be educated that they can seek redress, knowing what their rights are, and then going to work. That’s what we do in the US. The government can’t solve all the problems. The people must go get redress in the court system.

…Maung Maung is chairman of trade unions of Burma. He’s now returned back to Burma, and has got a lot of awards. He’s also in favor of being able to have a reentry of rule of law in relations between labor and management. You don’t just give one group the rights, but it will be bilateral. The US has imposed a code of good conduct on American investors [Editor’s note: the US has not imposed a code of good conduct; it has implemented Reporting Requirements for Responsible Investment in Burma]. That will be a code of how things should be done, not just on how they’ve been in the past.

GSP Subcommittee representative: Your relations with the Cambodian textile industry have made you believe Burma is ready for GSP. What’s the protocol of the manufacturing people in Burma?

Rose: We are advising them on draft regulations of good conduct for their members [Rose’s phone goes off] to obey by, and more important, their current leadership is very committed to continue working with ILO in implementing rules for Burma to become very competitive in the government market. In a nut shell, it’s a work in progress. Has it been done? No. Will it be done? I think so. You look at Bangladesh, which has become kind of a dirty word for manufacturing…we all know why. Looking at other countries, there is very little reason not to set up industry in Burma…

GSP Subcommittee representative: Are you aware of child labor problems? What industries would it be concentrated in? Are you aware of any government programs to address those issues?

Rose: Absolutely yes. The government has become extraordinarily sensitive to this subject. They are a signatory of Child Labor Convention of 1955. They don’t need to implement any new rules, frankly. They just need to implement the ones they already have. Do I have firsthand knowledge of child labor? No. Have I been in factories that use child labors? No. However, children used as apprentices sometimes. There is still — we’re looking at a snapshot. This has started a few months ago. Are there a number of factories still doing business the old fashioned way? Yes. Do I have any personal knowledge of it? No. Are they disappearing? Yes. If we [American businesses] come into this, things will change. I can use my own personal example in Vietnam. In Eastern Europe, in Romania. Once you get westerners, Americans, that’s the time you’ll have a favorable reaction from the locals. Because they have to do it by the American rules or they can’t do business at all.

GSP Subcommittee representative: Have your clients in the private sector dealt with trademarks [Editor’s note: Unsure if this is the question]?

Rose: If there is a weak spot in the investor climate in Burma, frankly, that’s it. [Editor’s sarcastic note: yes, because there is only one weak spot…] Frankly that’s very high technology and that comes from Thailand and Malaysia. What is the legal framework? That dates to the British Empire. It’s badly outdated. If you have a trademark, you go to the office to register and you must publish it again and again to make sure the trademark is in the public eye. You first have to have the law. They’re working very hard to bring a state-of-the-art law out. The mentality of the people isn’t there yet, [the mentality] that you trust the courts. It’s still incipient, but it’s getting better, at a very, very fast pace. Mind-boggling. It’s extraordinary how the mentality of freedom – looking for your rights and enforcing those rights – has changed in the last 18 months.

 

Panel 3: International Intellectual Property Alliance, Mr. Michael Schlesinger, Counsel, Washington, DC

Mr. Schlesinger believed the lack of a proper legal infrastructure to deal with IPR, and market access obstacles, are grounds to deny Burma GSP. Schlesinger spoke articulately on Burma’s outdated (91-year-old) copyright laws and the need to improve IPR enforcement in Burma. He spoke on ensuring that internet-based rights are covered, on protections against unauthorized encryption of encrypted signals, on the need for criminal laws and border protection to stop illegal transport of pirated goods from China, and on the need for “a whole host of other legal measures.” He stressed the need to build enforcement capacity starting with educating law enforcement and ensuring that they’re well aware that the import and sale of illegal goods is an actionable offense.

He added: “I don’t want to leave out market access concerns because all these legal infrastructure changes can be made to begin to form the rule of law. If we don’t have access to the market for our created materials, it will be difficult to do business in the market. Through investment law and GSP review, we’re looking for clarification on how people/companies have access to Burmese market to creative products.”

GSP Subcommittee representative: Is there more than one investment law in Burma right now?

Schlesinger: We are aware of a few…The draft we reviewed is the most serious one, I think. The government said that they’ll incorporate things from various sources. Obviously we want to listen carefully to all stakeholders but our interests in hundreds of companies internationally gives us experience with what will work commercially in Burma. Our comments today are tailored to the real commercial concerns we’d face in the Burmese market.

GSP Subcommittee representative: The UN designates Burma as a least developed country (LDC). How does it rank in terms of IPR?

Schlesinger: As of now, Burma is behind. Even behind other LDCs. Is it playing quick catch-up? Maybe. We’ll see how the government is being mobilized and see how judicial reform takes hold. But they’re lagging behind even in comparison with LDCs.

The Q & A carried on for quite a while.

Panel 4: Earth Rights International, US Campaign for Burma, and the Burma Fund

Ms. Jenifer Quigley, Executive Director, US Campaign for Burma, Washington, DC


Mr. Jonathan Kaufman, Legal Advocacy Coordinator, Earthrights International, Washington, DC


Dr. Sein Win, Chairman, the Burma Fund, Rockville, MD

…“Troubling trends have emerged over the past year that correlate with the relaxation of sanctions by the international community. Land confiscation has become pandemic throughout Burma. Reform of land tenure rights should be considered one of the most essential needs to guarantee political and economic rights for the people of Burma. But the government of Burma has taken legal steps in the opposite direction, enacting two additional pieces of legislation, the Farmland Law and the Vacant, Fallow, and Virgin Land Law to strengthen their legal authority to confiscate land from local farmers. Nearly 2 million acres have been confiscated in recent years, a trend that is rising in correlation with potential foreign investment partnerships. Government officials, the military, and business cronies have confiscated land to make way for special economic zones, industrial parks, extractive industry projects, plantation agriculture, and development projects. Farmers and communities have little to no recourse to contest the loss of land and livelihood. Provisions in the new land laws require complaints be registered with a politically appointed government committee, and not the judicial system. A redundancy considering the judicial system is also not independent…”

Other trends include military ventures aimed at confiscating land to enable investment opportunities, crackdowns on protestors and rights activists, and a complete lack of transparency in the natural resources sector.

Quigley spoke on the need for reform of land tenure rights and the corrupt mechanisms that allow the Burmese elite to produce goods on the backs of the disenfranchised poor. Products from Burma are tainted – extractive products in particular – because only by displacing communities, seizing their land, and conscripting them for use as forced labor are these goods produced. Quigley warned the Subcommittee to take a cautious approach to all US-Burma economic activity.

  • Read ERI’s Mr. Kaufman’s testimony in full here. ERI and USCB coordinated testimonies; Kaufman’s testimony served as a “part 2” to Quigley’s testimony.  Kaufman spoke on the need to safeguard labor and land rights in the GSP process by instituting a reporting requirement for import companies and manufacturers.

“Fortunately, the Committee has two points of entry through which it can act to manage the impacts of the GSP program on human rights, including labor rights. If Myanmar’s GSP status is reinstated, the Committee can first use its powers to limit the designation of Myanmar as a Beneficiary Developing Country in order to require reporting and certification requirements for all importers and trigger periodic reviews. And second, the Committee can use its power to limit and withdraw the designation of particular articles to exclude certain high risk articles and establish a procedure for vetting progress on human rights concerns.”

Kaufman also suggested that importers be required to certify that they’ve conducted human rights due diligence. Furthermore, products from the oil, gas, mining, and agricultural sectors should not be eligible for GSP benefits due to the rampant human rights violations in those sectors. Kaufman argued that without proper safeguards and limitations, GSP benefits could exacerbate the existing connection between foreign investment and human rights abuses.

  • Dr. Sein Win, former Burmese prime minister-in-exile after the 1990 elections, spoke about how Burma has not met criteria necessary for GSP status given human rights abuses.

Please check back for more information – USCB will post the links to the post-hearing briefings on June 27.

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