- The Washington Times - Thursday, October 10, 2002

The United States was created as one big "free trade zone" among the states; our Constitution was written to ensure no state would bar another's products. But, evidently, some American states still haven't gotten that message. Today, everything from contact lenses to caskets are blocked at state borders.

That is why the Federal Trade Commission (FTC) is holding hearings this week with the goal of removing state-issued tariffs and other anticompetitive regulations, especially those dealing with the Internet. These regulations hurt not only producers and consumers, but national unity and prosperity as well.

Everyone knows the Internet increases exponentially the ability of producers and consumers across the world to engage in voluntary exchange. It makes transactions more efficient, more personalized and less costly while expanding consumer choice and allowing an infinite number of producers to market their goods and services directly to consumers.

So who could be against such vibrant trade?


Why should you care?

Because middlemen often go to their state government to protect their turf to stop you from doing business with whomever you please. States, often eager to protect in-state industries and to increase tax revenues, are all too often complicit allies with industries seeking shelter from competition.

Wine is a classic example. There are thousands of wineries in the United States, most of which are small, family-run enterprises with small production. The number of wine wholesalers, by contrast, has shrunk markedly in recent years. Wholesalers, working with state legislators, have erected trade barriers in more than half the states forbidding the direct interstate sale and shipment of wine to consumers, often while allowing such shipments by in-state wineries. The Internet's vast potential for helping consumers obtain precisely the product they wish is obliterated.

The government's rationale is to protect against underage access to alcoholic beverages which aside from government-sponsored sting operations is a nonexistent problem and to collect tax revenue. But the real driving force is the multibillion-dollar wine wholesaler industry, which is determined to preserve its monopoly over wine sales at any cost.

This became clear after the Institute for Justice filed suit in New York on behalf of wineries and wine consumers to open up that market. Immediately, New York's four largest wholesalers, the liquor store association, and a transportation union all intervened to preserve the trade restrictions.

Those entities have completely taken over the litigation from the state, demonstrating in the strongest possible way exactly whose interests are threatened by Internet commerce.

The Federal Trade Commission has an important role to play preserving economic liberty and consumer freedom two pillars of a free society. As the foremost watchdog over national free trade, it should investigate state trade barriers that separate producers and consumers, and it should weigh in on federal legislation that impacts free trade and in court cases that raise issues of free trade. Never before has the role of the FTC been more important. The promise of our constitutional design and the vast potential of the Internet to produce greater consumer freedom than ever before demand its vigilance.

Clint Bolick is vice president and national director of state chapters for the Institute for Justice.

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