TRADE-U.S: Businesses Declare War on Economic Sanctions

By Pratap Chatterjee Reprint | | Print |

Pratap Chatterjee

SAN FRANCISCO, Feb 17 1997 (IPS) - Some 35 major U.S. corporations are gearing up to battle a recent flurry of economic sanctions imposed by local and national governments against rogue nations.

“Unilateral sanctions don’t work,” said Frank Kitteredge, head of the National Foreign Trade Council (NFTC), a Washington- based business lobby group that is leading the campaign against countries like Burma and Nigeria, whose rulers stand accused of major human rights violations.

As the United States maintains its own bans on business with Cuba, Iran, and Libya, cities and states around the country are themselves responding to calls for a boycott of Burma and Nigeria.

“Multilateral sanctions like those on Iraq may work,” said Kitteredge, referring to action taken by member-states of the United Nations following Iraq’s 1990 invasion of Kuwait. “But look at the embargo on Cuba. The intention was to oust Castro. You can see for yourself that it has not worked.”

The NFTC official argues that sanctions cost U.S. companies business and jobs.

“Take the U.S. embargo on the Russian oil pipeline,” said Kitteredge, a former executive at General Electric (GE). “It simply cut out U.S. companies like Caterpillar and GE. Instead, the Russians got aid from Europe and Japan and the effect was that Komatsu, a Japanese company which had no internatqonal experience before, today is a player to rival Caterpillar.”

Laws in the state of Massachusetts and several cities in California, Colorado, and Wisconsin now bar local governments from doing business with companies that have Burmese contracts.

Several major companies, including Apple computer, Kodak, Motorola, PepsiCo, and Walt Disney, have pulled out of Burma as groups protest the actions of the military dictatorship.

Some companies which have not heeded the boycott call, stand to lose business at home. Ericsson of Sweden said recently that its business in Burma would disqualify its bid for a 40-million-dollar contract to rebuild the emergency radio system in the city of San Francisco. The company is now considering taking the matter to court.

Bill Lane, the Washington lobbyist for Caterpillar, says that his company recently lost an engine sale in Canada because part of the product would have ended up in a Middle Eastern country. The customer, who was worried that Caterpillar might be forced to pull out because of possible sanctions, chose instead to buy the engines from a German company.

Not surprisingly, Caterpillar is a major player in the NFTC campaign. So is the company Dresser international, which makes oil drilling equipment.

In the so-called “education” campaign, the NFTC plans to publish studies on the impact of sanctions and lobby U.S. lawmakers in Washington. The drive, to begin in mid-April, is to receive support from the law firm Hogan & Hartson, the public relations company Wexler, and the National Association of Manufacturers (NAM), a lobby group.

On the other side of the issue, the coalition lobbying for the imposition of sanctions has also made headway on the issue of Nigeria.

The city of Oakland, California, has a ban on doing business with companies that have Nigerian contracts. And several other cities in the state are also considering such legislation.

The NFTC is not the only one upset at the sanctions. The Washington offices of the European Union (EU) recently sent a letter to the U.S. State Department to protest the sanctions on companies that do business in Burma imposed by the sate of Massachusetts.

“With regard to Burma, let me assure you that the European Union shares U.S. concerns about the absence of democratisation and the continuing human rights violations in Burma,” wrote EU ambassador Hugo Paemen. “Our objections pertain solely to what we see as a breach of U.S. international obligations.”

He says that the Massachusetts law, which will ban European companies working in Burma from competing for state contracts, violates the bilateral agreement on Government Procurement.

EU officials say they would prefer to see a common, multilateral position on such bans. Later this month, for example, the EU Council of Ministers will debate removing Burma from the Generalised System of Preferences, a trading agreement.

Kitteredge says that his group also plans to suggest alternatives to embargoes, including the use of diplomacy and “constructive” dialogue.

But activists like Thaung Ahtun of New York’s Burma Support Group, say these do not always work. In joint venture deals like those between multinational companies and Burma’s military government, he says, “the profits will flow directly into the pockets of the generals.”

And many activists say the new lobbying efforts in Washington show that the sanctions are working, because large companies are now taking them seriously.