My colleague Michelle blogged recently about the Reporting Requirements for Responsible Investment in Burma, which are up for re-authorization by the U.S. government. As she described in her post, ERI sent a detailed comment to the State Department supporting the RRs and suggesting improvements. So, as it turns out, did at more than fifty other commenters, including dozens of Myanmar civil society organizations, at least two company (Gap Inc. and Coca-Cola), one law school clinic, an investor advocacy group, a Myanmar responsible business think tank, and a number of international NGOs. Based on the government’s comments website, it seems just about everyone thinks that disclosures on human rights and other social responsibility practices are good for Myanmar, good for business, and good for U.S. foreign policy.
Everyone, that is, except for… wait for it… the U.S. Chamber of Commerce, which submitted two comments (one from the Chamber itself, and one from AmCham Myanmar, its local affiliate). No one should be surprised to find opposition from the Chamber, which seems to fight against all mandatory requirements on U.S. businesses, no matter how important they are for the public interest.
But there are a couple of features of the Chamber’s comments that I was surprised by, and (since the official comment period is closed), I can’t refrain from taking this opportunity to blog about them.
First, the Chamber is taking positions that are actually at odds with the interests of its members in its zeal to gut any regulation that would hold companies accountable to the public. Gap, Inc., which voluntarily submitted a RRs report even though it does not believe it is required to so by law, sent in a comment supporting the RRs and encouraging the government to expand their reach. Coca Cola has publicly stated that the RRs are a great way for U.S. businesses to distinguish themselves from the pack. As far as we know, no individual companies criticized the RRs during the comments process, despite the Chamber’s claim that the RRs deter U.S. businesses from investing in Myanmar.
OK, so maybe I shouldn’t have been surprised by this. The Chamber is famous for taking cringe-worthy policy positions that make many of its members want to run for the exits – such as its implacable opposition to government action on climate change, its attempts to gut U.S. anti-bribery laws, and its efforts to fight anti-smoking initiatives worldwide. Some observers have suggested that the Chamber’s agenda is driven not by the spectrum of U.S. businesses that it claims to represent but by the interests of its top donors – a handful of very large corporations in entrenched industries that push their own special concerns, with little or no regard for the preferences of small business owners and responsible global companies. So why should the fact that some of the flagship U.S. investors in Myanmar support business transparency deter the Chamber from its ideological crusade?
Second, the Chamber claims that companies are putting way more time into their RRs reports than the government estimated, but that these reports haven’t changed any practices. This makes no sense – the reports themselves require only some short-form answers to a handful of questions. If companies are putting a lot of time into the report, it can only be because they’re using the opportunity to thoroughly review their human rights, environmental, labor, land rights, and corruption impacts. This is exactly the point of the RRs and should be encouraged. The idea that the companies that submitted abbreviated reports put lots of time into them is hard to substantiate (and, in fact, the Chamber makes no attempt to do so). Also, AmCham Myanmar claims that it helped the U.S. Embassy conduct a survey on the level of burden that the RRs impose on companies, the results of which were then to be shared with AmCham. But rather than actually providing the results of that survey, the Chamber and AmCham both speak in vague generalities. The fact that AmCham gives no detail to support its claim that the RRs are much more burdensome than estimated suggests that those details simply don’t exist.
Third, the Chamber implies – but does not actually claim – that the Reporting Requirements have deterred companies from investing in Myanmar. By using “weasel words” like “appear to” and “in part due to these factors,” the Chamber manages to put its dire predictions forward as reality without actually making a factual statement. I have no doubt that U.S. companies are deterred from investing in Myanmar because they fear reputational risks and compliance costs, but those risks do not come from the modest demands of the RRs. Instead, they come from the actual dangers of investing in a country where the people who control the economy are associated with brutal repression, corruption, and possible crimes against humanity and the regulatory environment is byzantine and unpredictable.
Finally, the Chamber says that companies are structuring their investments to avoid meeting the monetary threshold set by the Reporting Requirements – in other words, that they are trying to skirt the regulations – but again without providing any details or examples. This claim is astonishing for a number of reasons. For one thing, it’s pretty hard to believe. Investment levels are based on expected returns, and are not going to be influenced significantly by the requirement to file a report that can be more or less as detailed or vague as the investor wishes. But it’s also outrageous to say that the regulations should be withdrawn because companies are trying to evade them. (Should we abolish taxes because the powerful and wealthy commonly go through contortions to avoid them?) Regulations often include “anti-avoidance” provisions that prohibit regulated entities from structuring their transactions in order to evade regulatory reach; maybe this is necessary for the RRs as well. ERI’s comment includes a number of practical suggestions to clarify loopholes in the Reporting Requirements that we believe companies are relying on – improperly – to avoid reporting.
It’s sad to see the Chamber trotting out the same tired old refrains – that regulation is always bad for business, and that forced transparency harms American competitiveness. Myanmar stands at a critical juncture – for the first time in 60 years, its 50 million people stand to benefit from political change and expanding economic opportunities, but the forces working against positive change are still strong and powerful. American enterprise should be proud to shine a light on what it’s doing to manage the risks of investing in Myanmar and promote the well-being of the Myanmar communities, rather than fighting for the right to do business in the dark.