June 29, 1999
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| June 29, 1999 | atimes.com | |
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| Southeast Asia Massachusetts' Burma law may be only the first to be overturned By Jim Lobe WASHINGTON - Multinational corporations have scoreda major victory over U.S. state and local governments that penalizecompanies doing business in repressive countries abroad. In a sweeping decision, a three-judge federal appeals court inBoston this week struck down as unconstitutional a Massachusettslaw that imposed a 10-percent penalty on bids for state contractsby companies doing business in Burma. Massachusetts, which buys some $2 billion in goods andservices per year, enacted the law in 1996. The judges' ruling, which may be appealed to the U.S. SupremeCourt, could invalidate dozens of similar ''selective purchasing''laws. ''This is a major setback,'' said Simon Billenness, a leader inthe international campaign to force Burma's military junta toimprove its human-rights practices and recognize the winner of theaborted 1990 elections, the National League for Democracy led byNobel Peace laureate Aung San Kuu Kyi. ''If this ruling had been applied to anti-apartheid selectivepurchasing laws in the 1980's, then Nelson Mandela would still be in prison,'' he added. While activists were despondent, the big U.S. corporations thatbrought the lawsuit last year voiced jubilation. ''We are delighted that the First Circuit [court] agreed that state and local sanctions laws are not allowable under ourconstitution,'' said Frank Kittredge, president of the NationalForeign Trade Council (NFTC), a coalition of some 580 major U.S. andforeign-owned firms. ''This ruling has broad, nationwide significance, and shouldhelp to put an end to local efforts to make foreign policy,'' saidKittredge, whose group opposed selective purchasing laws becausethese curbed companies' freedom to do business where they liked. The court's opinion also vindicated the European Union (EU),which, in an extraordinary intervention, submitted a ''friend ofthe court'' brief to the judges arguing that the law should beoverturned. The EU and Japan had previously complained to the World TradeOrganization (WTO) about the Massachusetts law, which they saidviolated the Geneva-based agency's 1995 Government ProcurementAgreement (GPA). The GPA forbids states from using non-economiccriteria in deciding contract bids. The administration of President Bill Clinton, which normallywould have been expected to file its own brief on such animportant issue, declined to do so in this case - in major partbecause of internal differences of opinion. Deputy Treasury Secretary-designate Stuart Eizenstat argued for supporting the NFTC in the interests of promoting the WTO andeconomic globalization. But trade officials contended that itwould trigger a new backlash against the WTO in Congress and humanrights officials warned that it would undermine theadministration's own policy against Burma. Selective purchasing laws are designed to force companies tochoose between bidding on often-lucrative state and localgovernment contracts and operating in target countries. They have served as a powerful tool for local human-rights activists since the anti-apartheid movement virtually inventedthem in the late 1970's. In the 1980s, scores of states, cities, and localjurisdictions enacted laws that barred companies with investmentsin South Africa from bidding on contracts. The result was anexodus of big U.S. companies - including such giants as Coca-Cola,IBM and General Motors - from South Africa. Similar laws in New York, California, Pennsylvania and otherstates and cities prompted Swiss banks and insurance companies toreach a settlement with Nazi holocaust victims and their familieslast August. Other jurisdictions have enacted laws against companies thatdo business in China and Cuba, purchase rare rain-forest woodproducts or violate codes of conduct against discrimination inNorthern Ireland. Some two dozen U.S. states and cities have enacted selectivepurchasing laws against companies doing business in Burma. As inSouth Africa 15 years ago, the campaign has prompted manyprominent U.S. firms - including Eastman Kodak, Levi Strauss, AppleComputer, PepsiCo and Liz Claiborne - to leave the Asian nation. The NFTC's challenge to the law rested on three mainconstitutional arguments, all involving the relative powers of thefederal government vis-a-vis local jurisdictions in conductingforeign affairs and commerce. Under the constitution, according to the business group,federal law and policy are supreme and automatically pre-empt andinvalidate inconsistent local laws. Massachusetts - which was supported by two dozen members ofCongress from both major parties, a plethora of human-rights,environment and labor groups, 11 states and more than a dozencities - argued that local jurisdictions had the right to decidehow they wished to spend their money and to use moralconsiderations in making those decisions. The NFTC won the first round last November when a trial courtruled that the law ''impermissibly infringes on the federalgovernment's power to regulate foreign affairs.'' This week's appeals court ruling was even more sweeping in that it upheld each of the NFTC's three main arguments in favor offederal supremacy. ''The conduct of this nation's foreign affairs cannot beeffectively managed on behalf of all of the nation's citizens ifeach of the many state and local governments pursues its ownforeign policy,'' the three judges stated in a 78-page opinion. ''This is a serious blow to local power over spendingdecisions,'' said Thomas Barnico, the lawyer who argued the caseon behalf of the Massachusetts attorney-general. ''It casts doubton numerous other state and local laws.'' He added that theattorney-general had not yet decided whether to appeal the rulingto the Supreme Court. (Inter Press Service) | |||||||||
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