The States' Role (if any) in Foreign Affairs.

A recent Supreme Court decision on the Massachusetts law discouraging trade with Burma leaves the door open to state involvement in the affairs of nations.

Is it unwise for states to meddle in foreign affairs? The U.S. Supreme Court seemed to say in a July 19 decision that states have no business there at all. But the facts of the case and details of the Court's decision paint a far more complex picture with important implications for the role of state legislatures.

It all began when Massachusetts passed a law discouraging trade with Burma (Myanmar). The United Nations Human Rights Commission had found that the Burmese military regime was engaging in brutal repression and the denial of basic human rights. Outraged at the cruelties, Representative Byron Rushing spearheaded a Massachusetts statute that, in essence, imposed a 10 percent penalty on the bids of companies doing business with Burma and placed them on a "restricted purchase list" compiled by the state's Operational Services Division. "I am committed to put everything in place to ensure the restoration of democracy in Burma," Rushing explained.

However, the National Foreign Trade Council, a business group that represents 580 members, challenged the statute in federal court. The suit reflected widespread concern in the business community, says council President Frank Kittredge, about the "patchwork quilt" of varying sanctions imposed by state and local governments. Among its many arguments, the trade council contended that the Massachusetts law "undermines the authority of the president to speak with one voice for the United States" and violate the federal government's exclusive authority to regulate foreign affairs. The group said the law violated the foreign commerce clause of the Constitution, which states that "Congress shall have power ... to regulate commerce with foreign nations, and among several states, and with Indian tribes." It also asserted that the Massachusetts law had been preempted by federal sanctions on Burma.

The Supreme Court could have issued a sweeping opinion against Massachusetts based on broad preemption doctrine that would have prevented states from imposing sanctions on firms doing business in certain rogue nations. Instead, the Court ruled in a narrow opinion based on the Constitution's supremacy clause that Congress had preempted the Massachusetts statute when it adopted federal sanctions against Burma.

"Because our conclusion that the state act conflicts with federal law is sufficient to affirm the judgment below," said Justice David Souter, writing for the Court, "we decline to speak to field preemption as a separate issue ... or to pass on the 1st Circuit's rulings addressing the foreign affairs power ..."

So what impact will the decision have on sanctions and the range of state activities in foreign affairs on which the Court remained silent?

Because the Court's decision rests on a single preemptive act of Congress rather than broader constitutional grounds, state sanctions were not ruled to be unconstitutional per se. But on countries that the federal government has already chosen to place under sanction, such as Burma, Cuba and Iraq, states are clearly precluded from enacting their own, more restrictive measures unless explicitly permitted by Congress. Indeed, by the Court's logic, the Massachusetts law was constitutional until Congress adopted federal legislation. The Court remained silent on the ability of states to place sanctions on countries where the federal government has not taken action.

Under current U.S. law, state sanctions remain a distinct opportunity for elected officials to speak out against perceived abuses without the political constraints under which the federal government must operate. Nonetheless, future cases could be decided very differently, particularly as new faces appear on the Supreme Court bench.

One large question remains: What is the compatibility of state sanctions with international commitments of the federal government? The European Union and Japan had earlier challenged the Massachusetts Burma law before the World Trade Organization (WTO). The complaint was based on the WTO Agreement on Government Procurement that limits the use of noneconomic criteria in awarding government contracts. It was later suspended because the case was going through U.S. courts.

Thirty-seven states have told the U.S. trade representative that they intend to adhere to this agreement. Although the states themselves are not signatories to international trade or investment agreements nor bound by the decisions of WTO tribunals, a decision against Massachusetts or another state would create tremendous pressure on the U.S. government to challenge the measure in U.S. courts. In the future, the emerging Multilateral Agreement on Investments or other international trade and investment agreements could be used to challenge state sanctions. The outcome could be anybody's guess, regardless of the recent findings of the U.S. Supreme Court.

This uncertainty aside, avenues for state legislatures to act in foreign affairs remain open in light of the Supreme Court's decision. Legislatures may adopt declaratory resolutions on international matters. Legislatures may also host foreign delegations, send representatives to foreign countries or participate in foreign exchanges through NCSL or other organizations. More formal links can also be created. For example, legislators from the Northwest meet annually with counterparts from the western Canadian provinces through the Pacific NorthWest Economic Region to discuss economic development and other issues of mutual concern.

As states have become more integrated into the global economy, legislatures have been very active in seeking opportunities to attract foreign investment and boost exports. There are 41 states operating 240 trade offices in 34 countries around the globe, according to a 1999 study conducted by the European Commission. State legislators routinely participate in overseas trade missions and have proved to be among the most aggressive sales people helping to lure foreign investors to their states. States have become key players in the global marketplace; this, in turn, has increased their clout.

State legislatures control vast sums of money in employee pension funds that are invested around the world. Strong political policy statements can be made through decisions such as the divestment campaign against companies doing business in apartheid-era South Africa. As with other types of state action, one state's voice is not inconsequential. If other states follow, that voice becomes even louder.

Globalization has created unparalleled opportunities for state legislators to make their voices heard beyond their borders, but within a legal environment that is still taking shape. Litigation is likely to continue as policymakers seek to strike a balance consistent with American federalism and international commitments. Representative Rushing reflects on the experience of the past few years by stressing that "we need to get away from the means and instead focus on the end."

While the Supreme Court's recent finding has invalidated the Massachusetts' Burma statute, the narrow decision leaves as many questions as answers on the appropriate role for states and localities in foreign affairs.

Dave Naftzger covers trade issues for NCSL.

NCSL PARTICIPATION

State legislatures can actively participate in the international arena via the National Conference of State Legislatures. As an example, NCSL recently considered a resolution on trade relations with China and adopted a resolution supporting the dissolution of the embargo on Cuba for food products and medicine. Its international programs also offer opportunities for legislators and staff to participate in exchanges and legislative projects around the world. And Quebec, Canada, recently became a member of NCSL, and it is possible other foreign provinces or states will follow in the near future.

NCSL's Agriculture and International Trade committee, which considered the China and Cuba policies, adopts organizational strategies on trade issues that affect the states. For more information, contact Dave Naftzger or Steve Smith, [phone].