Can cities and states boycott rogue regimes?
Like the anti-apartheid campaign, the Burma movement has used divestment and purchasing laws to pressure an oppressive regime into political reforms. More than two dozen U.S. cities and counties have passed Free Burma purchasing laws. One of the first of these measures was enacted in 1996 by the Massachusetts state legislature.
But a recent court decision threatens to pull the rug out from under the Free Burma laws--and lots of other laws at the same time. As a result of a lawsuit brought by the National Foreign Trade Council (NFTC), a Washington, D.C., lobbying group, a federal judge ruled in November 1998 that the Massachusetts Burma law was unconstitutional. A U.S. appeals court upheld the decision last summer.
'This is an attempt by a handful of large companies to repeal the legacy of the South Africa anti-apartheid movement,' says Massachusetts state legislator Byron Rushing, author of the Burma bill. 'If this court decision had happened 10 years ago, Nelson Mandela might still be in prison today.'
The Burma purchasing law itself is pretty simple: It adds a 10 percent penalty to bids for state contracts from companies that do business in Burma. And it seems to be accomplishing its objective of cutting off financial support for Burma's brutal military regime. A number of companies, including Apple Computer, Eastman Kodak, and Hewlett-Packard, pulled out of Burma soon after the law was passed.
But the law's success has corporations worried. While few companies are looking to make big bucks in Burma--the country's gross national product is less than $10 billion--some multinationals are concerned that the Burma law is only the beginning. Already, a few cities have passed similar purchasing laws focused on places like East Timor, Tibet, and Nigeria. And New York City, along with New Jersey, California, and Pennsylvania, adopted the tactic with impressive results last year, targeting Swiss banks that had dealt in gold and other assets taken from victims of the Holocaust during World War II. Shortly before a New York City law penalizing them went into effect last year, three of Switzerland's largest banks agreed to pay Holocaust survivors $2 billion.
'It's outrageous for the NFTC to claim that a boycott of companies is unconstitutional,' says Simon Billenness, an analyst at Trillium Asset Management, a Boston investment firm, and coordinator of the New England Burma Roundtable. 'If it wasn't for a boycott of tea, we wouldn't have a constitution in the first place.'
So in July, one week after the Independence Day holiday weekend, Massachusetts officials announced that they had appealed the case to the U.S. Supreme Court. Texas, California, New York, and seven other states, as well as 12 cities and counties, including Los Angeles, New York City, and Philadelphia, filed amicus briefs in support of the appeal, as did more than two dozen members of Congress, the AFL-CIO, Defenders of Wildlife, Friends of the Earth, and a number of other environmental and human rights organizations.
Why are so many different groups concerned about an obscure Massachusetts purchasing law? The court decision, it turns out, could have far-reaching consequences. Among the laws it could affect:
-- Environmental purchasing preferences, which include recycled
content, alternative fuels and ink, and sustainable forestry
standards. Forty-eight states have passed some form of these
-- Purchasing laws targeting oppressive regimes in East Timor, Nigeria, and Tibet.
-- At least 43 'Buy American' or 'Buy Local' laws.
-- Legislation enforcing the MacBride Principles, which require companies to hire both Catholics and Protestants if they do business in Northern Ireland. In the past decade, 26 cities, including Chicago, Philadelphia, Tucson, and Omaha have passed MacBride Principles laws.
-- Laws requiring fair labor standards for goods purchased by cities or states.
-- Action by New York City, Pennsylvania, New Jersey, California, and other states, which forced Switzerland's three largest banks to settle claims from Holocaust survivors.
Does the Massachusetts law violate the U.S. Constitution? 'Private individuals and corporations can base their purchasing decisions on their own moral standards,' says Professor Robert Stumberg of Georgetown University's school of law. 'Will the Supreme Court bar states from doing the same thing? I doubt it.'
And while the question has never actually come before the high court in this form, says Stumberg, the Justice Department--under President Ronald Reagan's attorney general Edwin Meese III, no less--concluded that the South Africa laws, on which the Massachusetts Burma law is based, were constitutional.
'It's a unique opportunity,' says Billenness of the legal challenge. 'How often do you get the chance to defend democracy in the United States and simultaneously help free an enslaved nation in another part of the globe?'
The New England Burma Roundtable: 800/548-5684. The Free Burma Coalition: www.freeburma.orgor