Trade With Burma
"Massachusetts officials were flummoxed to learn they were required to comply with WTO procurement rules that they had never approved."
The serious human rights violations and the deliberate suppression of democracy perpetrated by the military junta ruling Burma (which the junta has renamed Myanmar) since it came to power in 1988 are well known throughout the world.
Burma's pro-democracy movement, led by Nobel Peace Prize holder Aung San Suu Kyi, has called for South Africa-style foreign divestment from Burma to financially starve the military dictatorship.[i] Some two dozen U.S. municipal and county governments, and the state government of Massachusetts,[ii] have acted on this request and terminated purchasing contracts with companies doing business in Burma.[iii] The selective purchasing laws are designed to ensure that public money is not used to indirectly support a regime whose conduct taxpayers find repugnant. A goal of such policies is to create incentives to encourage transnational corporations to divest from Burma. The selective purchasing laws are based on the effective divestiture and selective purchasing initiatives that animated the anti-apartheid movement in the U.S. in the 1980s and which are widely credited for helping to facilitate the successful transition to democracy in South Africa.
The EU and Japan challenged the law at the WTO in the summer of 1997. The EU argued that Massachusetts’ procurement policy had to conform to the WTO rules and that the Burma law contravened the WTO procurement agreement by imposing conditions that were not essential to fulfill the contract (Art. VIII(b), imposed qualifications based on political instead of economic considerations (Art. X), and allowed contracts to be awarded based on political instead of economic considerations (Art. XIII).[iv]
Massachusetts officials were flummoxed to learn they were required to comply with WTO procurement rules that they had never approved. They later learned that a previous governor had sent a letter to the USTR during the Uruguay Round without legislative consultation, much less approval which was the basis for the claim that the state was bound to the WTO procurement rules.
[i] "Burmese leader in exile welcomes limited U.S. sanctions," Agence France Presse, Sep. 24, 1996.
[ii] Act of June 25th, 1996, Chapter 130, 1, 1996, Mass. Acts. 210, codified at Mass. Gen. L. ch. 7. 22G-22M.
[iii] Jim Lobe, "Government Opts Out of Court Case on Globalization," InterPress Service, Mar. 11, 1999. Most recently, the Los Angeles City Council voted unanimously in Dec. 1997 to ban companies that do business in Burma from bidding for any city contracts.
[iv] World Trade Organization, “United States – Measure Affecting Government Procurement, Request for Consultation by the European Communities,” WT/DS**/1, GPA/DS2/1, Jun. 26, 1997.