Opposition members are calling into question the effectiveness of Canada's trade sanctions against Burma's military regime after documents from Trade Minister David Emerson's office revealed Canada is not systematically tracking which companies are investing in the Southeast Asian country.
In December 2007, following a crackdown by the Burmese military junta on pro-democracy protesters, Canada invoked the Special Economic Measures Act against Burma. Doing so prohibits Canadians and Canadian financial institutions from directly or indirectly trading with the Southeast Asian country, and banned new investment there.
However, a document obtained by NDP Foreign Affairs critic Paul Dewar from Mr. Emerson's office reads that "there is no requirement for Canadian companies to register their business activities with the department," and that "the department does not have information regarding Canadian companies or individuals who have indirect investment through third-party companies in Burma."
In addition, the document reads that "there is no requirement by companies to advise us of their investment intentions in Burma."
"This is a paper tiger," Mr. Dewar said Monday of the sanctions. "They don't have any mechanism to actually monitor who is investing in Burma.... To say that we're going to crack down on the military junta by way of restricting Canadian investment in Burma is all for naught."
Mr. Dewar said the government needs to address this serious loophole immediately.
"At the end of the day, what is the government actually doing to restrict investment in Burma and to find out what's going on in Burma?" he asked. "Why can't our government tell us to a dime and to a company who is investing in Burma?"
In a scrum Monday, Mr. Emerson defended the effectiveness of the government's sanctions.
"The evidence is that the sanctions are working," he said. "There are financial penalties, companies are divesting, the trade is dropping. Everything we are able to track in terms of normal streams of data would suggest there is almost no business being done with Burma right now."
However, he acknowledged some Canadian business with Burma likely continues.
"Is there zero?" he said. "I doubt that it's zero, but I'm not able to tell you specifically who might be doing what."
Mr. Emerson said it is nearly impossible to track all investment, especially indirect, in the complex global economy.
"The reality is, if you start to look at indirect investment flows, you can funnel it through so many different companies, through so many different countries [before ending] up in the prohibited country," he said. "I challenge somebody to come up with a rigorous workable system for tracking that because it is very, very difficult."
Mr. Emerson added that if somebody brings a specific example of Canadian investment in Burma to the department's attention, "we'll certainly follow up on that."
Liberal MP Larry Bagnell, chair and founder of Parliamentary Friends of Burma, recently visited the Thai-Burmese border and met with Burmese refugee leadership.
He said that Canadian sanctions are "some of the toughest sanctions in the world" and that the Burmese refugees welcome them.
"The people there are very happy with the sanctions that Canada, the United States, Europe and Australia have put in place," he said. "They are helping. They are making an effect when you put them all together."
However, he said the Burmese refugees told him Burma's neighbours, with whom the country does the most business, need to get on board.
"They're upset that the ASEAN counties, the ones close to Burma that could really have an effect, have not put on the same sanctions," he said. "India, Thailand and China—those are the biggest economic partners of the dictatorship in Burma, the ones that could really make a difference."
Mr. Bagnell said that Canada, by imposing tough sanctions, is already leading by example, and that it should step up its diplomatic efforts.
"We should be lobbying hard in the international forum for India, China and Thailand to cut not only economic sanctions, but to stop selling weapons, even indirectly, to the dictatorship."
CPP Burmese Investments?
Despite the introduction of measures against Burma under the SEMA, some say Canadian companies remain invested in the country, which the ruling military junta calls Myanmar.
Testifying before the House Standing Committee on Foreign Affairs and International Development on April 8, executive director of the Canadian Friends of Burma Tin Maung Htoo made specific allegations against a number of Canadian companies.
Mr. Htoo also said the Canada Pension Plan, which Canadian workers are obligated to contribute to, holds shares in a number of companies operating in Burma, including Ivanhoe Mines, TransCanada, Power Corporation, Chevron-Unocal and French energy giant Total.
Mr. Htoo said these investments show SEMA was proving to be less than effective, and called on the government to set up a task force for the enforcement of the measures imposed last year.
"There are a number of measures that are, of course, law right now, but who monitors and who imposes these measures is still a question for us," he told the committee. "That's why I strongly ask the government to set up a task force."
While the government has not established a task force, as recommended by Mr. Htoo, there is at least one official doing some investigations of his own.
Liberal Senator Percy Downe has taken it upon himself to find out if the Canada Pension Plan is complying with SEMA, and to find out exactly what investments it holds in Burma.
It is important, the Liberal senator told Embassy Monday, that the pension fund is in full compliance as it manages Canadian taxpayer's money.
"[I want] an explanation for Canadians who are depending on the CPP to fund their retirement," he said. "Every month you contribute to this—you have no choice—so Canadians would not want their CPP deductions to be going to a repressive dictatorship."
On October 16, Mr. Downe addressed a letter to David Denison, president and CEO of the Canada Pension Plan, expressing his "deep concern over the ongoing violence in Burma" and asking whether the CPP has "any direct or indirect holdings in companies operating in Burma"
A reply from Mr. Denison, dated December 20, said the CPP was "undertaking a portfolio review to ensure CPP investment board is in compliance" with SEMA.
The CPP reported back again on March 6, saying that as a result of a review of its 2,600 investments, "the CPP Investment Board is in full compliance with the [SEMA] measures announced by the Government of Canada."
"No companies in our public equity portfolio, to the best of our knowledge, have material operations in Burma," wrote Mr. Denison.
However, he added, the CPP had "identified several Canadians and international companies for direct engagement to encourage improved transparency and corporate responsibility strategy with regard to the small portions of their business that might include operations in Burma."
Mr. Downe said that, with these answers, the CPP has left itself some "weasel room," and that questions remain unanswered about how Canadian pension dollars are being invested. He added that he is drafting another letter to ask for further clarification on the issue of investments in Burma.
"We need further clarification, to be polite," he said.
Monday, May 12, 2008
Burma investment sanctions filled with loopholes
From Embassy magazine on April 30: