Academic journal article Law and Policy in International Business

Back to First Principles: The Constitutional Rationale for Invalidating Local Sanctions against Foreign Trade

Academic journal article Law and Policy in International Business

Back to First Principles: The Constitutional Rationale for Invalidating Local Sanctions against Foreign Trade

Article excerpt


For half a century after the New Deal, the Supreme Court approved a progressive expansion of federal power. The Commerce Clause and the Fourteenth Amendment appeared to confer virtually unlimited powers on the federal government. (1) The restraints of the Tenth and Eleventh Amendments were limitations in name only. (2) In the past decade, however, the Court has struck down a broad array of federal statutes on federalism grounds. The Court has invalidated congressional enactments as beyond the scope of the Commerce Clause and Fourteenth Amendment powers, and as inconsistent with the Tenth and Eleventh Amendments. (3)

To some observers, the Massachusetts statute at issue in Crosby v. National Foreign Trade Council (4) offered the Court a chance to extend its solicitude for states' rights to a new doctrinal area. In an effort to influence the domestic policies of the Burmese government, Massachusetts had restricted the ability of state agencies to procure goods and services from entities that did business in Burma. (5) The court of appeals held that the statute was an unconstitutional state infringement on the federal government's powers to regulate foreign commerce and foreign affairs, and was preempted by a federal law imposing sanctions on Burma. (6)

The Supreme Court's decision, which invalidated the state statute on preemption grounds, certainly signaled no new willingness to tolerate state efforts to influence the policies of foreign governments. But the Court did not address the constitutional issues presented, and a number of prominent commentators have suggested that state sanctions laws like the one at issue in Crosby should be sustained unless preempted by the political branches. (7)

One theme of these arguments is that no special constitutional presumption against state regulation of foreign commerce is warranted. We will accept this premise for the sake of argument. It does not necessarily follow, however, that the Court should sustain a state sanctions law like the one at issue in Crosby unless the state statute is preempted by federal legislation. To the contrary, the principles developed under the Dormant Commerce Clause for analyzing state restraints on interstate commerce condemn foreign commerce initiatives like the Massachusetts Burma Act, even without a special presumption against state regulation that implicates foreign policy concerns.

Established doctrine would have little tolerance for one state's far-ranging secondary boycott of another state. (8) Under familiar Dormant Commerce Clause principles, such a boycott would appear to be vulnerable not only as overt discrimination, but also as an attempt at extraterritorial legislation.

What, then, accounts for the reluctance to apply Dormant Commerce Clause principles rigorously when state sanctions target a foreign country rather than a sister state? This reluctance can be attributed to real differences in the application of federalism principles at the national and international levels. At the national level, in which traditional Commerce Clause doctrine has evolved, citizens of all states are able, through the national government, to regulate matters of consequence in every state. Internecine economic warfare is antithetical to the federal model and is made unnecessary by it.

At the international level, by contrast, the legitimacy of certain forms of economic warfare--at least against certain nations--is still presumed. And the citizens of a state do not, by virtue of their participation in the national government, acquire a means of influencing objectionable conduct in a foreign state. From a federalist perspective, then, the rationale for constitutional restraints on economic sanctions might seem to disappear. If so, state sanctions that would surely be condemned in a domestic context might survive constitutional scrutiny when the sanctions programs are imposed on foreign nations, rather than other states. …

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