Senate Report 111-279 - APPROVING THE RENEWAL OF IMPORT RESTRICTIONS CONTAINED IN THE BURMESE FREEDOM AND DEMOCRACY ACT OF 2003

[Senate Report 111-279]
[From the U.S. Government Publishing Office]

Calendar No. 461
111th Congress
SENATE
2d Session Report No. 111-279
======================================================================

APPROVING THE RENEWAL OF IMPORT RESTRICTIONS CONTAINED IN THE BURMESE
FREEDOM AND DEMOCRACY ACT OF 2003

_______

August 5, 2010.--Ordered to be printed

_______

Mr. Baucus, from the Committee on Finance, submitted the following

R E P O R T

[To accompany S.J. Res. 29]

[Including cost estimate of the Congressional Budget Office]

The Committee on Finance, to which was referred the joint
resolution (S.J. Res. 29) approving the renewal of import
restrictions contained in the Burmese Freedom and Democracy Act
of 2003, having considered the same, reports favorably thereon
without amendment and recommends that the joint resolution do
pass.

CONTENTS

Page
I. Report and Other Matters of the Committee.........................2
A. Report of the Committee on Finance.................. 2
B. Background.......................................... 2
1. The Government of Burma......................... 2
2. The Burmese Freedom and Democracy Act of 2003... 2
3. S.J. Res. 29 Is a ``Renewal Resolution'' for
Purposes of Extending Import Restrictions...... 4
4. Committee Consideration of S.J. Res. 29......... 4
5. Report of the U.S. Department of State on the
Trade Sanctions Against Burma.................. 4
6. Additional International Sanctions Against Burma 8
II. Budgetary Impact of the Joint Resolution..........................9
III.Regulatory Impact of the Joint Resolution and Other Matters.......9

IV. Changes in Existing Law..........................................10

I. REPORT AND OTHER MATTERS OF THE COMMITTEE

A. REPORT OF THE COMMITTEE ON FINANCE

B. BACKGROUND

1. The Government of Burma

Burma is governed by the State Peace and Development
Council (SPDC), a military junta that took power in September
1988. Since taking power, the junta has violently suppressed
pro-democracy movements. International human rights
organizations and the U.S. Department of State have reported a
pattern of SPDC policies that include the suppression of
political and civil liberties, jailing of political prisoners,
widespread physical abuses, forced relocation of civilians,
conscription of civilians--including children--into military
services, and conscription of thousands of civilians for work
on economic projects. Recent examples of these human rights
abuses are provided below.
In May 2003, a pro-government group of several hundred
people assaulted the opposition National League for Democracy
(NLD) leader Daw Aung San Suu Kyi and her supporters near
Mandalay, Burma's second-largest city. The attackers were
members of the United Solidarity Development Association
(USDA), an organization affiliated with the SPDC. Some NLD
supporters were killed, and others were taken into custody.
In September 2007, the Burmese government engaged in a
violent crackdown against Buddhist monks and other Burmese
citizens who were demonstrating peacefully against the poor
economic conditions in Burma and the repressive policies of the
SPDC. The Burmese government also failed to provide adequate
humanitarian assistance or allow speedy entry of international
aid in response to Cyclone Nargis in May 2008.
In August 2009, the regime convicted Burmese human rights
leader and Nobel Prize winner Aung San Suu Kyi of spurious
charges of violating the terms of her house arrest, and
sentenced her to three years in prison with hard labor,
commuting that sentence to 29 months of house arrest. United
Nations investigators allege that the Burmese Government has
violated Suu Kyi's substantive and procedural rights during the
course of her trial. All told, the SPDC continues to hold an
estimated 2,100 political prisoners. And, in March 2010, the
SPDC announced that it intended to hold national elections this
year, but promulgated a series of electoral laws that seem
intended to ensure that the elections will not be fair and
transparent.

2. The Burmese Freedom and Democracy Act of 2003

On June 4, 2003, the Burmese Freedom and Democracy Act of
2003 (the BFDA) was introduced in the U.S. House of
Representatives (H.R. 2330) and the U.S. Senate (S. 1182) in
response to the attack on Daw Aung San Suu Kyi on May 30, 2003.
A revised version of the legislation was introduced in the
Senate (S. 1215) on June 9, 2003. That latter version, S. 1215,
passed the Senate with an amendment on June 11, 2003, by a
recorded vote of 97-1. In the House, H.R. 2330 passed with an
amendment on July 15, 2003, by a recorded vote of 418-2, 1
Present. The Senate then passed the House-passed version of
H.R. 2330 without amendment on July 16, 2003, by a recorded
vote of 94-1. The legislation was presented to the President on
July 22, 2003, and signed into law by the President on July 28,
2003 (Pub. L. 108-61).
The BFDA bans the importation of any article that is a
product of Burma. The BFDA allows the President to lift these
import restrictions if he certifies to Congress that (1) the
SPDC has made substantial progress to end human rights
violations, including rapes, and no longer systematically
violates workers' rights, including forced and child labor, and
conscription of child soldiers; (2) the SPDC has made
substantial progress toward implementing a democratic
government, including by releasing political prisoners, by
allowing freedom of speech, press, association, and religion,
and by reaching agreement with the NLD for a democratically
elected civilian government; and (3) Burma has not been
designated as a country that has failed to abide by its
obligations under international counternarcotics agreements and
to take other effective counternarcotics measures. In addition
to the import ban, the BFDA also freezes the assets of the
Burmese regime and its officials held by U.S. financial
institutions, directs the Secretary of the Treasury to instruct
the U.S. representatives to international financial
institutions to oppose loans or other assistance to Burma, and
authorizes the President to deny visas to the leaders of the
Burmese regime.
In July 2008, Congress amended the BFDA when it passed the
Tom Lantos Block Burmese JADE (Junta's Anti-Democratic Efforts)
Act of 2008 (JADE Act). The JADE Act was introduced in the
House on October 18, 2007, and passed by voice vote on December
11, 2007. The Senate passed an amended version of the bill on
December 19, 2007. After resolving the differences between the
two bills, the revised legislation was passed by the House on
July 15, 2008 by voice vote and by the Senate on July 22, 2008
by Unanimous Consent. The President signed the legislation into
law on July 29, 2008. The JADE Act amends the import
restrictions of the BFDA by prohibiting the importation into
the United States of jewelry from any country that contains
jadeite or rubies mined in Burma. The JADE Act also imposes
additional financial and visa sanctions on members of the SPDC
or USDA and their immediate family members.
Pursuant to section 9(b) of the BFDA, the import ban
expires after 1 year unless a new joint resolution approving a
1-year renewal of the import ban is enacted into law prior to
the anniversary of the date of enactment of the BFDA. The
current import ban remains in effect through July 28, 2010.
As originally enacted, section 9(b)(3) also limited the
imposition of import restrictions to a maximum of 3 years from
the date of enactment, or until 2006. In 2006, a joint
resolution was introduced to extend this period to a maximum of
6 years from the date of enactment, or until 2009.
Specifically, H.J. Res. 86 was introduced in the House on May
19, 2006, and S.J. Res. 38 was introduced in the Senate on May
26, 2006. The House passed H.J. Res. 86 on July 11, 2006 by
voice vote. H.J. Res. 86 was placed on the Senate calendar on
July 26, 2006 and passed without amendment by voice vote. The
President signed the joint resolution on August 1, 2006 (Pub.
L. 109-251).
In 2009, S.J. Res. 17 was introduced to extend the
limitation on the import restrictions for an additional three
years, to a maximum of 9 years from the date of enactment, or
until 2012. A similar resolution (H.J. Res. 56), which included
budgetary offsets, was passed by the House on July 21, 2009, by
voice vote. H.J. Res. 56 was received by the Senate on July 22,
2009, and passed by Unanimous Consent on July 23, 2009. The
resolution was signed by the President on July 28, 2009 (Pub.
L. 111-42).
On May 5, 2010, S.J. Res. 29 was introduced to renew the
import ban for another year, in accordance with section 9(b) of
the BFDA. On May 11, 2010, a companion resolution, H.J. Res.
83, was introduced in the House of Representatives.

3. S.J. Res. 29 Is a ``Renewal Resolution'' for Purposes of Extending
Import Restrictions

As described above, the import restrictions in the BFDA may
be renewed for a 1-year period if Congress approves a ``renewal
resolution,'' which section 9(c)(1) defines as a joint
resolution whose sole matter after the resolving clause is
language to renew the import restrictions for 1 year. Section
9(c)(2)(B) applies the expedited procedures set forth in
section 152(b), (c), (d), (e), and (f) of the Trade Act of 1974
(19 U.S.C. 2192(b), (c), (d), (e), and (f)), to Finance
Committee and floor consideration of a renewal resolution. S.J.
Res. 29 meets the definition of ``renewal resolution'' under
section 9(c)(1) of the BFDA.
S.J. Res. 29 was introduced and approved by the Finance
Committee before receipt of H.J. Res. 83 from the House. After
the Committee reported the Senate measure, the vote on passage
in the Senate was on the House-passed measure. The Senate
approved H.J. Res. 83 by a vote of 99 to one on July 22, 2010.

4. Committee Consideration of S.J. Res. 29

The Committee considered S.J. Res. 29 in open executive
session on June 30, 2010. With a quorum present, the Committee
approved S.J. Res. 29, without amendment, by a roll call vote,
22 ayes, one nay.
Ayes: Baucus, Rockefeller, Conrad, Bingaman, Kerry,
Lincoln, Wyden, Schumer, Stabenow, Cantwell, Nelson, Menendez,
Carper, Grassley, Hatch Snowe, Kyl, Bunning, Crapo, Roberts,
Ensign, Cornyn (proxy).
Nays: Enzi.
The Chairman reported the resolution to the Senate on July
14, 2010.

5. Report of the U.S. Department of State on the Trade Sanctions
Against Burma

On April 21, 2010, the U.S. Department of State submitted
to Congress a report regarding the trade sanctions against
Burma, as required by section 8(b)(3) of the BFDA. At the
request of the Chairman, that report was made a part of the
record of the Committee's consideration of S.J. Res. 29. The
State Department report is reprinted below:
United States Department of State,
Washington, DC, April 21, 2010.
Hon. Max Baucus,
Chairman, Committee on Finance,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The enclosed report reviews measures to
promote human rights and democracy in Burma and assesses the
effectiveness of the trade provisions in the Burmese Freedom
and Democracy Act of 2003 (P.L. 108-61) to improve conditions
in Burma and advance U.S. policy objectives. This report also
discusses the importance of maintaining the import ban
contained in the Act.
We hope this information is useful to you. Please do not
hesitate to contact us if we may be of further assistance in
this matter.
Sincerely,
Richard R. Verma,
Assistant Secretary, Legislative Affairs.
Enclosure: As stated.

Report on U.S. Economic Sanctions Against Burma

INTRODUCTION AND SUMMARY

Pursuant to section 8(b)(3) of the Burmese Freedom and
Democracy Act of 2003, (Pub. L. 108-61) (the BFDA), and in view
of the impending expiration of the import ban contained in the
BFDA, as amended by the Tom Lantos Block Burmese JADE (Junta's
Anti-Democratic Efforts) Act of 2008 (Pub. L. 110-286) (the
JADE Act) this report reviews bilateral and multilateral
measures to promote human rights and democracy in Burma and
assesses the effectiveness of the BFDA's trade provisions
relative to the improvement of conditions in Burma and the
furtherance of U.S. policy objectives.
During this reporting period (July 2009 to March 2010), the
Administration completed its Burma policy review. The review
was undertaken to find the best ideas to influence the regime
because, as Secretary Clinton noted, neither sanctions nor
efforts to engage the regime alone have proven successful in
influencing the authorities in Burma. The review reaffirmed the
Administration's fundamental goals in Burma: we support a
unified, peaceful, prosperous, and democratic nation. To
achieve these goals, the Administration has pursued senior-
level dialogue with the Burmese government and has announced
plans to expand humanitarian assistance directly to Burma's
people. Sanctions remain an important element of our strategy
and there will be no change to the sanctions regime until
Burmese authorities take concrete steps to address core
concerns. Given the absence of concrete progress by the Burmese
government on respect for human rights, release of political
prisoners, transition to democracy via inclusive dialogue, and
an end to conflict with ethnic minorities, the State Department
supports a renewal resolution to maintain the import ban.

BILATERAL AND MULTILATERAL MEASURES

During the reporting period, the United States intensified
its efforts to promote human rights and democracy in Burma
through diplomatic engagement with key stakeholders in
Southeast Asia and beyond by supporting U.N. action on Burma
and by delivering a direct message on these issues to the
Burmese regime through senior-level engagement. The United
States continued to lead efforts in the international community
to ensure that others echo the call for Burmese authorities to
begin a dialogue with the democratic opposition and ethnic
minority representatives on a transition to democracy. The U.S.
embassy in Rangoon maintained regular contact with
representatives of democratic parties including the National
League for Democracy and its allies, civil society, and ethnic
minority groups, and used every interaction with Burmese
officials to advocate respect for human rights and encourage
political reform.
Senior U.S. officials encouraged their counterparts in the
region and other like-minded states to press the regime to take
concrete and credible actions toward national reconciliation
and democratic transition. The European Union, Australia, and
Canada maintain financial and trade sanctions against the
Burmese regime, including targeted financial sanctions against
senior junta members and their inner circle of supporters.
The United States has consistently pushed for the United
Nations, including the U.N. Security Council, Human Rights
Council, and the U.N. Secretary General's Good Offices Mission
to keep pressure on the regime. On September 28, 2009,
Secretary of State Clinton briefed the Secretary General's
Group of Friends on the conclusions of the policy review and
advocated a unified position on the need for dialogue and
support for those working for democracy in Burma. The United
States co-sponsored resolutions on the human rights situation
in Burma in the General Assembly's Third Committee and in the
Human Rights Council. On March 15, following a February trip to
Burma, U.N. Special Rapporteur Tomas Ojea Quintana presented
his report to the Human Rights Council and recommended that
U.N. institutions consider establishment of a Commission of
Inquiry for Burma to investigate whether human rights abuses
there amount to war crimes or crimes against humanity. The
United States is considering his recommendations carefully,
including the Commission of Inquiry.
The United States continues active efforts to identify
regime officials and cronies who should be subject to
sanctions. To date, the United States has sanctioned 17 persons
providing financial and other support to the regime and certain
family members, and 41 companies. The United States also
maintains a broad travel ban on key regime officials, their
family members, and their supporters.

EFFECTS OF SANCTIONS ON SITUATION IN BURMA

U.S. economic sanctions have made it more difficult and
more costly for the Burmese regime and its financial supporters
to continue profiting from its repressive policies. Senior
Burmese officials, such as the Foreign Minister, have publicly
complained about sanctions and called for them to be lifted.
Influential businessmen in Rangoon with connections to the
regime have increasingly complained about the detrimental
effects sanctions have had on their business operations and
personal lives. Between July 1, 2009 and March 26, 2010, 58
transactions totaling approximately $1,770,000 and involving
Burmese individuals or entities were reported to the Treasury
Department as blocked.
During the reporting period, the Treasury Department issued
14 licenses authorizing the release of blocked funds or
otherwise prohibited transactions to allow, for example, NGOs
to conduct assistance-related transactions, including
agricultural development, microfinance, and education projects.
In the aftermath of Cyclone Nargis, which devastated Burma in
May 2008, the Department of the Treasury issued General License
14, which, as subsequently amended, continues to provide a
broad authorization for funds transfers in support of
humanitarian and religious activities in Burma.
Although the United States and others continue to look at
ways to target sanctions against the Burmese authorities,
growing trade with countries in the region and increased income
from the exploitation of oil and natural gas deposits enable
the regime to retain power. According to the Economist
Intelligence Unit, Burma's GDP grew roughly 1.8 percent in
2009, due primarily to rising prices for petroleum and
agricultural exports. According to Burma's Central Statistical
Organization (CSO), total trade in 2009 (up to November)
reached $9.4 billion, with exports of $5.6 billion and imports
of $3.8 billion. Nevertheless, foreign investment falls well
below potential investment levels, as the Burmese business
climate continues to worsen. Notably, during the reporting
period the regime began a wide-scale sell-off of state assets
including some state-owned enterprises and valuable real
estate, via a process that lacked transparency. It is too soon
to gauge the effects of this privatization on Burma's economy
or long-term development.
The regime continued to commit grave human rights abuses
during this reporting period. The military regime severely
restricted and frequently violated freedoms of assembly,
expression, association, movement, and religion. Human rights
abuses have included custodial abuses and deaths,
disappearances, rape, torture, recruitment of child soldiers,
and forced labor. The government continued to infiltrate and
covertly and overtly monitor meetings and activities of vitally
all non-governmental organizations, including religious
organizations. Although the regime released more than 100
political prisoners during the reporting period, it continued
to arrest, detain, and convict activists on politically-
motivated charges. The regime continues to hold an estimated
2,100 political prisoners, including democratic opposition
leader Aung San Suu Kyi, who was convicted in August 2009 on
spurious charges of violating the terms of her house arrest.
She was sentence to three years in prison with hard labor,
which was commuted to 18 months of house arrest. The United
States condemned these actions against her and urged many other
countries to join us in doing so.
In March 2010 the regime established an Election Commission
under the control of the SPDC and promulgated a series of
electoral laws and by-laws that appear to ensure the elections
planned for 2010 will not be transparent, inclusive or
credible. The United States has expressed deep concern over
these laws, and urged the regime to engage in genuine political
dialogue with all stakeholders and to release all political
prisoners unconditionally. Furthermore, we have called on
countries around the world to deliver a similar message to the
Burmese government.

EFFECTS OF SANCTIONS ON BROADER U.S. INTERESTS

Sanctions targeting regime leaders and their financial
supporters send a clear signal to the regime and to the Burmese
people of our support for a transition to democracy. Many
individuals in the Burmese democracy movement support U.S.
sanctions. However, some academics, exiled Burmese, and
independent Burmese business people argue that U.S. sanctions
will continue to have only limited economic impact so long as
Burma continues to enjoy the benefits of trade and investment
from China, India, ASEAN members, and other countries.
The trade-related and financial sanctions implemented
pursuant to the BFDA and Executive Orders 13047, 13310, 13448,
and 13464 have had a limited impact on U.S. relations with
other nations. Although some foreign businesses and their
representative embassies have complained about the impact of
sanctions, those investing in Burma since 2003 have done so
recognizing the difficult operating environment and overall
poor economic climate created by the regime.
The regulations and restrictions contained in the JADE Act,
amending the BFDA to (i) prohibit the important of jadeite and
rubies mined or extracted from Bruma, and articles of jewelry
containing jadeite or rubies mined or extracted from Burma, and
(ii) regulate the importation of jadeite and rubies mined or
extracted from a country other than Burma, and articles of
jewelry containing jadeite or rubies mined or extracted from a
country other than Burma have an impact on other countries that
process jadeite and rubies. Thailand, specifically, has
expressed strong concern over the negative impact the JADE Act
provisions have had on its ruby-processing and jewelry
manufacturing industry. It is in such processing and
manufacture that the majority of the value is added to the
final imported product.

CONCLUSION

The Administration's support for Burma's democracy movement
remains firm. The United States continues to work within the
U.N. and with countries in Southeast Asia and beyond to promote
a peaceful transition to democracy. Economic sanctions are one
important tool for exerting pressure on the regime to respect
the will of the Burmese people and to cooperate with the
international community's efforts to facilitate a genuine
dialogue with democratic and ethnic minority representatives on
a transition to democracy. The Administration believes we must
send a consistent message to Burma's generals that in the
absence of concrete progress in key areas of democracy and
human rights, sanctions will remain in place. The Department of
State supports renewal of the import ban in the Burmese Freedom
and Democracy Act, as amended by the JADE Act.

6. Additional International Sanctions Against Burma

The international community has joined with the United
States in protesting human rights conditions in Burma. The
European Union, Australia, and Canada each maintain financial
and trade sanctions against the Burmese regime. All three
continue to impose restrictions on Burmese imports, focusing on
gems and timber, as well as targeted financial sanctions
against senior Burmese government members and their inner
circle of supporters. In May 2008, the United Nations Security
Council issued a Presidential Statement that called on the
Burmese Government to hold a free and fair constitutional
referendum, and to allow greater humanitarian aid to enter the
country.

II. BUDGETARY IMPACT OF THE JOINT RESOLUTION

CBO ESTIMATE FOR H.J. RES. 83
[Estimate is in millions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2010-2015 2010-2020
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in Revenues

Section 1: Renewal of import ban........ * -2 0 0 0 0 0 0 0 0 0 -2 -2
Section 3: Corporate timing shift....... 0 0 0 0 0 153 -153 0 0 0 0 153 0
Total Revenues...................... * -2 0 0 0 153 -153 0 0 0 0 151 -2

Changes in Outlays

Section 2: Customs user fees............ 0 0 0 0 0 0 0 0 -3 -7 0 0 10

Net Increase or Decrease (-) In the Deficit

Total Budgetary effecta............. * 2 0 0 0 -153 153 0 -3 -7 0 -151 -8
--------------------------------------------------------------------------------------------------------------------------------------------------------
aNegative numbers indicate a reduction in the deficit; positive numbers indicate the opposite.
Source: Congressional Budget Office and Joint Committee on Taxation.
Note:*denotes a revenue loss of less than $500,000.

III. REGULATORY IMPACT OF THE JOINT RESOLUTION AND OTHER MATTERS

Pursuant to the requirements of paragraph 11(b) of rule
XXVI of the Standing Rules of the Senate, the Committee states
that the resolution will not significantly regulate any
individuals or businesses, will not affect the personal privacy
of individuals, and will result in no significant additional
paperwork.
The following information is provided in accordance with
section 423 of the Unfunded Mandates Reform Act of 1995 (UMRA)
(Pub. L. 104-04). The Committee has reviewed the provisions of
S.J. Res. 29 as approved by the Committee on June 30, 2010. In
accordance with the requirement of Pub. L. 104-04, the
Committee has determined that the bill contains no
intergovernment mandates, as defined in the UMRA, and would not
affect the budgets of state, local, or tribal governments.

IV. CHANGES IN EXISTING LAW

Pursuant to paragraph 12 of rule XXVI of the Standing Rules
of the Senate, the Committee finds no changes in existing law
made by S.J. Res. 29, as ordered reported.