Sanctioning Burma,
Sanctioning the United States
excerpts from the book
Corporate Predators
by Russel Mokhiber and Robert Weissman
Common Courage Press, 1999
Can the European Union (EU) and Japan force U.S. states to
do business with those who do business with dictators?
Yes, allege the EU and Japan, making a powerful argument under
the rules of the World Trade Organization (WTO).
Last week, Japan joined the European Union in challenging
a 1996 Massachusetts law preventing state agencies from purchasing
goods or services from companies that do business with Burma.
Burma is currently ruled by a brutal junta, known as the SLORC
(the State Law and Order Restoration Council), which has killed
thousands of Burmese and annulled the election in which Nobel
Prize winner Aung San Suu Kyi was elected president.
Earlier this year, the EU sent a formal diplomatic submission
to the U.S. State Department arguing that the Massachusetts selective
purchasing law violates the WTO Government Procurement Agreement.
Japan has since seconded the EU objection.
The EU says the Massachusetts law violates the WTO agreement
because it "allows the award of contracts to be based on
political instead of economic considerations," such as price
and quality.
The EU and Japan have now entered formal negotiations with
the United States in an effort to convince the federal government
to force Massachusetts to repeal its law.
If the law is not changed, the EU and Japan are on course
to bring a formal case against the United States in the WTO, where
a panel of foreign trade bureaucrats would be empowered to decide
whether the Massachusetts law complies with WTO rules. If the
United States lost, the federal government would have to force
Massachusetts to change its law, or accept sanctions or fines.
The European Union itself has implemented sanctions against
Burma, recently lifting tariff preferences for the country under
the Generalized System of Preferences. Nonetheless, the EU argues
that the means Massachusetts has chosen to sanction Burma are
illegal, even though they apply equally to U.S. and foreign corporations.
The Massachusetts law "is a major breach of an international
code to which the state of Massachusetts has agreed and to which
the United States has agreed," says Ella Krucoff, an EU spokesperson
in Washington, D.C. "We don't believe this kind of action
is fair to the trade and investment community."
Condemned by the EU, selective purchasing laws have been endorsed
by Aung San Suu Kyi. It is easy to see why. The Massachusetts
law has significantly influenced corporate decisions to deal with
the Burmese generals. Since its passage, Apple Computer, Eastman
Kodak, Philips Electronics and Hewlett-Packard have pulled out
of Burma, moves attributed in significant part to the Massachusetts
law and the possibility that other states and cities will soon
follow suit.
"If the World Trade Organization agreements had been
successfully used against South Africa selective purchasing laws,
then Nelson Mandela might still be in prison," says Simon
Billenness, a leading campaigner for the Massachusetts selective
purchasing law.
The EU/Japan challenge to the Massachusetts law is intended
to chill other states' consideration of selective purchasing laws
against Burma or other countries ruled by heinous regimes. Connecticut,
Texas, North Carolina, Vermont and California are among the states
now considering selective purchasing laws against Burma.
Not coincidentally, the EU challenge comes as U.S. businesses
have mounted a major campaign against unilateral trade sanctions
of all sorts by U.S. states and the federal government. Hundreds
of large corporations have together set up USA*Engage, a business
coalition to lobby against trade sanctions.
Decisions about selective purchasing laws and related matters
belong in state houses and city halls, not in closed tribunals
in Geneva. Should the European Union and Japan be able to force
Massachusetts to deal with those who deal with the Burmese dictators?
Surely not. To preserve Massachusetts and other states' freedom
of action, the United States should pull out of the WTO.
[In 1998, the European formally challenged Massachusetts'
Burma sanctions law at the World Trade Organization. But the WTO
may never decide the case, given the potential success of a U.S.
business suit against the law in U.S. courts (see "When the
People Speak, the Corporations Squeak").
Corporate Predators