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Reuters-U.S. court hears appeal of

Subject: Reuters-U.S. court hears appeal of Massachusetts Burma law

Tuesday May 4, 7:02 pm Eastern Time
U.S. court hears appeal of Massachusetts Burma law
By Leslie Gevirtz

BOSTON, May 4 (Reuters) - Can one U.S. state have its own foreign policy?

The U.S. appeals court in Boston wrestled with that issue on Tuesday as
Massachusetts argued its 1996 law penalizing companies doing business with
Myanmar was constitutional. A district court struck down the law in November

``Massachusetts is trying to make foreign policy here,'' declared Timothy
Dyk, a lawyer for the Washington. D.C.-based National Foreign Trade Council.

Some 324 of the council's 580 business members claim to be affected by the
selective purchase law, which effectively bars firms that do business with
Myanmar from doing business with Massachusetts and its state agencies.

The state spends about $2 billion annually on goods and services from the
private sector. The Massachusetts law adds 10 percent to any bids received
from companies that do business in Myanmar.

The law has been the subject of intense talks between Washington, Japan and
the European Union. The EU has filed a complaint with the World Trade
Organization, which is awaiting the decision by the U.S. Appeals Court.

Sandra Lynch, the head of the 1st U.S. Circuit Court of Appeals three-member
panel, said at the start of proceedings, ``We all agree human rights in the
country formerly known as Burma are deplorable.''

But the complex legal issues involved are whether Massachusetts infringed on
the federal government's right to make foreign policy, Lynch said.

The legislation is crafted after similar laws passed in Massachusetts and
other states and countries during the 1980s that were aimed at ending
apartheid in South Africa.

Numerous friend-of-the-court briefs were filed by unions, 10 state attorneys
general, congressmen and senators from both sides of the aisle, the National
Association of Manufacturers and other business groups.

But the one player most directly affected, the U.S. government, chose not to
file any motions with the court.

Assistant Massachusetts Attorney General Thomas Barnico noted the U.S.
Congress passed similar sanctions against Myanmar a year after Massachusetts
and chose not to override the state's law.

In the courthouse overlooking Boston harbor, where the first Massachusetts
boycott of British tea took place more than more than 200 years ago, Barnico
argued the state is not regulating conduct, but instead choosing how to
spend its taxpayers' dollars.

``We've taken a stand that says at bottom whom we will deal with. If you
reject (this appeal) we will be compelled to do business with these
people,'' Barnico told the court.

    The appeals court's decision is expected in two to three