free trade, unilateral and economic trade sanctions

 

April 30, 1998 Press Release

Test Case Filed Contesting Validity of
State and Local Sanctions Laws

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Washington, D.C. -- The National Foreign Trade Council (NFTC) filed suit last week in the United States District Court in Boston, Massachusetts to enjoin Commonwealth of Massachusetts officials from enforcing the "Massachusetts Burma Law," (7 M.G.L.A.§§ 22G-M). The law effectively prohibits companies that do business in the Union of Myanmar (formerly Burma) -- or whose parent companies have business dealings in that nation -- from providing goods and services to Massachusetts state agencies.

"We regard this law suit to be an important test case that will determine the very significant, perplexing and continuing issue concerning the constitutionality of state and local sanctions," said Frank Kittredge, President of the National Foreign Trade Council and Vice Chairman of USA*ENGAGE. "We believe the interests of all affected parties, including the Commonwealth and its citizens, will be served by an authoritative and prompt resolution of this issue."

"The Massachusetts Burma Law directly intrudes on the exclusive power of the national government to determine foreign policy, discriminates against companies engaged in foreign commerce, and conflicts with the policies and objectives of the federal statute imposing sanctions on the Union of Myanmar," Kittredge continued. "This is a clear constitutional issue, and we believe there are strong grounds to overturn the law."

The NFTC legal challenge is based on three premises:

"The constitutional problem created by the Massachusetts Burma Law is a serious one, and the proliferation of similar laws in states and cities throughout the country creates a problem not only for business, but for the ability of the United States to conduct a coherent foreign policy," Kittredge continued. "We share concerns over reported human rights abuses in the Union of Myanmar, and encourage the United States to seek multilateral solutions to problems that exist throughout the world. However, our system of government was not designed to allow the fifty states and hundreds of municipalities to conduct their own individual foreign policies."

The NFTC has, for most of this century, represented the interests of hundreds of companies in free international trade. NFTC has filed the suit on behalf of its 580 members because the law establishes a "restricted purchase list" which currently includes over 30 of the NFTC's member companies -- preventing these companies from competing on an equal basis for contracts with Massachusetts state agencies or require that they cease doing business in the Union of Myanmar.

# # #

The Wall Street Journal Interactive headlined Friday, "U.S. Trade Group Files Lawsuit Challenging State Sanctions." "'This is a clear constitutional issue, and we believe there are strong grounds to overturn the law,' said NFTC President Frank Kittredge. 'We're prepared to litigate this to the Supreme Court, no matter how long it takes.'" The Los Angeles Times wrote, "the lawsuit claims that such local statutes violate the U.S. Constitution." "The Foreign Trade Council's O'Flaherty said members don't condone the harsh actions of the military regime in Myanmar, but believe 'economic engagement' rather than isolation is the most effective way to influence authoritarian governments."

Reuters reported, "The National Foreign Trade Council (NFTC) said the lawsuit was an important test case to decide whether state and local governments have the constitutional right to in effect have their own foreign policy independent of federal government. 'The overall purpose of the suit is a test case to get a federal judicial decision on the constitutionality of state and local sanctions. To set a precedent that is valid nationwide,' Daniel O'Flaherty, vice president of the trade council, said in an interview with Reuters."

USA TODAY reported, "Foreign policy at state level draws lawsuit." "Dan O'Flaherty, vice president of the trade council, said, 'We're against unilateral sanctions on grounds of self-interest and because they don't work.'" The article reported, "The plaintiffs argue that such sanctions are an unconstitutional and harmful intrusion into U.S. foreign policy" and "The Clinton administration is quietly supportive of the lawsuit."

The Boston Globe published an AP story that headlined, "Suit attacks state law penalizing business with Myanmar." "'We regard this lawsuit to be an important test case that will determine the very significant, perplexing and continuing issue concerning the constitutionality of state and local sanctions,' said Frank Kittredge, president of the council, which represents 550 corporations." The Boston Herald reported, "An industry-backed free trade group yesterday challenged a Massachusetts law that effectively denies state contracts to companies doing business in Burma, also known as Myanmar." "Don Baldini, a lobbyist for the Associated Industries of Massachusetts, said the law 'is a throwback to the whole attitude that this state is not business-friendly.'"

The Journal of Commerce called the suit, "a landmark federal lawsuit" and reported, "the suit follows two years of industry complaints about the 1996 Massachusetts law." The Financial Times headlined, "State sanctions face challenge in US lawsuit." "A US industry group yesterday filed a suit challenging the right of states and localities to impose economic sanctions for foreign policy purposes."

UPI reported, "The National Foreign Trade Council filed suit in federal court in Boston Thursday challenging the law as unconstitutionally encroaching on the authority of the U.S. government to conduct foreign affairs." "More than a dozen cities in the United States, including New York and San Francisco, have similar laws."

 

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