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Friday, June 14, 2013

Regulating Snus in the E.U.

Should the E.U. be able to regulate sales of a product that can legally be sold only in one state? Would such regulations encroach too much on the governmental sovereignty of the state? In the U.S., Congress has steadily extended its power to regulate interstate commerce to the point that commercial transactions taking place entirely within one state are routinely covered. Is the E.U. headed toward the same outcome?
In 1830, Andrew Jackson, the seventh president of the U.S., vetoed a bill that would have permitted Congress to spend money on the Maysville Road in Kentucky.[1] That veto, and several others, effectively ended federal internal improvement spending on transportation. The Maysville Road was entirely within Kentucky, so Congress’s authority to regulate interstate commerce did not properly apply. Lest it be correctly pointed out that spending is not regulation, the veto can also be interpreted as an insistence that Congressional spending “for the general welfare” of the Union must be within one of the domains delegated to Congress by the U.S. Constitution. Otherwise, the "spending clause" could circumvent the listing of powers itself. Due to the power of money, it does not make sense to say Congress can legislate on only X, Y, and Z, but spend on anything. In short, Congress could not fund a road that runs entirely within a state because that is a state rather than a federal matter.
In 2013, about 50 years after the E.C., the E.U.’s predecessor, had begun, the issue of whether federal regulations should be permitted to touch a matter entirely within a state came to the fore as the E.U.’s executive branch, the Commission, considered whether to regulate a flavored tobacco product known as snu within Sweden. Selling the product had been banned in the E.U. in 1992. When it became a state in 1995, Sweden requested a permanent exemption, which the E.U. granted. The question is whether the E.U. can (or should) regulate snu in Sweden—the product being banned in the other states. Maria Larsson, a state official in Sweden, claimed that the Commission was intent “to both exclude us from the EU market, and regulate the contents of snus in Sweden.”[2] The question is whether the waiver is only on being able to sell snus within Sweden, or whether the authority to regulate the sales is also included. To regulate sales is not to forbid them.
The customary basis on which the Commission reaches within a state to regulate a product is anti-competitiveness, wherein other states are being discriminated against. For instance, the European Court of Justice ruled against Germany’s “Beer Purity Law” in 1987.  In its ruling, the court determined that Germany’s requirement that beer must have certain ingredients that French breweries just happened not to include discriminated against out-of-state producers and thus violated the principles of the common market. Hence, the E.C. could change a state regulation involving sales of a product in the state.
In the case of sales of snu within Sweden, the question is whether the Commission can issue regulations valid in Sweden and intending to prevent out-of-state producers from being discriminated against by Swedish regulations. That snu cannot be sold in other states does not mean that a company based in one of them could not sell its snu in Sweden. Sweden’s waiver does not extend to the authority to block out-of-state sellers from selling in the state. This does not mean, however, that the Commission could regulate the sales in Sweden to the point that the product is effectively banned there. To reach this far would be to violate the waiver.

[1]Andrew Jackson: Good, Evil & The Presidency,” PBS (accessed June 14, 2013)
[2] Niclas Rolander, “Sweden to EU: Hands Off Our Snus,” The Wall Street Journal, June 14, 2013.