State & Local Issues

State, Local Sanctions Growing

Economic sanctions against foreign nations are proliferating at the state and local level. The trend worries business executives and U.S. foreign policy-makers alike. Sanctions effectively deny state or local contracts to any U.S. or foreign company doing business in the targeted country. Most are aimed at punishing the subject country for human rights violations.

  • Since 1995, at least three dozen new sanctions have been enacted.

  • Massachusetts and 18 other governmental entities in the U.S. sanction the country of Myanmar -- formerly Burma.

  • Both Berkeley and Oakland, Calif., sanction Nigeria, while New York state targets companies investing in Northern Ireland.

  • U.S. business executives are concerned by the prospect of a new wave of state and city laws targeting China for alleged religious persecution.

Following Massachusetts' sanction of Myanmar, such companies as Apple Computer, Eastman Kodak and Hewlett-Packard pulled out of the country, citing the Massachusetts law.

Foreign officials say they are confused by the conflicting signals concerning who determines U.S. foreign policy and what that policy is. State Department officials are also worried, trade experts report.

A World Trade Organization ruling, which applies to the U.S. and all other member countries, says such sanctions are illegal if they involve procurement contracts above $500,000 for goods and services or $7 million for construction projects.

The National Foreign Trade Council, a U.S. business group with about 550 corporate members, is threatening to file a lawsuit this spring contending that state and local sanctions violate the U.S. Constitution.

Source: Robert S. Greenberger, "States, Cities Increase Use of Trade Sanctions, Troubling Business Groups and U.S. Partners," Wall Street Journal, April 1, 1998.

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