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U.S.: Transnationals Win Court Vict

Subject: U.S.: Transnationals Win Court Victory Over Grassroots  Activists 


               U.S.: Transnationals Win Court
               Victory Over Grassroots Activists

               Inter Press Service

               WASHINGTON, (Nov. 5) IPS - U.S. and other transnational
               (TNCs) have scored a major victory against state and local
governments in the
               United States that penalize companies doing business in
repressive countries

               A federal court judge ruled late yesterday that a
two-year-old Massachusetts
               law which makes it more difficult for companies that do
business in Burma
               (Myanmar) to win state contracts violates the U.S.

               U.S. District Court Judge Joseph L. Tauro found that the
law, which adds a
               ten-percent penalty to bids for contracts by companies with
investments in
               Burma, "impermissibly infringes on the federal government's
power to regulate
               foreign affairs". 

               "State interests, no matter how noble, do not trump the
federal government's
               exclusive foreign affairs power," according to the ruling. 

               A spokesperson for the Massachusetts Attorney General
intimated today that a
               bid would be made to have the ruling overturned by a higher
court. "We expect
               to appeal although we want to analyze the decision further,"
said the
               spokesperson, Marsha Cohen. 

               Some observers believe the case will eventually have to be
decided by the
               Supreme Court. 

               The judgement has major implications not just for human
rights activists opposed
               to the military regime in Burma, but also for the
relationship between state and
               other local political jurisdictions, on the one hand, and
the federal government on
               the other. 

               "The impact of this decision goes far beyond Massachusetts,"
said Bob
               Stumberg, a law professor at the Georgetown Law Center here
and a
               recognized expert on the U.S. federal system. "It would deny
the cities and
               states the power to use moral standards for choosing their
business partners if
               foreign commerce is affected," he noted. 

               The Massachusetts law is one of dozens of so-called
"selective purchasing" laws
               which have been used by state and local jurisdictions for
more than 20 years to
               pressure companies to cease doing business with repressive
               abroad. Such laws are designed to force TNCs to choose
between bidding on
               often lucrative state and local government contracts and
continuing operations in
               the target country. 

               They were used most successfully during the late 1970s and
1980s to force U.S.
               TNCs to withdraw from apartheid South Africa. Such laws were
credited with
               the exodus of scores of some of the biggest U.S.
corporations, like Coca-Cola,
               IBM, and General Motors, from South Africa between 1976 and
1986, when
               Congress imposed its own sanctions against Pretoria over the
opposition of
               then-president Ronald Reagan. 

               Similar laws in New York, California, Pennsylvania and other
states and cities
               targeting Swiss banks and insurance companies which had
failed to account
               adequately to Nazi Holocaust survivors and their families
after World War II
               helped prompt a settlement of outstanding claims last August. 

               Some two dozen states and cities have enacted selective
purchasing laws against
               companies doing business in Burma, where a military junta
has repressed the
               democratic opposition led by Nobel Peace Prize laureate Aung
San Suu Kyi.
               Other jurisdictions have targeted companies with operations
in Nigeria, China
               and Cuba. 

               TNCs have naturally opposed these initiatives because they
curb their freedom
               to do business where they like. But, until now, they have
been reluctant to bring
               a legal challenge to such laws, in part because of the
negative publicity that might
               accrue to any company claiming a right to do business with

               This case, however, was brought by the National Foreign
Trade Council
               (NFTC), an association of 580 of the largest U.S.
corporations and U.S.
               affiliates of foreign TNCs. Early in the case, the judge
denied the state's request
               that the NFTC identify specific companies which had been
harmed by the
               Burma law in order to establish their standing to bring the
lawsuit. Instead,
               Tauro, in one decision that may be part of an appeal,
permitted the NFTC to
               assert that more than 30 of its members had been affected. 

               The NFTC claimed vindication here today. "The ruling rests
on clear
               constitutional grounds, and should significantly deter
states and cities from
               imposing their own foreign-policy sanctions," said Frank
Kittredge, the council's

               "We share concerns over reported human rights abuses in
Burma, (but) our
               system of government was not designed to allow the fifty
states and hundreds of
               municipalities to conduct their own individual foreign
policies," he added. 

               The Burma sanctions law has also provoked major interest

               The European Union (EU) filed a brief to the court in
support of the NFTC's
               position, an action which earned it a strong rebuke from
state officials and
               Massachusetts lawmakers in the U.S. Congress. 

               The EU and Japan also filed formal challenges to the law
with the World Trade
               Organization (WTO) in Geneva, claiming that it violates a
1994 Government
               Procurement Agreement with Washington which forbids states
from using
               non-economic criteria in deciding on contract bids. 

               The administration of President Bill Clinton, which
initially tried to persuade
               Massachusetts lawmakers to amend the law so that the EU and
Japan would
               drop their WTO action, has since pledged to defend it in the
WTO. The
               International Federation of Chemical, Energy, Mine and
General Workers'
               Unions, which represents more than 20 million workers, last
month called on the
               EU to withdraw its WTO complaint and "sever all trading
links with Burma until
               democracy is restored there." 

               "We're pleased with the decision, and we're assessing the
implications for the
               WTO case," said Maeve O'Beirne, the EU's spokesperson here. 

               If the big TNCs were jubilant, supporters of the Burma
measure were defiant
               today. "Boycotts based on human rights have been a
cornerstone of our
               democracy since the Boston Tea Party," said Simon Billeness,
a senior analyst at
               Franklin Research and Development Corp. and a top leader of
the grassroots
               effort behind the law. "We cannot allow a few corporations
to remove this
               democratic tool so that they can profit from a murderous
military junta." 

               "If selective purchasing had been banned ten years ago,
(South African
               President) Nelson Mandela might still be in prison today,"
said State Rep. Byron
               Rushing, chief sponsor of the bill in the Massachusetts


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