by Naomi Klein
Local legislators know that they can’t keep multinationals from channeling funds to dictatorships in Nigeria and Burma, and they cannot prevent imports from companies that use child and prison labor in Pakistan and China, but they can do something else. They can collectively refuse to buy goods and services from these companies when they select their business partners for everything from cellular services to Little League soccer balls. The goal of “selective purchasing agreements,” as these ethical trading policies are called, is twofold. First, the agreements may lead individual companies to decide that it is not cost-effective to continue to do business under unethical conditions abroad —for instance, if it is going to cost them contracts at home. Second, actions by local governments can put pressure on federal governments to take more principled positions in their foreign policy agendas.
Modeled after similar initiatives during the anti-apartheid years, the current local foreign policy “fad” (as one Republican commentator snidely called it) began, like so many other U.S. social-justice movements, in Berkeley, California.18 In February 1995, Berkeley’s city council passed a resolution barring the purchase of goods or services from companies invested in Burma. Of course such companies could still sell their wares inside Berkeley — just not to municipal agencies, such as the police force or sanitation services. The move set off a domino effect across the country —at last count, twenty-two cities, one county and two states had selective purchasing agreements relating to companies in Burma, and a handful of cities had disqualified purchases from companies with investments in Nigeria.
Though each law has slight variations in wording, the gist is summed up in this one, passed unanimously by the City of Cambridge, Massachusetts, on June 8, 1998:
WHEREAS
The city of Cambridge declares the right to measure the moral character of its business partners in determining with whom it seeks to have business relationships; now therefore be it
RESOLVED
That as a matter of public policy the City of Cambridge declares that it will not purchase goods, services or commodities from any company or corporation that does business in the nation of Burma …
The most significant move came in June 1996 when the Massachusetts State Legislature passed the Massachusetts Burma Law, making it far more difficult for companies doing business in the dictator-run country to land a government contract in the state. As the influential Journal of Commerce noted, “The targets are far from home, but suddenly local governments are showing they can reach around the world.”19
Another popular purchasing restriction is one that does not broadly target all corporations in particular countries, but rather corporations engaged in a particularly objectionable practice —for instance, the practice of employing sweatshop or child labor. One such case involved the Los Angeles Monroe High School. After reading the Life magazine article on the Pakistani soccer-ball industry, a Monroe student, Sharon Paulson, recalled that she and her classmates “ran out during one practice and we were checking all the balls and they all said, ‘Made in Pakistan.’ That kind of made everything more real. Before, it was something that we read about, but then it was like, ‘We won a city championship using these balls!’ It gave us something to fight for.” What they fought for —and won —was a commitment from the Los Angeles Board of Education to halt an order of balls made in Pakistan, and another from Los Angeles City Council “to investigate the production of soccer balls made in countries using child labor.”20 According to the Investor Responsibility Research Center, “in 1997, some 20 U.S. cities and towns … adopted ‘anti-sweatshop’ ordinances that require that goods purchased by those city governments —including uniforms for police, fire and public works personnel —be made without sweatshop labor.”
Though selective purchasing agreements have been primarily an American phenomenon, they are beginning to pop up elsewhere. The city of St. John’s, Newfoundland, passed an anti-sweatshop resolution in June 1998, and a group of kids in Fort McMurray, Alberta, succeeded in getting their city council to pass a resolution banning the use of child-made soccer balls and fireworks on public property. Free Burma resolutions, meanwhile, are reaching even farther —on March 17, 1998, the Marrickville Council in New South Wales, Australia, “voted unanimously to become the first local authority outside the United States to enact a Burma selective purchasing law.”21
In the past four years, the Berkeley City Council has passed so many boycott resolutions — against companies doing business in Burma, Nigeria, Tibet; companies associated with the arms industry or with nuclear power —that, as Councilor Polly Armstrong joked, “Pretty soon we’ll have to do our own offshore drilling.”22 It’s true that between the Nigeria and Burma resolutions, and one about the Exxon Valdez oil spill, the council is prevented from using every single major oil company and is forced to fuel its ambulances and street-cleaning vehicles with gas from the little-known Golden Gate Petroleum Company. Berkeley banished Pepsi from its municipal vending machines because of its investment in Burma, returned to the company after it cut ties with Rangoon and then decided to boycott Coke because of its involvement in Nigeria.
It may all sound like Alice in Wonderland, but the boycotts do affect the multinationals. They may smile at a tie-dyed college town like Berkeley boycotting everything but hemp paper and Bridgehead coffee, but when rich states like Massachusetts and Vermont get in on the action, the corporate sector is not amused. In May 1999, three more states —Texas, Washington and New York — had Burma laws pending. And it was beginning to cost. For instance, before it pulled out of Burma over the Celine Dion controversy, the telecommunication firm Ericsson lost a major bid to upgrade San Francisco’s 911 services because of its business ties with Burma, and Hewlett-Packard is alleged to have lost several large municipal contracts as well.
Understandably, many companies have bowed to the demands of the human-rights campaigners. Since Massachusetts adopted its Burma Law in June 1996, there has been an exodus of big-name multinationals from the dictatorship, including Eastman Kodak, Hewlett-Packard, Philips Electronics, Apple computers and Texaco. But just because these companies decided to give in does not mean they plan to accept these new local roadblocks in international commercial transactions without a fight. As Robert S. Greenberger explains in The Wall Street Journal, “Procurement contracts in California alone, for example, are worth more to some U.S. companies than any business they could secure in many countries, but they don’t want to have to choose” (italics mine).23
Precisely because it forces such a stark choice, many people are convinced that localized foreign policy initiatives are the most effective political tool available for wresting back some control over transnational corporations. “Selective purchasing based on the Burma model,” says Danny Kennedy, coordinator of mining lobby group Project Underground, “is our greatest hope.”24
It’s the kind of statement that has come to enrage the business community, which, after being caught off guard by the sudden rise of selective purchasing laws, is determined not to make the same mistake twice. A coalition of companies, including key Burma investors such as Unocal, and Nigeria investors such as Mobil, have banded together under the National Foreign Trade Council to launch an all-out assault on local selective purchasing agreements. In April 1997, the council formed USA*Engage, claiming to represent over 670 corporations and trade associations. Its express purpose is to fight these laws collectively, allowing individual corporations to avoid putting their own practices in the firing line. Frank Kittredge, who is both president of the NFTC and vice chairman of USA*Engage, explains that “a lot of companies are not anxious to be spotlighted as supporters of countries like Iran or Burma. The way to avoid that is to band together in a coalition.”25
The group argues that foreign policy is a federal matter, and municipal and state governments have no business wading into the fray. To these ends, USA*Engage has developed a “State and Local Sanctions Watch List” to monitor all the towns, cities and stat
es where selective purchasing agreements have passed, as well as communities that are considering passing them and are therefore still vulnerable to outside pressure. Aggressive lobbying by USA*Engage members has already succeeded in squashing a proposed law on Nigeria that was about to be adopted by the State of Maryland (in March 1998); and Unocal (which has not managed to keep its name out of this debate) succeeded in convincing the California state legislature not to adopt a Massachusetts-style Burma law.
The attacks have also come from farther afield. Acting at the behest of multinationals based in Europe, the European Union has launched an official challenge to the Massachusetts Burma Law at the World Trade Organization. At issue is the allegation that the law violates a WTO regulation that prohibits government purchases from being made on “political” grounds.26 There has even been talk that municipal and state governments in the U.S. could be sued by their own federal government for violating the WTO clause. Though federal legislators categorically deny that is their intention, on August 5, 1998, Congress narrowly defeated a resolution that would have barred the government from using public money for such a court challenge.
While this trade wrangling went on, the multinationals didn’t wait around to see if the selective purchasing agreements would survive. In April 1998, the National Foreign Trade Council filed a lawsuit in the federal district court in Boston that challenged the Massachusetts Burma Law as unconstitutional. The NFTC argued that “the Massachusetts Burma Law directly intrudes on the exclusive power of the national government to determine foreign policy, discriminates against companies engaged in foreign commerce, and conflicts with the policies and objectives of the federal statute imposing sanctions on the Union of Myanmar.”27 Though the NFTC succeeded in winning a protective order that concealed the identities of the individual corporations funding the case, it claimed in court that thirty of its members had been affected by the law. And in November 1998, the NFTC won: the court ruled the Massachusetts Burma Law unconstitutional because it “impermissibly infringes on the federal government’s power to regulate foreign affairs.”28
The state has already lost one appeal, but both sides have said they are willing to take the case all the way to the Supreme Court. The NFTC openly acknowledges that the court challenge is an attempt to set a precedent that would effectively stamp out all municipal selective purchasing agreements, as well as campus and school-board bans. “We regard this law suit to be an important test case that will determine the very significant, perplexing and continuing issue concerning the constitutionality of state and local sanctions,” said Frank Kittredge.29
For their part, proponents of selective purchasing argue that they are not trying to implement their own foreign policy. They say calling these laws “sanctions,” as their critics invariably do, is a misnomer because selective purchasing agreements are not regulations placed on businesses, they are simply large-scale consumer pressure. Simon Billenness, the Burma campaigner who has helped draft these pieces of legislation, characterizes them colorfully as “boycotts on steroids.”30 Just as consumers have the right to personal choice in the marketplace, so too do they have the right collectively, whether as schools, town councils or state governments. He also points out that the agreements have a proven track record of meaningful human-rights victories. During the anti-apartheid movement, five U.S. states, nine cities and fifty-nine universities passed resolutions that either barred purchases from companies in South Africa outright, or compelled them to adopt the Sullivan principles. “If USA*Engage had succeeded with their tactics during the apartheid years, Nelson Mandela might still be in prison,” says Simon Billenness.31
Perhaps most important, the assault on selective purchasing agreements has turned what were campaigns on behalf of citizens in faraway lands into battles for local rights and liberties as well. Billenness, for his part, describes the attempt to criminalize selective purchasing as “a violation of state sovereignty and local democracy.”32 It may also prove a tactical miscalculation. In taking aim at these locally based actions, the NFTC has actively reinforced the very beliefs that led to their enactment in the first place: that corporations have become more powerful than governments; that federal governments have stopped serving the interests of people; and that in the light of these two facts, citizens have no choice but to confront corporate power themselves.
The proposed Multilateral Agreement on Investment would not help matters. The MAI is stalled for the moment, but its supporters have in no way abandoned the project. According to a draft leaked in 1997, selective purchasing agreements could become instantly illegal. The agreement explicitly bans “discrimination” against corporations based on their trade relations with other countries, and states clearly that this clause would override any preexisting laws at all levels of government —including municipalities. Not only that, but multinationals would be granted the legal standing to sue governments directly for any alleged discrimination on this basis. Many now believe that these parts of the MAI will be part of the next round of World Trade Organization negotiations.
In the same way that citizens’ groups from around the world mobilized against the MAI in 1998, many such groups have declared themselves ready to resist the business community’s frontal assault on selective purchasing. Free Burma campaigners are vowing to “out” the corporations behind the NFTC lawsuit and target them for boycott campaigns. They also point out that local governments can easily carry out their “boycotts on steroids” with or without formal resolutions on the books. The city of Vancouver is a case in point. In 1989, at the tail end of the apartheid boycott, Vancouver passed a selective purchasing resolution that banned Shell gasoline from city-owned vehicles because of the company’s controversial dealings in South Africa. Similar resolutions were passed —mostly relating to banks that issued loans to South Africa —by councils in Toronto, Ottawa and Victoria. But Shell Canada decided to take the City of Vancouver to court for discrimination. The case dragged on for nearly five years and in February 1994 the Supreme Court of Canada ruled, by a margin of five to four, in Shell’s favor. Judge John Sopinka wrote that the council had indeed discriminated against Shell, and that councilors only had the jurisdiction to make procurement decisions based on concerns for Vancouver residents —not for people in South Africa. The purpose of the Shell boycott, he concluded, “is to affect matters beyond the boundaries of the City without any identifiable benefit to its inhabitants.”33
Shell got what it wanted: the City of Vancouver’s gas contract. But the company’s problems were far from over. When Shell again became the subject of international approbation after the hanging of Ken Saro-Wiwa, local Sierra Club activists again began lobbying the Vancouver council to cut its ties to Shell. In light of the Supreme Court ruling, the council could not formally pass another selective purchasing resolution but, coincidentally, on July 8, 1997, it handed over a $6 million contract to fuel the fleet of ambulances and police and fire vehicles for the entire Greater Vancouver Regional District to Shell’s competitor, Chevron. It is possible that the city’s decision was based solely on the merits of each company’s bid, but there is little doubt that the human-rights issue was also a factor. Included in the Greater Vancouver catchment area is the smaller municipality of North Vancouver; less than four months before the contract went to Chevron, North Vancouver councilors had voted unanimously to condemn Shell’s behavior in Ogoniland and to direct its staff not to buy Shell gas. “We have to take a stand on corporations, against the way Shell has raped the Ogoni people,” one councilor said at the time.34 But since the North Vancouver resolution was simply an expression of council’s beliefs — with no mention of municipal contracts —Shell could not appeal legally. When the contract went to Chevron, local environmentalists, who had been keeping weekly vigils outside Shell gas stations in Vancouver for over a year, celebrated it as a victory.
But was it a victory? Less than a year later, Bola Oyinbo, a thirty-three-year-old activist who led an occupation of a Chevron oi
l barge in Nigeria’s Ondo State, would be writing the following report:
Just as we were preparing to leave we saw three helicopters (choppers). They came like eagles, swooping on chickens. We never expected what followed. As the choppers landed one after the other discharging soldiers, what we heard were gunshots and fire. In fact they started shooting commando style at us even before they landed. They shot everywhere. Arulika and Jolly fell. They died instantly. Larry who was near him rushed to his aid, wanting to pick him up, he was also shot. More soldiers came and more shooting followed. Some of my colleagues jumped over board into the Atlantic, others ran into the platform. There was pandemonium. They shot teargas. White men flew all the helicopters … We were defenseless, harmless.35
The protest had begun peacefully on May 25, 1998, and it ended three days later in a bloodbath, with two activists dead. The circumstances were eerily similar to those that had prompted Ken Saro-Wiwa’s campaign against Shell five years earlier. “Go to Awoye community and see what they have done,” Oyinbo writes. “Everything there is dead: mangroves, tropical forests, fish, the freshwater, wildlife etc. All killed by Chevron…. our people complain of ‘dead creeks.’” According to Oyinbo, the community attempted on several occasions to negotiate with Chevron, but its executives never showed up at the meetings. The occupation of the moored barge was a last resort, they say, and the only demand was for a formal meeting with Chevron.