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. Last Updated: 07/27/2016

Local U.S. Sanctions Worry EU

BRUSSELS, Belgium -- Europeans are looking across the Atlantic with concern as a growing number of U.S. states and even cities pass sanction laws to punish repressive governments and the companies that deal with them.


The European Union, already up in arms over U.S. federal trade laws concerning Cuba, Iran and Libya, is alarmed at the new drive to enforce human rights through selective purchasing bills at a regional or local level.


"Our concern is the absolute proliferation that has occurred," one EU source said.


Though most sanctions laws to date have not hurt European companies very badly, there are dangerous proposals in hand, the source explained, adding, "States like California, New York and Texas are big purchasers."


U.S. states and cities are pondering laws against countries as far apart as Nigeria and Indonesia. New York City holds the record, with sanction proposals affecting a total of 15 countries, from Egypt to North Korea.


The recent debate over Nazi gold and Jewish bank accounts in Switzerland put that country on the lawmakers' black list in several U.S. states.


The state legislature of New York prepared a law that would ban the state from purchasing goods or services from any company doing business in Switzerland.


Pending an agreement between the Swiss banks and Jewish organizations, this measure was put on hold for the year. But it went far enough to set off alarm bells in Washington.


"The actions against Swiss banks are counter-productive," Under Secretary of State for Trade Stuart Eizenstat said in recent testimony before a congressional committee.


The administration of U.S. President Bill Clinton already has its hands full with EU challenges against the Helms-Burton act and D'Amato act of 1996, both of which seek to extend U.S. penalties worldwide against any firms doing major business with Cuba, Iran or Libya.


"Ad hoc and scattered actions at various levels of government, however well-intentioned, can do more harm than good in achieving the desired objective," he added.


One favorite target of sanction laws is Burma, where opposition leader and Nobel Peace laureate Aung San Suu Kyi is staging a highly publicized fight against a military government that has been accused of violating human rights and organizing the drug trade.


The state of Massachusetts and 15 individual U.S. cities and counties have passed legislation to bar the authorities from buying goods or services from companies which do business in Burma. In another four states, similar laws are pending.


The EU commission has asked the World Trade Organization for consultations over the Massachusetts law. This is the first step in the WTO dispute settlement procedure.


"We are using Massachusetts as a test case," the EU source explained.


The EU has been able to start the procedure against the Massachusetts law because that state had signed up to a WTO agreement on public procurement. But not all U.S. states have done so and EU officials are worried by the fact that there are no rules at all for cities and counties.


"The laws don't fall under the normal WTO rules," the EU source said. "This is very much a consumer boycott along the lines of: 'I am buying and therefore I can chose who I will buy from.'"


The selective purchasing proposals are modeled on the sanction laws that helped bring down South Africa's former whites-only apartheid regime.


The fight against Burma was led by the California city of Berkeley, which passed the first such law in early 1995.


"The citizens of the city of Berkeley, believing that their quality of life is diminished when peace and justice are not fully present in the world, adopted Ordinance No. 59085-N.S.," the decision said.


But even in the U.S., the legality of such measures is being questioned. In an essay for the Vanderbilt law journal, David Schmahmann and James Finch recently pointed out that they may constitute an impermissible usurpation of federal authority.


Bryan Cassidy, a British Conservative member of the European Parliament, put it more plainly. "These measures are silly and absurd and likely to harm American interests more than anybody else. The federal government is alarmed and embarrassed."


REUTERS


BRUSSELS, Belgium -- Europeans are looking across the Atlantic with concern as a growing number of U.S. states and even cities pass sanction laws to punish repressive governments and the companies that deal with them.


The European Union, already up in arms over U.S. federal trade laws concerning Cuba, Iran and Libya, is alarmed at the new drive to enforce human rights through selective purchasing bills at a regional or local level.


"Our concern is the absolute proliferation that has occurred," one EU source said.


Though most sanctions laws to date have not hurt European companies very badly, there are dangerous proposals in hand, the source explained, adding, "States like California, New York and Texas are big purchasers."


U.S. states and cities are pondering laws against countries as far apart as Nigeria and Indonesia. New York City holds the record, with sanction proposals affecting a total of 15 countries, from Egypt to North Korea.


The recent debate over Nazi gold and Jewish bank accounts in Switzerland put that country on the lawmakers' black list in several U.S. states.


The state legislature of New York prepared a law that would ban the state from purchasing goods or services from any company doing business in Switzerland.


Pending an agreement between the Swiss banks and Jewish organizations, this measure was put on hold for the year. But it went far enough to set off alarm bells in Washington.


"The actions against Swiss banks are counter-productive," Under Secretary of State for Trade Stuart Eizenstat said in recent testimony before a congressional committee.


The administration of U.S. President Bill Clinton already has its hands full with EU challenges against the Helms-Burton act and D'Amato act of 1996, both of which seek to extend U.S. penalties worldwide against any firms doing major business with Cuba, Iran or Libya.


"Ad hoc and scattered actions at various levels of government, however well-intentioned, can do more harm than good in achieving the desired objective," he added.


One favorite target of sanction laws is Burma, where opposition leader and Nobel Peace laureate Aung San Suu Kyi is staging a highly publicized fight against a military government that has been accused of violating human rights and organizing the drug trade.


The state of Massachusetts and 15 individual U.S. cities and counties have passed legislation to bar the authorities from buying goods or services from companies which do business in Burma. In another four states, similar laws are pending.


The EU commission has asked the World Trade Organization for consultations over the Massachusetts law. This is the first step in the WTO dispute settlement procedure.


"We are using Massachusetts as a test case," the EU source explained.


The EU has been able to start the procedure against the Massachusetts law because that state had signed up to a WTO agreement on public procurement. But not all U.S. states have done so and EU officials are worried by the fact that there are no rules at all for cities and counties.


"The laws don't fall under the normal WTO rules," the EU source said. "This is very much a consumer boycott along the lines of: 'I am buying and therefore I can chose who I will buy from.'"


The selective purchasing proposals are modeled on the sanction laws that helped bring down South Africa's former whites-only apartheid regime.


The fight against Burma was led by the California city of Berkeley, which passed the first such law in early 1995.


"The citizens of the city of Berkeley, believing that their quality of life is diminished when peace and justice are not fully present in the world, adopted Ordinance No. 59085-N.S.," the decision said.


But even in the U.S., the legality of such measures is being questioned. In an essay for the Vanderbilt law journal, David Schmahmann and James Finch recently pointed out that they may constitute an impermissible usurpation of federal authority.


Bryan Cassidy, a British Conservative member of the European Parliament, put it more plainly. "These measures are silly and absurd and likely to harm American interests more than anybody else. The federal government is alarmed and embarrassed."