WEEKLY BULLETIN-UNITED STATES: Massachusetts Defends Burma Sanctions Laws

By Farhan Haq Reprint | | Print |

NEW YORK, Aug 1 1998 (IPS) - State officials in Massachusetts are headed for a showdown with a coalition of nearly 600 major corporations over whether state laws restricting business with companies that deal with Burma are against the U.S. Constitution.

The officials this week filed a defence of the sanctions law that is being challenged by the National Foreign Trade Council (NFTC), a coalition of some 580 U.S. businesses. The council filed a lawsuit against Massachusetts in May, contending that he state’s “restrictive purchasing” law against firms that deal with Burma was both unconstitutional and harmful to many businesses.

“We’re not interfering with anybody,” Tom Barnico, Massachusetts’ assistant attorney general, declared Tuesday. “Our action is constitutional.”

The U.S. Federal Court is scheduled to hear the case on Sept. 2. The NFTC, meanwhile, is expected to keep pushing the courts to overturn the 1996 Massachusetts law, which prohibits the state from contracting with companies that deal with Burma unless they offer bids 10 percent lower than their competitors.

“The Massachusetts Burma Law directly intrudes on the exclusive power of the national government to determine foreign policy, discriminates against companies engaged in foreign commerce, and conflicts with the policies and objectives of the federal statute imposing sanctions on (Burma),” NFTC President Frank Kittredge said in filing the lawsuit.

He argued that the lawsuit against Massachusetts would be “an important test case” of the constitutionality of local and state- level sanctions. Various localities in the United States have enacted some 50 laws restricting business with companies that engage in controversial deals abroad, with about half of the laws seeking to restrict trade with Burma.

Other selective purchasing laws affect trade with such countries as Nigeria, China, Indonesia and Switzerland.

“There have been no legal challenges to other selective purchasing laws,” said Simon Billeness, a human-rights campaigner for the Franklin Research and Development Corporation in Boston.

The only major legal precedents for such laws, Barnico argued, are those that arose a decade ago when many localities, inclding Massachusetts state and New York City, prohibited commerce with firms that were invested in apartheid South Africa.

In response to challenges, the Maryland Court of Appeals upheld the city of Baltimore’s divestment laws, while the U.S. Office of Legal Counsel in 1986 concluded that such legislation was “constitutional in all respects”, Barnico noted.

Nevertheless, there have been some changes in international commerce since the South Africa divestment drive weakened the apartheid regime. Most notably, the formation of the World Trade Organisation (WTO) has given opponents of sanctions measures a venue to air their grievances.

Several critics of the Burma legislation – including Japan and many European governments – have made clear their intention to ask for WTO action against the laws by September if no changes have been made.

The governments complained last year to the WTO that Massachusetts had violated the General Procurement Agreement, an accord signed by Massachusetts and 38 other US states which says that procurement contracts must be based solely on economic criteria.

In response, Massachusetts State Representative Byron Rushing, the law’s chief sponsor, has considered adding an amendment that would exempt goods and services contracts of more than 500,000 dollars, and construction projects worth more than six million dollars, from the Burma law.

Rushing objected to the European Union’s recent decision to file a ‘friend of the court’ brief supporting the NFTC case, calling it an “unfriendly act”.

Rushing’s amendment, however, is unlikely to be considered by the Massachusetts state legislature at its present session, and will likely be held pending the European Union’s reaction, Billeness said.

The legal issues surrounding the laws are complicated by the political factors that prompted grassroots groups to seek penalties against commerce with Burma in the first place.

As the legal arguments are presented, President Bill Clinton’s administration is under pressure to tip its own hand and show clear support for one side or another. While the administration has complained about state or local laws that are inconsistent with U.S. foreign policy laws, “it certainly doesn’t want a political rupture with the states” on the issue, Billeness said.

More importantly, the White House – which has its own restrictions in place on dealing with Burma – also wants to keep the pressure on Rangoon, especially with the ongoing standoff in which the Burmese junta have blocked opposition leader Aung San Suu Kyi from meeting members of her own National League for Democracy.

“With each passing day, the likelihood of social breakdown – or explosion – that would undermine regional stability grows higher, and the likelihood that a future government will be able to tackle Burma’s problems smaller,” US Secretary of State Madeleine Albright declared earlier this week.