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US, EU, Japan meet inconclusively o

US, EU, Japan meet inconclusively on Burma sanctions law

WASHINGTON, Oct 2 (AFP) - The United States, Japan, and Europe held
inconclusive talks Thursday on a controversial US state law that major
trading partners say violates WTO rules on government contracts.

The one-day, working-level talks in Geneva on the Massachusetts Burma law
were "broad and constructive," US Trade Representative (USTR) spokesman Jay
Ziegler said.

No further talks are scheduled, and Japanese and European officials
reportedly did not exercise their option to call for a dispute settlement
panel -- the next step in seeking trade sanctions against the United States.

"This was an opportunity to lay out our mutual interest in seeing reforms
in democracy and human rights practices in (Burma) and take note of
different actions that European countries and Japan have put forward,"
Ziegler told AFP.

The military government that has ruled Burma for the last decade is
accused of gross and widespread human rights abuses.

But the spokesman had stronger words of support Thursday for the 1996
state law, which effectively bars Massachusetts contracts with US and
foreign companies operating in Burma.

"We have indicated that we intend to defend the Massachusetts law, and
that it is fundamentally consistent with US foreign policy objectives,"
Ziegler said.

A first round of talks in July failed to resolve differences over the
Massachusetts law, modeled after the sanctions leveled at South Africa in
the 1980s.

Continued disagreement over the measure could eventually result in trade
sanctions against the United States, if a WTO panel deems that US states
have violated WTO government procurement rules.

Those rules, which took effect last year, prohibit governments from
awarding contracts based on political rather than economic criteria.

How the WTO deals with the law could set a broad precedent for its
handling of local sanctions laws -- which are proliferating as Washington
clashes with allies over federal sanctions targeting Cuba and Iran.

A dozen US cities have so far passed similar selective purchasing laws
aimed at Burma, while other state and municipal legislatures are considering
measures aimed at Indonesia and China as well.

"Massachusetts companies don't do a lot of business with Burma, so from
that point of view the stakes aren't that high," said Nicholas Rostow,
executive director of the state's international trade and investment office
and a former White House adviser.

"But there's a larger US domestic law question, which is not resolved,
that has to do with the constitutional authority of the states to do this
kind of thing," he added.

The constitutionality of state and local sanctions laws may yet be the
subject of a federal lawsuit, said J. Daniel O'Flaherty, vice president of
the National Foreign Trade Council (NFTC), a lobbying group based here.

The NFTC will likely decide by mid-November whether to proceed with such
a court challenge, with an eye toward setting a legal precedent against
sanctions laws by state and local governments, he said.

Sarah Jackson-Han