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GM's link to abuses in
Myanmar
By Takahashi Nobuyuki
Corporate globalization is especially intense in
the automobile industry. The biggest-ever merger in the
manufacturing sector, between the United States'
Chrysler and Germany's Daimler-Benz, shocked the world
in May 1998, just a year after the Asian financial
crisis. The new trans-Atlantic company, DaimlerChrysler
Corp, announced on the day of the merger that it would
enhance management and administration (M&A) and
strategic alliances in Asia. This declaration was one of
the first indications of infiltration by transnational
giants into the crippled Asian industrial sector,
triggered by currency turmoil. Since then, transnational
production networks have penetrated the entire region,
including underdeveloped nations such as Myanmar.
On the same day of the trans-Atlantic
DaimlerChrysler merger, another US automotive giant,
General Motors Corp, started negotiations with South
Korea's Daewoo Motor Corp for a possible buyout, and
Ford Motor Co attempted to increase its share in Korea's
Kia Motors Corp. It goes without saying that devastated
stock prices and currency rates favored the overseas
buyers. Indeed, International Monetary Fund (IMF)
conditions imposed on the South Korean government
encouraged bargain hunting on declined local companies.
The IMF conditions, based on the Washington Consensus,
included lifting the ceiling on foreign investment into
local designated companies up to 55 percent, full
commitment to World Trade Organization (WTO) guidelines
on trade liberalization and easing restrictions on
layoffs during M&A restructuring.
As a
result of long negotiations, GM eventually agreed to
acquire Daewoo's assets and, on June 27, GM's Japanese
affiliate, Suzuki Motor Corp, unveiled the form of the
takeover: GM will invest US$400 million for 67 percent
of the newly formed GM-Korea Auto and Technology Co
(GMAT), and Suzuki will pour in $89 million for 14.9
percent to GM's investment. In September 2000, GM agreed
to increase its share in Suzuki by 20 percent to bring
it under its control according to international
accounting standards. This followed increases of its
investments in Isuzu Motors Ltd to 49 percent in
December 1998 and in Fuji Heavy Industry for 20 percent
in December 1999.
To date, six of the eight
major Japanese automobile groups are under control of US
and European giants. The long-term Japanese recession
and the Asian financial crisis in 1997 turned Japan's
once-thriving national industry into a foothold for
globalization in Asia. Another factor of the drastic
changes in the regional industry is the wave of
liberalization engineered by institutions such as the
IMF and WTO, laying the foundation for transnational
companies to proceed with their Asian strategy without
regard for social costs.
The hottest field for
transnationals' entry into the Chinese market since that
country's accession to the WTO late last year has been
in the automotive sector. GM has established joint
ventures in Shanghai and Shenyang, and Toyota and Ford
are to start full-scale production in China this year.
At the same time, the proposed ASEAN (Association of
Southeast Asian Nations) Free Trade Area, or AFTA, is
another factor luring the giants into the Asian market.
The sales of the world's biggest transnational
companies surpass those of many developing nations. GM
has officially declared that it is a strong supporter of
the WTO to ensure that global trade proceeds smoothly
and cost-effectively. However, WTO policy that
facilitates market expansion of corporate giants often
causes friction with indigenous people in developing
countries.
It is widely acknowledged that in
Myanmar there is suppression of ethnic minorities,
nearly a million people are in forced labor and more
than 1,500 dissidents languish in jail under a military
government sponsored by foreign aid and transnational
businesses, including GM and Suzuki. In June 1996, on
the grounds of human-rights abuses in Myanmar, the US
state of Massachusetts passed a law to retaliate against
companies doing business with that Southeast Asian
nation by restricting their access to the state's
procurement process. In response, the Japanese
government and the European Commission (EC) took the
case to the WTO, insisting that the Massachusetts law
violated the WTO article on government procurement. The
plaintiffs claimed that Massachusetts is a signatory to
the agreement, which prohibits discrimination against
products and services offered by foreign suppliers.
The Massachusetts law was eventually judged
unconstitutional on the grounds that it went beyond
state jurisdiction. Based on that judgment, Japan and
the European Union suspended their complaint to the WTO.
However, the case drew attention to the WTO procurement
rule, which favors investors to the detriment of
socially disadvantaged people, and raised suspicions
about GM's involvement in Myanmar.
Suzuki, of
whom GM owns the largest stake, established a joint
venture with Myanmar Automobile and Diesel Engine
Industries (MADEI) in November 1998. The newly formed
joint venture, Myanmar Suzuki Motor Co Ltd, was 60
percent held by Suzuki, 5 percent by the Japanese
trading house Tomen, 5 percent by SPA and 30 percent by
MADEI.
The official business magazine of the
military government, Myanmar Times of Business Review,
named MADEI as part of the government's Second Industry
Ministry. Local sources confirmed that the address of
MADEI and the ministry are the same and that they were
working inside the same compound.
Suzuki's
suspected partner, the Second Industry Ministry, oversaw
the manufacture of assault rifles, vehicles and weapons
necessary for Yangon's military operations. Suzuki's
executive managing director, Keiji Yamauchi, disclosed
that Second Industry Minister Saw Lwin visited Japan to
inspect its factory in October 1999. Myanmar's official
business magazine reported that an industrial delegation
consisting of six high-ranking officers led by the Saw
Lwin were invited to the Japanese head office of Suzuki
on October 18, 1999, to discuss future cooperation and
to visit factories.
General Saw Lwin is known to
have commanded training of the Myanmar Army, which is
notorious for its harsh repression of indigenous people
and ethnic minorities for 40 years. In contrast to the
Japanese auto maker, the EU officially banned a visit by
the general and froze his asset in Europe. Meanwhile,
Japan is among 40 countries opposed to sanctions on
Myanmar proposed by the International Labor Organization
because of continued forced labor, and is one of four
countries preparing to restart support for a
hydroelectric power plant project in that country.
Amnesty International's report in 2001 claimed
that 1,700 people were jailed in Myanmar for political
reasons, 45 of them parliamentarians who had won a
general election in 1990. Detainees' conditions are
harsh. Amnesty reported that the most common
human-rights violation is the forced labor of ethnic
minorities, who are much more likely to be seized by the
army than the majority Myanmese ethnic group. Men, women
and children are forced into labor, are almost never
paid for their work and suffer beatings and even death
at the hands of their taskmasters, according to the
international human-rights watchdog.
Giant GM
ranks at the top of global companies whose sales are
more than 10 times of gross domestic production of
Myanmar. While most other transnational giants have
distanced themselves to the Yangon government's military
activities against its own people, GM's Japanese
affiliate Suzuki has yet to clarify whether it is
involved in production diverted for military purposes.
(©2002 Asia Times Online Co, Ltd. All rights
reserved. Please contact content@atimes.com
for information on our sales and syndication policies.)
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