Japan's Position Regarding
the Problem of Massachusetts State Government Procurements
March, 1997
The Government of Japan holds that the Act Regulating State Contracts with Companies Doing Business with or in Burma (Myanmar), enacted by the State of Massachusetts, could be problematic in terms of the World Trade Organization's Agreement on Government Procurement and in terms of general international law.
The core of the problem is this law's discriminatory provision. It stipulates that even if a company (including a subsidiary) doing business with the government of Myanmar tenders the lowest bid, a company that has no dealings with Myanmar will win the contract if it tenders a bid that does not exceed 10% of the other company's bid.
Depending on how the law is applied, (1) it may violate the provisions of the WTO Agreement on Government Procurement (especially the provisions calling for national treatment and non-discrimination) and (2) it may constitute extraterritorial application of legislative jurisdiction, which is not accepted under general international law.
In January 1997 the Government of Japan conveyed these concerns to the Federal Government of the United States (U.S. Trade Representative, Department of State) and to the government of the State of Massachusetts. The Government of Japan also understands that the European Commission has now presented similar concerns.
Naturally, Japan's concern is not limited to this particular law. The Government of Japan would voice similar concerns regarding consistency with the WTO Agreement on Government Procurement and other international rules if similar laws stipulating discriminatory treatment on the grounds of business dealings with any other countries were put into effect.
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