A decade later, when he became aware of widespread human rights abuses by the military junta in the Southeast Asian nation of Burma (which its new leaders renamed Myanmar), Rushing decided to sponsor a bill that penalizes companies bidding for state contracts if they do business with that country.
Multinational firms, however, responded to the 1996 law by filing suit against the state. They contend it is unconstitutional and pre- empted by similar, albeit less restrictive, sanctions that have since been imposed by Congress. The case, Natsios v. National Foreign Trade Council, has made its way to the U.S. Supreme Court, where the justices heard oral arguments in March and are expected to deliver a verdict by the end of June.
As other states and municipalities consider and enact similar laws-- and several sign briefs supporting Massachusetts' stand--they are pitting themselves against the federal government's prerogative to conduct foreign policy, as well as becoming another political battleground for the same forces that clashed at a meeting of the World Trade Organization in Seattle last winter and at the annual meetings of the International Monetary Fund and World Bank this April.
At the same time, selective procurement laws are taking center stage in the tricky and volatile debate over purchasing preferences. In addition to sanctions designed to influence foreign behavior from Northern Ireland to Tibet, the justices' verdict could also affect a host of other state and local policies--from favoring firms that recycle to punishing those who carry out unfair labor practices or discriminate against homosexuals. Dozens of these measures have been passed in the past decade as some large cities--among them New York, Philadelphia and Los Angeles--joined with university towns and other highly educated communities.
Politically, selective purchasing laws work on several different levels. First, the act of introducing such laws mobilizes support. Massachusetts state Representative Antonio F.D. Cabral proposed a measure on the heels of the Burma legislation that would have cut off state purchases from and investments in companies doing business with Indonesia to protest that country's policies in the former Portuguese colony of East Timor. Although the measure did not pass, Cabral said that sponsoring such a law "brings attention to an issue, presses people to realize this is something important to be resolved, and if it doesn't get resolved then they know this is what happens."
Businesses, of course, strongly oppose such tactics. Although in many cases the direct economic impact of state and local laws is not large, their passage produces a stigma that most companies want to avoid. Much of the inspiration for Los Angeles' Burma law came from complaints about the behavior of a locally headquartered oil company, Unocal Corp., which the U.S. Labor Department has said may well have used forced labor to help build a pipeline in Burma.
Tom Ammiano, president of the San Francisco Board of Supervisors, notes that passage of a selective purchasing law there helped persuade Motorola to withdraw from Burma. Soon after Massachusetts passed its law, several businesses cut ties with the country, including Eastman Kodak Co., Hewlett-Packard Co., Apple Computer Inc. and the Japanese construction firm Obayashi Corp.
And when New York City led a national campaign among municipalities to punish Swiss banks that accepted deposits of Nazi-era gold allegedly stolen from victims of the Holocaust, the banks quickly capitulated after years of stonewalling.
That's just one example of the way New York City Comptroller Alan G. Hevesi has wielded the city's purchasing power and the unusual powers of his office to pressure firms to act in "socially responsible" ways, from cutting down on sweatshops and environmental protection to ensuring that both Catholics and Protestants are employed by U.S. firms doing business in Northern Ireland. "The program has been quite successful, and we believe we have a right to decide who we associate with," says First Deputy Comptroller Steve Newman.
But businesses complain that benefits do not justify the costs. "The greatest economic consequence of these kind of bills is that our companies would get a reputation as unreliable trading partners, which would be a perceived liability as a supplier," says Donald F. Baldini, senior vice president for legislative policy at the Associated Industries of Massachusetts, the state's largest employers group, which has filed a brief on behalf of the trade council. "And foreign governments whose companies suffered from these sanctions might be tempted to impose similar restrictions on us. It's a two-way street," he adds.
In their rulings so far, the federal courts have agreed with those who worry about the restrictions such laws could impose on the federal government's ability to shape the nation's foreign policy. As District Court Judge Joseph H. Tauro concluded, "State interests, no matter how noble, do not trump the federal government's exclusive foreign affairs power."
The lawsuit is one of a series of anti-sanctions efforts by the trade council, which is spearheading USA Engage, a group of exporters who have joined to fight unilateral sanctions imposed in the United States by federal, state or local governments. For them, the Burma case was a good litmus test because it offered the opportunity to probe the constitutionality of state and local sanctions without the domestic political consequences of taking on laws supported by strong domestic political constituencies--such as those involving South Africa or Holocaust victims.
"Without federal authority over foreign affairs, each of the 50 state governments and over 39,000 other local governments, with almost $1 trillion in purchasing power, would be free to make foreign policy," says National Foreign Trade Council president Frank Kittredge. "This isn't in the best interests of the nation, and is certainly a situation the framers intended to prevent."
In addition to the ideological arguments about selective purchasing restrictions, they also face more pragmatic criticism at the state and local level. Some cities, such as Berkeley, California, have restricted purchases on so many grounds from so many companies that they have become the stuff of urban legends. Stories have circulated about how Berkeley is unable to buy gas because it bans purchases from companies that do business in Nigeria or Burma and has trouble buying computers because it prevents purchases from firms involved in building nuclear weapons. The city has been able to avoid most of these ills by using waivers in the laws to make necessary purchases. But business lobbyists have used the hiccups experienced by Berkeley and other Bay Area communities to help persuade other cities, such as Seattle, not to impose their own restrictions.
If the Supreme Court's decision goes against Massachusetts, enforcement of existing laws in other jurisdictions could fall by the wayside, although they would not automatically be invalidated. In any event, some critics say that cities and states might simply be better off thinking and acting locally. They argue that the attention municipalities have devoted to these foreign concerns has distracted from more mundane issues of greater importance to their constituents.
Berkeley City Council member Polly Armstrong notes that these "fairly frivolous" pieces of legislation have no bearing on Berkeley's many urban ills. "When we solve Berkeley's problems, we should help Oakland, not Nigeria," she says.
Similarly, Reynolds Holding, a San Francisco Chronicle columnist, observed in a humorous riddle: "What government has urged the Pope to establish diplomatic relations with Israel, endorsed a boycott of Salvadoran coffee, encouraged companies to hire Catholics in Northern Ireland, complied with an international treaty against gender discrimination and shunned firms doing business with South Africa and Myanmar? The answer, of course, is San Francisco, the city with no clue on how to fix the Muni or help the homeless but a foreign policy so sophisticated that it would put the efforts of many nations to shame."
Amiano, however, defends the time he has devoted to foreign concerns. "We're still getting the garbage picked up in my district," he says.
