“We believe such state legislation is unconstitutional, contrary to proper conduct of U.S. foreign policy, and counter to the future health of the nation’s economy,” wrote Reinsch and Sawaya. “As the current administration’s policy initiatives in the Middle East demonstrate, such legislation is simply counter to the proper conduct of diplomacy. Finally, punishing corporations for imputed commercial actions retroactively would only serve to weaken further the position of both the U.S. economy generally and that of California.”
AB 961 was introduced as a follow-on to the state’s Sudan divestment legislation, which “prohibits a scrutinized company, as defined, that is, involved in specified activities in Sudan, from entering into a contract with a state agency for goods or services.” The bill would have extended the prohibition to companies that did business with agents of “genocide” – defined in the legislation as “the atrocities committed by the Ottoman and Turkish governments against Armenians from 1915 to 1923, inclusive, which constituted the Armenian Genocide, and the massacres of Armenians committed by the Ottoman Empire from 1894 to 1909, inclusive.”
The NFTC and USA*Engage advocate against state sanctions and divestment bills similar to AB 961. In August 2006, the NFTC and eight boards of Illinois public employee pension funds brought suit (NFTC v. Giannoulias) against Illinois over the state’s “Act to End Atrocities and Terrorism in Sudan,” challenging the constitutionality of the Illinois Act. In February 2007, Judge Matthew Kennelly of the Federal District Court for the Northern District of Illinois ruled that the state’s law was “unconstitutional because the Act [violated] federal constitutional provisions that preclude the states from taking actions that interfere with the federal government’s authority over foreign affairs and commerce with foreign countries.”
The NFTC lawsuit followed the precedent set in the U.S. Supreme Court’s 2000 decision in Crosby v. NFTC, in which the Court struck down sanctions enacted by Massachusetts on Burma. In that decision the Court ruled that if the federal government has enacted sanctions on a country, state and local governments are preempted from imposing sanctions of their own.
For a copy of the letter, please click here.
USA*Engage (www.usaengage.org) is a coalition of small and large businesses, agriculture groups and trade associations working to seek alternatives to the proliferation of unilateral U.S. foreign policy sanctions and to promote the benefits of U.S. engagement abroad. Established in 1997 and organized under the National Foreign Trade Council (www.nftc.org), USA*Engage leads a campaign to inform policy-makers, opinion-leaders, and the public about the counterproductive nature of unilateral sanctions, the importance of exports and overseas investment for American competitiveness and jobs, and the role of American companies in promoting human rights and democracy world wide.
About the NFTC
The National Foreign Trade Council (www.nftc.org) is a leading business organization advocating an open, rules-based global trading system. Founded in 1914 by a broad-based group of American companies, the NFTC now serves hundreds of member companies through its offices in Washington and New York.