Proponents of the Boycott, Divest & Sanction (“BDS”) campaign are faced with growing legislative opposition. In the US, New York is poised to become the third state to enact binding anti-BDS legislation. In Britain, new rules will essentially prohibit BDS in local government altogether.
Proposed New York Law
The New York Senate and General Assembly are considering legislation that would prevent the state from contracting with or investing in companies that boycott Israel. The stated purpose of Senate Bill S6086 is “To prohibit New York State from contracting with or investing taxpayer money in corporations who have a stated policy of boycotting Israel.” The Senate’s justification is:
The Boycott, Divest, Sanctions movement (BDS) is a harmful discriminatory policy effectuated by a growing number of companies. The BDS movement is nothing more than thinly veiled anti-semitism. This bill would ensure that New York continues its long history of standing up to discrimination by condemning this movement and not doing business with these companies.
A growing number of states have passed bills dealing with both state contracting and state retirement funds; this bill ensures that money from neither will go to companies with this discriminatory policy in New York State.
To effect this purpose, S6086 and Assembly Bill A08220 would amend New York State law in three primary ways.
First, the new § 165-B(2)(a) would deem companies that boycott Israel not to be “responsive” bidders or offerers for “purchasing services and commodities” under New York’s financing law. The financing law, in turn requires that services and commodities contracts go to responsive bidders under §§ 163(1)(d), (4)(d) and (10). Together, a company that boycotts Israel would preclude itself from services or commodities contracts with New York State agencies.
The proposed legislation has a carrot to complement the proscriptive stick: a company is not prohibited from such contracts if its anti-Israel boycott preexists the enactment of this proposed legislation and the company “has adopted, publicized, and is implementing a formal plan to cease such activities and to refrain from engaging in any new boycott activities.”
There is also a safety-valve exception that allows the state to contract with a company with an anti-Israel boycott if the company is the only source of commodities or services that the state agency needs to perform its function.
Second, the new § 165-B(b)(3)(a) would require those contracting with the state under existing § 38 of the New York Highway law or § 8 of the Public Buildings law to certify that they do not boycott Israel. 165(b)(3)(b) would prohibit contractors under § 38 of the New York Highway law or § 8 of the Public Buildings law from using any subcontractors that boycott Israel.
Both the provisions for 165-B(2) (contracts services and commodities) and 165-B(3) (contracts for highways and §8 housing) apply to companies on a list compiled “using credible information available to the public.” Proposed § 165-B(2)(b) provides for the creation of the list of boycotters, and that people or companies that will appear on it are first (1) given 90 days notice that they will be listed and informed they can be removed from the list by ending their anti-Israel boycott; (2) given the opportunity to dispute in writing that they engage in an anti-Israel boycott.
Third, New York’s Retirement and Social Security Law would be amended so that New York State’s common retirement fund and any pension or annuity under the jurisdiction of the comptroller would divest from any company boycotting Israel and would not invest through any bank or financial institution that boycotts Israel.
All three of these component prohibitions apply to companies or people that “boycott” Israel. Proposed § 165-B (1)(a) defines “[b]oycott Israel” or “boycott activities” as:
engaging in actions that are politically motivated and are intended to penalize, inflict economic harm on, or otherwise limit commercial relations with the State of Israel or companies based in the State of Israel or in territories controlled by the State of Israel.
This definition conspicuously captures boycotts against Israeli economic activity in the West Bank, even as Europe makes such boycotts easier.
In summary, New York’s proposed legislation would prevent New York state funds from going to companies that boycott Israel and would divest investments controlled by the state from companies that boycott Israel.
S6986 and A08220 are in committee. Democratic Senator Michael Gianaris, who sponsored S6986, has said passage “should be easy.”
Existing U.S. Laws
A number of jurisdictions in the United States have already adopted anti-BDS legislation. In June, President Obama signed legislation making anti-BDS a “principal negotiating objective[] of the United States” in negotiations with the EU over a future free trade agreement.
In July, Illinois enacted the first-ever state law specifically targeting anti-Israel BDS. Like New York, Illinois’s legislation prohibits tax-payer funded public pensions from investing in companies boycotting Israel. The Illinois law does not prevent the state or state agencies from contracting with companies that boycott Israel or otherwise engage in BDS.
In June, South Carolina enacted a broader prohibition barring state entities from contracting with companies that boycott “a jurisdiction with whom South Carolina can enjoy open trade.” This provision certainly prevents the state from contracting with companies that boycott Israel, but would also apply to a company that boycotted any other country with which South Carolina might contract. The South Carolina law does not divest assets from companies that boycott Israel or any other state.
Ohio House Speaker Cliff Rosenberger has said that Ohio is in the drafting stage of its own binding anti-BDS legislation, and that passage could be prompt.
Florida (SR 894), Indiana (HR59 and SR74), New York, Pennsylvania (HR 627) and Tennessee have passed non-binding resolutions critical of BDS.
British Rule-Making
In England, the Department for Communities and Local Government announced that it would instruct local governments that their policies must be consistent with the national government’s foreign policy.
According to The Independent:
A Department of Communities and Local Government (DCLG) spokesman said: “Councils should not be using pensions and procurement policies to pursue their own boycotts and sanctions against foreign nations. We are tightening up the rules to ensure taxpayers’ and the UK’s interests are protected.”
The forthcoming regulatory changes are expected to “make clear to authorities that in formulating these policies their predominant concern should be the pursuit of a financial return on their investments… They should not pursue policies which run contrary to UK foreign policy.”
BDS Proponents’ False Claims
BDS backers have made a range of false and outlandish claims about anti-BDS legislation. BDS proponents’ objection that New York’s anti-BDS proposal would “criminalize political action” is absolutely false. There are no criminal penalties in the bill.
More generally, opponents claim anti-BDS legislation impinges on the 1st Amendment rights, but that argument misstates the legislation. None of the enacted or proposed legislation bans or criminalizes BDS, they merely direct state agencies not to do business with companies that engage in BDS.
Eugene Kontorovich addressed this specious argument in the Washington Post in May:
The federal government has long used restrictions on contractors as a way to promote various social values. Thus contractors have been required to abstain from a variety of otherwise legal activities, like not practicing affirmative action. And state pension funds have long engaged in “socially conscious” investing, avoiding investing in companies on the basis of their environmental, employment or labor practices. The Illinois bill simply adds anti-Israel discrimination to the mix.The United States has long had legislation criminalizing participation in the Arab League boycott of Israel. Courts have upheld the constitutionality of these measures. The U.S. can just as rightly oppose privately propagated boycotts as it could governmentally-sponsored ones. Indeed, the separation is not ironclad, as many of the NGOs calling for boycotts of Israel are supported by foreign governments.Nonetheless, it is important to point out that the current round of measures is far less restrictive than earlier boycott laws. They in no way ban participation in, let alone advocacy for, boycotts of Israel.Yet BDS proponents, now on the defensive, decry these measures as an assault on their rights. Such objections are, like BDS itself, deeply hypocritical.
Professor Jacobson previously discussed Professor Kontorovich’s and SodaStream CEO Daniel Birnbaum’s congressional testimony on BDS’s pernicious impact in July.
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