Court to Balance Global Trade Vs. Local Activism

In a case that pits American moral values against the benefits of global free trade, the Supreme Court said Monday it will decide whether cities and states can refuse to do business with firms that operate under repressive regimes in such countries as Myanmar, Cuba or China.

At issue in the case from Massachusetts is whether trade restrictions imposed by states and local governments infringe upon the federal government’s constitutional role as the nation’s arbiter of foreign policy.

The case, which the court will hear early next year, pits human-rights activists and many state and local lawmakers against American businesses and some foreign firms.

The court’s decision to hear the case comes as the World Trade Organization faces protests over, among other things, the WTO’s own resistance to considering humanitarian and environmental issues in setting economic policy.

During the 1980s, most states and dozens of cities expressed their moral outrage at South Africa’s apartheid regime by boycotting firms that did business there. In this decade, the military regime in Myanmar, formerly known as Burma, has been targeted by similar laws, including ordinances in Los Angeles and San Francisco, for its human-rights violations. Cuba, China, Nigeria, Northern Ireland, Sudan and Switzerland have been targeted in other ordinances across the nation.

Some cities have also said they will not do business with global firms that operate “sweatshops” or that fail to pay a “living wage.”

Critics in the business community have decried these laws as foreign policy-making by cities and states. A coalition of firms, led by the U.S. Chamber of Commerce and the National Assn. of Manufacturers, challenged Massachusetts’ so-called Burma law, which generally barred the state from buying goods and services from companies doing business with Myanmar unless there were no other comparable bids.

The European Union and Japan also protested the Massachusetts law and joined in the legal attack. They said companies in Britain, Germany or Japan should not be forced to choose between doing business with Myanmar or Massachusetts.

In June, the U.S. Court of Appeals in Boston agreed and struck down the state’s law.

It agreed that “human rights conditions in Burma are deplorable,” but ruled that only the federal government can impose economic sanctions with international reach. The U.S. Constitution says the nation must “speak with one voice” in foreign affairs, wrote Judge Sandra Lynch, not through dozens of local and state governments. By discriminating against firms that do business in Myanmar, “Massachusetts is attempting to regulate conduct beyond the borders of this country,” she said.

Lawyers for Massachusetts appealed to the Supreme Court. They were joined by California and 14 other states, as well as a host of California cities, including Los Angeles, San Francisco, Oakland, Berkeley and Santa Cruz, which have enacted similar restrictions.

Congress, Clinton Support Sanctions

“Nothing in the federal Constitution denies to the states the right to apply a moral standard to their spending decisions [or] requires the states to trade with dictators,” the state’s lawyers said in the case of Natsios vs. National Foreign Trade Council, 99-474. They also noted that Congress and the Clinton administration have supported sanctions against Myanmar to protest human rights violations.

The case will test the court’s conservative majority and its willingness to uphold liberal state laws. In recent years, the court’s conservatives, led by Chief Justice William H. Rehnquist, have steadily strengthened the powers of the states. Their states’ rights rulings have struck down federal laws on guns, religious liberty and Indian gaming and freed the states from paying overtime to their workers. In political terms, these laws were generally supported by liberals and opposed by conservatives.

The new case will turn the tables. Liberals have championed the human-rights measures while big-business lawyers have opposed the restrictions.

Hofstra University law professor Peter Spiro, who has studied the anti-Myanmar laws, predicted the high court will side with Massachusetts and uphold its human-rights measure.

“This could make a fairly dramatic departure if the court gives states and local governments the green light,” Spiro said.

In the past, the court has said that any local or state law that interferes with foreign trade is unconstitutional, he said. But the current court has been unwilling to read the Constitution so strictly as to tie the hands of state officials, he said.

“In the context of economic globalization, this could be very significant,” he said.

The court’s ruling in the case may also affect a series of environmental measures.

For example, city councils in several cities--including Santa Monica, San Francisco, Ventura and Santa Clarita--have passed ordinances that forbid local officials from purchasing hardwoods from tropical rain forests. Many states and cities also require the purchase of recycled paper or clean fuels.

Lawyers said a broad ruling against local laws that discriminate against businesses could leave such measures vulnerable.

A ruling can be expected by next summer.

Court to Consider Hate-Crime Sentence

Meanwhile, the court also said it will decide whether a judge, rather than a jury, can impose a heavier sentence for a hate crime.

The high court upheld the constitutionality of hate-crime laws in a Ohio case in 1993. The new case will determine whether a defendant acted out of racial bias.

Charles Apprendi, a New Jersey pharmacist, was convicted for firing five shots into the home of a black family in 1994.

He pleaded guilty to charges that carried a maximum 10-year term. Applying the state’s hate-crime law, a judge sentenced him to 12 years, saying his crime had been racially motivated.

In Apprendi vs. New Jersey, 99-478, he argues the extra punishment was unconstitutional unless prosecutors could convince a jury beyond a reasonable doubt that his actions were racially motivated.