Thank you for the opportunity to speak with you today. I would like to discuss with you our shared interest in promoting U.S. national security, strengthening protection of human rights and enhancing U.S. competitiveness.

Let me begin by placing state sanctions in the context of exports, jobs and competitiveness.

The world is growing increasingly interdependent. In 1970, U.S. imports and exports were equivalent to 13 percent of gross domestic product (GDP). Now that figure is 30 percent. The United States once again has become the world's number one exporter, the world's largest manufacturer of automobiles, the world's premier agricultural exporter, and the world's leading producer of semiconductors. From coast to coast business is growing, real wages are rising and inflation is under control. Truly, the American economy has become the envy of countries around the globe.

While this stunning success is attributable to many factors, American participation in an increasingly rule-based global trading system is among the most important. International trade is a vital component of our economic strength at home and abroad. Since 1993, more than a third of our economic growth has come directly from exports. Much of this growth in exports is due to the performance of states like Maryland. The Port of Baltimore is the gateway to the global market place for exports and imports to and from Maryland any the entire country. From 1987 through 1996, Maryland goods exports increased 129.1% to $3.5 billion. In the first 6 months of 1997, Maryland's goods exports were running at a rate of $4.1 billion -- up 37% since 1992. Maryland's interests international trade translates into almost 50,000 jobs -- high paying jobs that pay 15% higher wages than other job in Maryland.

Our prosperity as a nation depends on our ability to compete in international markets. Ninety-six percent of the world's consumer live outside of the U.S., many of them in dynamic, emerging markets in Latin America and Asia that are growing much faster than our traditional export markets. We can benefit from their growth -- but only if their markets are open to our products, since our markets are already open to theirs.

America benefits from free trade that is also fair trade, and this Administration has worked hard to ensure that other countries live up to their word. We have frequently used the World Trade Organization's (WTO) dispute settlement system to enforce our rights. We have filed and won more dispute settlement cases in the WTO than any country in the world for a wide spectrum of U.S. industries from agriculture, to manufacturing, services industries and intellectual property. We have benefited from clearer rules on government procurement which has opened billions of dollars of procurement opportunities for U.S. firms and workers. Working toward creating a level playing field has benefitted Maryland. For example, the WTO's Government Procurement Agreement has enhanced access for Maryland companies in key markets such as Japan and Europe.

Now let me turn to the issue of sanctions. Economic sanctions are an important foreign policy tool that provides an option between diplomacy end the use of force. They are used when other measures have been insufficient and when their imposition is likely to change the behavior of the offending state.

Sanctions are not a "one-size-fits-all" foreign policy tool, however. When the U.S. must apply sanctions, the Administration seeks to design a sanctions regime to target the specific vulnerabilities of the sanctioned country so as to ensure the best and fastest possible response to our concerns, while minimizing the damage to other important U.S. interests. Sanctions are intended to highlight misconduct by regimes, and alter the behavior which threatens our national interests. Sanctions can address misconduct in the areas of human rights, terrorism, narcotics, weapons of mass destruction, and other areas where such conduct is considered unacceptable by world standards.

To maximize their effectiveness, we prefer sanctions that have multilateral support and participation. Multilateral economic sanctions are not only more effective vis-a-vis the target, but they also show unity of international purpose, minimize damage to U.S. competitiveness, and distribute the sanctions burden across responsible countries.

However, we are prepared to use unilateral sanctions when important national interests are at stake. The Clinton Administration has at times employed sanctions to promote human rights isolate rogue regimes and advance our economic interests in the global economy. In response to extreme actions taken by the Nigerian government, the President has imposed a visa ban on Nigerian senior officials and has banned military sales and services to Nigeria. He has banned new U.S. investment in Burma to prevent the repressive regime in Burma from benefiting from its misdeeds. He signed the Iran-Libya Sanctions Act to send a strong message to Iran and Libya to halt state-sponsored terrorism and the acquisition of weapons of mass destruction. Simultaneously with these actions, the Administration has launched vigorous diplomatic initiatives to encourage other countries to pursue our shared goals of changing the behavior of pariah regimes, improving the conditions under which their citizens live and working towards a world free from the threat of terrorism and weapons of mass destruction.

While we recognize and share state governments' frustration and often outrage at certain countries' unacceptable behavior, we are concerned about the growing number of state and local measures and the message they send to the rest of the world. The President has made it clear that this Administration will challenge the unacceptable behavior of rogue states wherever they are in the world. The Secretary of State has told other countries that the U.S. is prepared to pay the cost of leadership and, if necessary, to go it alone when it comes to delivering a clear message of condemnation to these regimes. Secretary Albright has not pulled any punches -- as diplomats often do -- in expressing the United States' outrage at egregious violations of human rights and international norms in countries like Cuba, Nigeria, Afghanistan, Burma and Iran. But state sanctions often can confuse the message the United States sends and impede our ability to build coalitions to focus on the targeted regime. Let me outline a few concerns we have about state sanctions.

Our first concern is whether sanctions are effective in pursuing the goals we all share. As I said before, to be most effective, sanctions should have multilateral support and participation wherever possible. While the U S. is the largest economy and most important country, sanctions by the U.S alone may not have the desired impact because they can be sometimes and often are circumvented. Sanctions often are ineffective unless they are supported by other key countries.

Second, from the Department of State's perspective, we are concerned that state and local sanctions may impair the President's ability to send a clear and unified message to the rest of the world. As the nation to which the world looks for leadership, the United States has the obligation to project a coherent and consistent message. We would like to work with you to send a clear message to oppressive regimes. But ad hoc and scattered actions at various levels of government, however well-intentioned, can do more harm than good in achieving the desired objective. They can impede the President's and Secretary of State's conduct of foreign policy. They also can create conflicts with our allies with whom we need to work to achieve our common goals.

For example, a variety of state and local officials recently began considering the imposition of various economic sanctions on Swiss banks and other Swiss institutions in order to force an accounting for assets of Holocaust victims. Our goal is to provide justice for Holocaust victims, not to punish the Swiss people or their government. The U.S. Government has already issued a very hard-hitting report and the Swiss have taken strong steps to account for the past. But now is the time for cooperation with the Swiss, not confrontation. According to Stuart Eizenstat, Under Secretary of State and the President's point person on this project, state actions at this time are unwarranted and counterproductive, particularly given positive steps the Government of Switzerland is taking to address the issue. Such actions threaten to harden Swiss public opinion against staying this positive course. These sanctions efforts also complicate our government's ability to develop a healing and reconciliation process that helps uncover the truth.

Third, if states do want to express concerns or viewpoints on particular human rights abuses or other objectionable behavior by foreign regimes, we would like to work with them to ensure that these actions complement U.S. foreign policy objectives and are consistent with our international treaties and agreements. As I mentioned before, as the world's largest exporter, no country does better than the United States when countries follow internationally developed trade rules. At the same time, the United States must also play by the rules. If state and local sanctions are perceived to violate the rules, they can cause counterproductive disagreements with nations that share the same values and are otherwise inclined to follow our lead in pursuing our foreign policy goals.

Fourth, we are also concerned about the impact of sanctions on our domestic economy. While sanctions serve an important foreign policy purpose, they are not without cost. The cost is measured in foregone economic opportunities by countries that put these measures in place. One private sector group estimates foregone opportunities for the U.S alone in 1996 at $15-19 billion dollars in unrealized exports and the loss of over 200,000 jobs in export-related sectors of our economy.

Often state and local sanctions have unintended effects that are counterproductive or divert attention from their original goal. In June 1996, Massachusetts enacted a law applying a price penalty, for purposes of bidding on procurement opportunities, on companies that have business operations in Burma. The European Union and Japan have initiated dispute settlement consultations in the World Trade Organization over this law. Our trading partners allege that the Massachusetts law violates certain provisions of the Government Procurement Agreement.

We are working closely with the Commonwealth of Massachusetts on this issue, just as we continue to work with the European Union, Japan and others to improve the situation in Burma. We have made a lot of progress. Let me be clear. We will defend the rights of the United States in the WTO dispute settlement process. But we must be honest in saying that the threatened WTO case has been an irritant and has diverted the United States' and Europe's attention from focussing where it should be -- on Burma.

We share Maryland's concerns about human rights in Nigeria and the necessary democratic reforms which must take place to improve the lives of Nigerian citizens. In its 1997 human rights report, the Administration issued a stinging account of the Nigerian Government's human rights abuses. The report holds, "The [Nigerian] Government's human rights record remained dismal.

Throughout the year, [Sani] Abacha's Government relied regularly on arbitrary detention and harassment to silence its most outspoken critics." The report goes on to note, "security forces continued to commit extrajudicial killings and use excessive force to quell antigovernment protests...". The report concludes that citizens of Nigeria do not have the right to change their government by peaceful means and that despite the announced timetable for transition from military to multiparty rule, there was little meaningful progress toward democracy. This scathing report demonstrates that we are in agreement with Maryland about the deplorable human rights and democratic situation in Nigeria and we welcome the voice of the people of Maryland demanding change.

We do have concerns, however, about the way Maryland has chosen to respond to the Nigerian situation. Specifically, certain provisions in the bill will make it difficult for us to continue our efforts; to work with our trading partners to implement effective multilateral measures to influence reform in Nigeria. These provisions raise serious questions, much like the Massachusetts Burma law, and we would like to work with you to ensure that we don't expose ourselves to a potential WTO challenge.

Finally, I know that questions have been raised about the constitutionality of state sanctions. I'm not here to debate those legal issues, but I can say that state and local sanctions that are inconsistent with our obligations to our political allies and trading partners can have the practical effect of interfering with the President's ability to conduct our foreign policy. Too often we find ourselves answering criticism about certain state and local actions rather than focussing on the poor behavior of the object of those actions.

My main message today is one of partnership -- an offer to work closely with you to respond to egregious threats to our national security, our interest in enhancing human rights, or in promoting other of our national values. We have had constructive private conversations with a number of Maryland legislators on this issue. We have made it clear to them and we want to make it clear to you that we fully support Maryland's desire to be heard, not silenced. Just as we have reached out to you, we have also consulted with the National Governors' Association, the Association of State Attorneys General, the National Conference of State Legislators, and the National Association of State Procurement Officers.

I hope we can work together to send the right message to governments that do not respect the basic human rights of their citizens. Our aim is not to try to halt state actions -- rather, we would like to work with you to encourage the judicious and appropriate use of sanctions. We can inadvertently aid pariah states when the United States does not speak with one voice. Measures by states that transgress our international obligations embroil us in disputes that could easily be avoided. Discord with our allies weakens opposition to rogue regimes and trade disputes can impair the cooperation that is essential bringing about meaningful change in the lives of the citizens of Nigeria and elsewhere

Once again, thank you for the opportunity to speak on these important issues. I look forward to working with you as we move forward.

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