Off the Precipice: Massachusetts Expands Its Foreign Policy Expedition from Burma to Indonesia

By Schmahmann, David R.; Finch, James et al. | Vanderbilt Journal of Transnational Law, November 1997 | Go to article overview

Off the Precipice: Massachusetts Expands Its Foreign Policy Expedition from Burma to Indonesia


Schmahmann, David R., Finch, James, Chapman, Tia, Vanderbilt Journal of Transnational Law


TABLE OF CONTENTS

I. INTRODUCTION II. THE VASTNESS OF U.S. INTERESTS IN INDONESIA III. THE UNCONSTITUTIONALITY OF THE MASSACHUSETTS

ANTI-INDONESIA MEASURES

A. Supremacy Clause

B. Foreign Commerce Clause

C. Federal Law Preemption of the Massachusetts

Anti-Indonesia Bill

1. U.S. Aid to Indonesia under the

Generalized system of Preferences

2. The Export-Import Flank of the

United States

3. The International Natural Rubber

Agreements Contemplation of Extensive

Trade with Indonesia

4. Congress's Rejection of the

Massachusetts Approach IV. CONCLUSION

I. INTRODUCTION

In 1996, the Massachusetts legislature made Massachusetts the first state in the United States to impose trade sanctions on the government of Burma.(1) These sanctions penalize companies that do business with Burma by making it nearly impossible for them to do business with the Commonwealth of Massachusetts.(2)

The wisdom of a Massachusetts foreign policy with respect to Burma has been questioned.(3) Moreover, even a cursory reading of U.S. Supreme Court cases and the U.S. Constitution makes it absolutely clear that the Massachusetts foreign policy initiative with respect to Burma is unconstitutional. Two of the authors have analyzed these constitutional issues and recently published their analysis in the Vanderbilt Journal of Transnational Law.(4)

The impact of Massachusetts's anti-Burma legislation is circumscribed by the limited foreign multinational corporate presence in Burma.(5) Even so, the Massachusetts initiative provoked a furor in the European Union and Japan because of its likely contravention of the World Trade Organization Convention on government procurement.(6)

In taking on Indonesia as its next foreign policy initiative, the Massachusetts legislature risks taking the people of the state into even riskier territory with repercussions that may go well beyond the contemplation of state lawmakers.

II. THE VASTNESS OF U.S. INTERESTS IN INDONESIA

Indonesia is the fourth most populous country in the world and is the world's largest Muslim country.(7) The United States has a broad range of interests in this huge country and its economy. The Indonesian economy has a growth rate of seven to eight percent per year, and is projected to be the fifth largest economy in the world by 2020.(8) While the Investor Responsibility Research Center reports that there are only eighteen publicly traded U.S. parent companies with direct investment or employees in Burma,(9) there are 240 such companies with ties to Indonesia.(10) Annual bilateral trade between the United States and Indonesia is about $12.3 billion.(11) The United States is one of Indonesia's largest foreign investors, with direct investments totalling more than $12 billion between 1967 and 1996.(12)

U.S. exports to Indonesia have quadrupled since 1987. In 1995, U.S. exports to Indonesia grew by nearly twenty percent to $3.4 billion, and are estimated to have reached $4.0 billion, or 9.7% of Indonesia's total imports, in 1996,(13) and support more than ninety-five thousand jobs in the United States.(14) In 1996, U.S. imports from Indonesia reached $8.2 billion.(15) Indonesia received $96 million in U.S. economic aid in 1995, and $71 million in U.S. economic aid in 1996.(16) Indonesia is also a key member of the Association of Southeast Asian Nations (hereinafter ASEAN), which is America's third-largest source of imports and its fourth-largest export market.(17)

Finally, Indonesia is significant to U.S. interests for its rubber production. The United States is by far and away the world's largest importer of natural rubber and seventy-five percent of the world's natural rubber supply is produced in just three countries: Thailand, Indonesia, and Malaysia. …

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