Justices Ban Many City, State Boycotts

WASHINGTON —  Saying the United States must speak with one voice in foreign affairs, the Supreme Court on Monday ruled that cities and states may not boycott companies that do business with the repressive regime in Myanmar.

The 9-0 ruling amounts to a victory for global free trade and a defeat for city officials who have sought to take a stand against human rights abuses abroad.

Without directly joining the debate, the high court said that only the president and Congress have the authority to set foreign policy for the nation.

In 1996, Congress imposed limited sanctions against Myanmar, the nation formerly known as Burma, and its repressive military regime. State and local governments may not go further, the court said, by refusing to do business with international firms that operate in Myanmar.

The decision strikes down a Massachusetts law that effectively barred state agencies from dealing with companies that sold products to the government of Myanmar.

The ruling appeared to also invalidate ordinances in Los Angeles, New York, San Francisco and 20 other localities--including Santa Monica, West Hollywood, Palo Alto, Oakland and Santa Cruz--that had adopted similar “selective purchasing” restrictions.

In one sense, however, the court’s ruling was narrow. It did not say that the Constitution forbids all such laws. Instead, it said that states and localities may not pass laws that conflict with measures enacted by Congress.

This means that states and local governments retain some leeway to voice their disapproval of foreign nations. California, New York and Pennsylvania have announced a boycott of Swiss banks for their withholding of assets of Holocaust victims. Those laws should not be affected immediately by Monday’s ruling, lawyers said.

Nonetheless, the court’s opinion makes clear that local and state officials cannot free-lance foreign policy, even when their cause is just.

During the 1980s, the apartheid regime in South Africa was punished by business boycotts and stock divestments pushed by cities, states and universities throughout America.

Those policies were not directly challenged in the courts, however.

But after Massachusetts enacted its so-called “Burma law” in 1996, a coalition of about 580 multinational firms sued to block it. Companies said they should not be forced to choose between doing business with Massachusetts or Myanmar.

The corporations won before a federal judge and the U.S. court of appeals in Boston, and on Monday the high court affirmed those decisions.

“We are very pleased with the decision, which reaffirms the federal government’s predominant role in foreign policy and should help put an end to state and local efforts to make foreign policy,” said Frank Kittredge, president of the Washington-based coalition, the National Foreign Trade Council.

Activists said they were dismayed by the ruling, but said they would launch new efforts to combat the regime. For example, U.S. companies can be forced by government contractors to disclose whether they do business with the government in Myanmar, they said.

“The court’s decision will not abate our efforts to stop foreign investment from flowing to the military junta in Burma,” said Dr. Zar Ni, a leader of the Free Burma Coalition.

Yale law professor Akhil Amar questioned why the court accepted the view that local boycotts violate basic legal principles. The American Revolution began, he noted, with a Boston boycott of English tea.

“Americans do not speak with one voice on these matters. That’s what makes us America, not Burma,” Amar said.

Over the past two decades, California’s cities have been leaders in expressing their disapproval of human rights abuses around the world.

The Berkeley City Council adopted an anti-Myanmar ordinance three years ago that was patterned after its condemnation of those who traded with South Africa.

Although local officials had not seen Monday’s ruling, they assumed it would render their local ordinance toothless.

“We’re very disappointed with the decision,” said Mayor Shirley Dean of Berkeley. “We have citizens who do a lot of traveling, and they see civil rights issues and want their government to be responsive. It’s an issue of putting your dollars where your heart is.”

The Los Angeles City Council agreed last May to prohibit the city from contracting with companies that do business in Myanmar. City lawyers joined a brief supporting Massachusetts in the case, known as Crosby vs. National Foreign Trade Council, 99-474.

Still on books are city laws that prohibit the purchases of Salvadoran coffee products, doing business with companies that participate in the Arab boycott of Israel and the purchase of soccer balls made in Pakistan.

Most of the 23 local anti-Burma laws were enacted in college towns, including Ann Arbor, Mich.; Chapel Hill, N.C.; Boulder, Colo., Cambridge, Mass., and Madison, Wis.

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Times staff writers Bettina Boxall and Beth Shuster in Los Angeles contributed to this story.