Jewish World Review April 30, 2002 /18 Iyar, 5762
Wine lovers may at last be able to stray across state borders. The Internet is coming to the aide of free trade
Sitting at my computer in New York, I cannot order a case
of Montrachet from France to be shipped directly to my
home. Nor can I order a chardonnay from the Swedenburg
Estate Vineyard in lovely Middleburg, Virginia. Both of
these purchases would be illegal.
I am not alone in my wine deprivation. Oenophiles in 26
US states are barred from shopping "abroad" - from
vendors outside the state border. This is particularly
frustrating for wine-drinkers who prefer America's 2,000-odd small wineries. Most
of these are so tiny that the big wholesalers across the country do not bother to
represent them. So when it comes to the Swedenburgs of the world,
wine-drinkers are often out of luck.
Now this sad reality is being challenged in several of the nation's federal district
courts. The challengers' collective case is worth reviewing, if only because it
demonstrates the way that globalisation - and specifically, globalisation via the
internet - can erode even smaller trade barriers.
Consider the New York case, the plaintiff in which is Virginia's Swedenburg.
During the 1930s, Albany lawmakers took advantage of residual pro-Prohibition
sentiment to protect the Empire State's wine wholesalers with a law making direct
purchases by consumers from out-of-state purveyors illegal.
The law was hard to enforce - can the State Liquor Authority police every package?
- but still constituted a serious deterrent. Who, after all, wants to risk tangling with
state authorities just to make his evening more enjoyable?
State authorities and wholesalers were aided by a general culture of ignorance in
their protectionist efforts. Vintners from outside New York were not allowed to
advertise direct sales to consumers in the New York press. The only way that a
wine buyer could find out about a Swedenburg in the first place was to order its
catalogue, or to make a pilgrimage to Virginia's wine country. Only the most
devoted would do that.
But the internet changed all this. New Yorkers can now find Swedenburg through
their browsers. They have also found Hidden Valley Winery (one of Swedenburg's
neighbours) and Virginia's Lost Creek. And they do not want to make the drive
south to collect the product.
So Swedenburg and friends recently found themselves before the honourable
Richard Berman of the US district court for the southern district of New York. The
plaintiffs' lawyers, the Institute for Justice, argue that New York's protectionist
regulation violates the US constitution. Its case appears strong, thanks to James
Madison and other founding fathers, who explicitly opposed inter-state
protectionism. Writing to fellow father James Monroe, Madison argued that "if it is
necessary to regulate trade at all, it surely is necessary to lodge the power, where
trade can be regulated with effect" - with the federal government.
The result was the US constitution's commerce clause, which gives Washington
alone the power "to regulate commerce". Or, as Juanita Swedenburg, the winery
proprietor, put it to The Washington Post (in more down-to-earth fashion): "This is
why we have a constitution. We're not like some little Podunk country that throws
out their constitution every 10 years, are we?" Ms Swedenburg is a member of the
Daughters of the American Revolution, so she speaks with a certain authority.
But the state of New York also cites the constitution in its defence. It cites the 21st
Amendment, which repealed Prohibition. Prohibition advocates wanted to protect
the rights of states that preferred to be "dry" to continue to regulate consumption of
liquor and so wedged the following phrase into the Amendment: "Transportation
or importation into any state, territory, or possession of the United States for
delivery or use therein of intoxicating liquors, in violation of the laws thereof, is
Consumers seem likely to prevail. Judge Berman, having issued a
sympathetic-sounding order, is now contemplating a motion for summary
judgment. In North Carolina and Virginia his peers have already moved in favour
of the small wineries. The case is probably heading for the US Supreme Court,
which also stands a good chance of smiling on the bibulous. The favourable
atmosphere for wine has much to do with the constitutional merits of the
Swedenburg case: the founding fathers, pure constitutionalists can argue,
intended there to be free trade among states.
But the interesting part of this story is that it is happening now. That has to do in
part with the general hedonism of our age and our new wine-drinking culture. But
it has even more to do with the rise of the internet and global communications.
When a product is visible, barriers to its acquisition - either protection or taxation -
become harder to defend.
New York has experienced this challenge in other arenas, most notably in the
area of taxation. The state officially subjects goods imported from other states
(and abroad) to a "use" tax. But the rise of advertising and the internet has made
the tax harder and harder to enforce.
New Yorkers, for example, like to head to New Jersey to shop because sales
taxes are lower there. Internet ads constantly remind them of other states' tax
advantages. In an effort that went down in the annals of tax desperation, the state
sent authorities to an Ikea parking lot in Elizabeth, New Jersey, a few years ago to
collect New York car licence plate numbers and so capture lost tax revenues.
Needless to say, the campaign collapsed in a humiliating storm of bad press.
In other words, the advantages of free trade are not only big and obvious but also
sweet, and subtle as a good chablis. At a time when globalisation is so much
attacked, this is a reality to which we should all raise a
JWR contributor Amity Shlaes is a columnist for Financial Times
. Her latest book is
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