Commentary

A Better Strategy for Burma

By Aaron Lukas
November 9, 1998

“Don’t despair. Don’t be afraid. Take action today.” That was the rallying cry for supporters of the Massachusetts Burma Law, which was overturned recently by a U.S. District Court. The decision, although likely to be appealed, is a victory both for constitutional government and for thoughtful supporters of human rights.

The controversial law, which is intended to promote democracy and human rights reform in Burma, requires the state to discriminate against companies seeking state procurement contracts if those companies do business in Burma. Any bids submitted by blacklisted firms have a 10 percent premium added and are then automatically rejected if they aren’t the lowest.

Despite its good intentions, the law is problematic on at least two counts: first, it’s unconstitutional, and second, it’s a poor way to promote freedom in Burma. Although the Federal District Court in Boston dealt only with the constitutional question, the strategic policy reasons for condemning the law are equally compelling.

In his decision, Chief Judge Joseph Tauro said that the Massachusetts law impinges on exclusive federal foreign policy powers and is thus unconstitutional. Indeed, that is true of state and local sanctions in general. In the balance struck between state and federal power by the Constitution, foreign affairs are clearly a federal prerogative. The Supreme Court has been adamant on the point: “The federal government representing as it does the collective interest of the states, is entrusted with full and exclusive responsibility for the conduct of affairs with foreign sovereignties.”

There are no exemptions or loopholes that would allow a state or city to legislate a secondary economic boycott — which such local laws are — with the specific objective of punishing or toppling a foreign government. “The Massachusetts Burma Law was designed with the purpose of changing Burma’s domestic policy,” Judge Tauro correctly noted. “State interests, no matter how noble, do not trump the federal government’s exclusive foreign affairs power.”

Judge Tauro’s reasoning tracks closely the analysis by legal scholars David Schmahmann and James Finch in a Cato Institute paper published this summer. Although the court rejected the Massachusetts law solely because of its infringement on foreign policy powers, Schmahmann and Finch identified further reasons to question the constitutional validity of sub-federal sanctions.


…[D]estroying jobs and opportunity in Burma won’t promote liberty. …American investment, on the other hand, has accompanied democratic and human rights reform in Asia, Eastern Europe and Latin America.


For one thing, state and local sanctions often apply to areas where federal policy has already been established. That is the problem of preemption. Neither logic nor the Constitution permits state laws at odds with federal laws in areas where the Congress has legitimate authority to act.

In 1986, for example, the Supreme Court struck down an attempt by Wisconsin to punish companies that repeatedly violated the federal National Labor Relations Act by barring such firms from receiving state contracts. Wisconsin’s motives may have been pure, the Court said, but a patchwork of state laws would detract from the integrated scheme of federal regulation. Sanctions at the sub-federal level produce the same effect.

Second, the law potentially runs afoul of the Foreign Commerce Clause of the Constitution. That clause prohibits states and localities from passing laws that burden interstate or foreign commerce by, among other things, creating “discriminations favorable or adverse to commerce with particular foreign nations.” With respect to foreign trade, the Supreme Court has said, “The people of the United States act through a single government with unified and adequate national power.”

The constitutional constraints imposed on states and localities don’t mean that nothing can be done. Private citizens remain free to stage protests and boycotts aimed at influencing foreign governments, though such actions aren’t necessarily wise.

Constitutional issues aside, however, statutes like the Massachusetts Burma Law are simply bad policy. Like all sanctions aimed at improving human rights conditions, they fail to recognize the value of private commercial engagement. Americans can’t help improve conditions in Burma if there are no Americans there. By isolating that country, we only hurt ourselves and those Burmese who could have benefited from outside contact.

Of course, many activists disagree. “With the same dogged determination that we used to drive close to 100 corporations out of Burma,” writes Simon Billenness of the New England Burma Roundtable, “we will ultimately prevail in restoring democracy and human rights in Burma.”

But destroying jobs and opportunity in Burma won’t promote liberty. On the contrary, as in Cuba, an impoverished and isolated population will needlessly suffer longer with sanctions in place. American investment, on the other hand, has accompanied democratic and human rights reform in Asia, Eastern Europe and Latin America.

It is unfortunate that a few zealous activists and misguided legislators have been able to frighten U.S. businesses out of Burma. It is to be hoped that the court’s ruling on the Massachusetts law will strengthen the hand of those who seek to promote freedom through example and engagement, not through isolation and fear.

Aaron Lukas is an analyst at the Cato Institute’s Center for Trade Policy Studies.