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Synthesis/Regeneration 47   (Fall 2008)

Does the US Constitution Mandate Free Trade?

review by David Morris

Gaveling Down the Rabble: How "Free Trade" Is Stealing Our Democracy by Jane Anne Morris. New York: Apex Press, 2008, 182 pp., $18.95 ISBN 13: 978-1-891843-39-6

In 1974, I helped found the Institute for Local Self-Reliance. As the name implies, we focus on building strong, self-sustaining, equitable and self-determining local and regional economies. Enabling that goal requires the exercise of local and state authority. Early on we encountered a surprising obstacle to the exercise of that authority, Article I, Section 8, Clause 3 of the United States Constitution: "The Congress shall have power.to regulate Commerce with foreign Nations, and among the several States, and with Indian Tribes."

At first glance, the words, popularly known as the "commerce clause" offer no surprises. When Congress decides to regulate commerce among the states, its regulation clearly pre-empts state and local statutes. But what happens when Congress doesn't regulate? The courts decide. And, therein lies a tale. For over the last 125 years the Supreme Court has ruled that when Congress has not decided it has indeed decided and decided to pre-empt state and local authority

The Institute first encountered the commerce clause with our work on solid waste. Solid waste is clearly a local problem. Local governments regulate garbage pickup. The pickup and disposal of garbage clearly come under the police powers of communities to protect their citizens' health and safety, and, from an environmental perspective, future generations as well.

In the early 1980s, Michigan adopted a solid waste statute that required all counties to develop a 20-year solid waste plan and dispose of their waste within their borders. Clearly the intent was to maximize recycling, since the more a county recycled, the longer its landfill would last. In return for their accepting responsibility for their own wastes, the state delegated to counties the authority to keep other counties and other states from dumping their garbage in local landfills.

It ruled the state could not prevent the dumping of garbage from other states within its borders.

Garbage collection companies in other states sued and the Court overturned the Michigan law. It ruled the state could not prevent the dumping of garbage from other states within its borders. It could, in effect, delegate responsibility but not authority. It could encourage recycling but it could not guarantee that increased recycling would translate into a need for fewer landfills. The decision effectively undermined the incentive to recycle.

At about the same time the Court issued its decision curbing Michigan's authority, the United States was beginning to negotiate a series of trade agreements that curbed national authority: the US-Canadian Free Trade Agreement, the North American Free Trade Agreement, and the World Trade Organization.

The parallels between free trade agreements and the Court's interpretation of the commerce clause of the US Constitution are the focus of Jane Anne Morris's (no relation) fascinating new book, Gaveling Down the Rabble: How "Free Trade" Is Stealing Our Democracy. This book is written for people who are concerned about `free trade' yet are unaware of the century-old United States `free trade' zone," the author notes. The book offers dozens of examples illuminating the parallels between the two.

In 1872, for example, the Supreme Court overturned a Missouri law that severely restricted the import of Texas cattle into the state, a restriction spurred by fear of the spread of "Spanish fever" in cattle. The Court ruled the law a "plain intrusion upon the exclusive domain of Congress." In 1999, the WTO denied the European Union the right to ban imports of US artificial-hormone-fed beef, which the EU had enacted to protect the health of its citizens, calling it a clear interference with free trade.

...the Court decided that when Congress was silent, the Court could decide what Congress meant.

In 1982 the Supreme Court overturned a New Hampshire law giving its state Public Utility Commission the right to prohibit corporations from exporting hydroelectricity generated in the state. "Absent authorizing federal legislation, the Commerce Clause precludes a state from mandating that its residents be given a preferred right of access over out of state consumers to natural resources located within its borders or to the products derived therefrom."

Today, Canadians are worried that NAFTA prohibits them from stopping the export to the United States of their hydroelectricity, a carbon free source of energy that could be used by Canada to meet its own greenhouse gas reduction obligations.

Morris sees the evolution of the Supreme Court interpretation of the commerce clause as a three-stage process. The first began in 1829, when Supreme Court Chief Justice John Marshall referred to Congress' "power to regulate commerce in its dormant state." That Court ruled that if Congress was silent, states could act. The second stage began in 1851, when the Court decided that when Congress was silent, the Court could decide what Congress meant. As legal expert Charles W. McCurdy puts it, the case had as an "unarticulated premise" that the Supreme Court might "supply its (Congress') voice."

Stage 3 began in 1876 and has lasted for more than 130 years. That year the Supreme Court announced it had discovered Congress' inner voice, and that voice was clear: "interstate commerce shall be free and untrammeled" by state action unless specific congressional action suggested otherwise. That ruling, in effect, turned on its head the Tenth Amendment to the US Constitution, which states, "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."

The Court's interpretation of the commerce clause denied states the authority to protect their citizens and local economies. Between 1870 and 1930 the Court used the commerce clause to invalidate 237 state laws. In three quarters of those cases, Congress had not acted on the subject so there was no conflict between state and federal law.

In 1880, the Court overturned a Virginia law that imposed license fees on out of state corporations to encourage them to do their marketing through local merchants. One legal scholar noted the court had created a "new, fundamentally important constitutional right: the right of American businessmen, even without congressional license, to engage in interstate transactions on terms of equality with local merchants and manufacturers."

Sixty years later, the Court broadened its interpretation of the commerce clause to conclude that states could not only not favor their own businesses but could not even treat local and out of state businesses equally. The ruling overturned a state sales tax on goods produced in another state and sold by agents located in another state directly to customers. In dissent Justice William O. Douglas declared, "I can see no warrant for an interpretation of the commerce clause which puts local industry at a competitive disadvantage with interstate business."

...whereas the Court was often inconsistent in its application of the commerce clause to federal authority, it was very consistent in applying the clause on behalf of corporations.

Even while the Supreme Court was using the commerce clause to curb state and local authority when Congress was silent, it was using the same commerce clause to curb federal authority even when Congress was loud and clear. In an instructive and illuminating section of the book, Morris examines the twists and turns of Court decision making with regard to federal authority. The reader comes away with the conclusion that whereas the Court was often inconsistent in its application of the commerce clause to federal authority, it was very consistent in applying the clause on behalf of corporations.

In 1895 Eugene V. Debs was sentenced to jail under the Sherman Antitrust Act. The Supreme Court upheld the sentence, concluding that labor unions inhibited commerce and "the strong arm of the national government may be put forth to brush away all obstructions to the freedom of interstate commerce." But in 1908, the court deemed unconstitutional a federal pro-labor law forbidding a corporation engaged in interstate commerce from firing an employee for labor activity, partly on the grounds that labor union membership has no bearing on interstate commerce.

In 1925 the Court found that coal mining qualified as interstate commerce and therefore the Sherman antitrust act applied to activities of a local union, so that the union was liable for treble damages. In 1936, on the other hand, the Court struck down the pro-labor provisions of a l935 federal law, insisting that mining and manufacturing were "purely local activities." Mining, the Court ruled, was a matter of production, not commerce.

Sidney Hillman, President of the Amalgamated Clothing Works accurately summed up the situation: "If you want (the federal) government to fight labor, (the industry) is interstate; if you want the (federal) government to help labor (the industry) is intrastate."

In 1936 came what historians often dub "the switch in time that saved the nine," referring to the shift by the Supreme Court in the face of anger by the general public to its overturning many key New Deal laws and FDR's court packing initiative. The Court began to approve federal legislation it had previously ruled unconstitutional. It did so primarily by expanding the definition of interstate commerce, which in turn allowed the federal government to extend its reach into what previously were considered local and state affairs.

...every action became part of interstate commerce...

The key case occurred in 1942. The Agricultural Adjustment Act of 1938 directed the Secretary of Agriculture to set national quotas on wheat production and impose penalties on excess production. A Kansas farmer grew wheat on his farm to feed his chickens and used the extra to feed himself and for seed. The Court ruled he was violating the federal law because every grain of wheat the farmer grew that did not enter the interstate commerce stream affected the flow of that stream.

By this astonishingly broad definition, every action became part of interstate commerce, which meant every action was subject to Congressional regulation. Many liberals have welcomed this expansive interpretation because it has been the Court's primary constitutional justification for upholding federal environmental and civil rights initiatives. It has allowed the court to uphold government bans on segregated local restaurants and clubs. It has allowed the government to protect, via the Endangered Species Act, creatures like the Delhi Flower-Loving Fly, an orange and black fly with a life span of about a week that travels only short distances. The Supreme Court upheld the lower court's determination that the federal government could protect the fly because doing so "prevented destruction of biodiversity, thereby protecting current and future interstate commerce."

Ms. Morris convincingly argues that federal civil rights laws (although not necessarily environmental laws) could have been upheld by the Court without using the commerce clause. The 13th, 14th and 15th Amendments would appear to provide all the justification the Court needs.

Morris notes that given the many Court interpretations of the commerce clause, "No doctrinal obstacle in the commerce realm would prevent the Supreme Court from easing up on its `free trade' rulings against state and local laws while accepting strong federal measures in environmental, civil rights and labor law." She makes the important point that by welcoming the use of the interstate commerce clause to justify federal pre-emption of local and state laws, we also implicitly justify its use to curb local and state authority, which in turn undermines democracy itself. "I have tried to demonstrate that acquiescing in the grounding of so much critical legislation on the Commerce Clause paints citizen-populists into a corner. Once there, we do not debate the distribution of local, state and national power and other traditional questions of federalism."

Ms. Morris comes down on the side of a vibrant democracy and an effective citizenry.

Ultimately, whether she is discussing the commerce clause or free trade agreements, Ms. Morris comes down on the side of a vibrant democracy and an effective citizenry. She has spent many years working to achieve this goal, often with the pioneering group, Program on Corporations, Law and Democracy. Gaveling Down the Rabble can be considered her remarkably well-argued and well-documented brief on that subject.

For David Morris the global economy is an oxymoron. He has spent much of his life illuminating that contradiction and working to nurture humanly scaled economies and political systems. In 1974 he co-founded the Minneapolis and Washington, D.C.-based Institute for Local Self-Reliance and currently directs its New Rules Project. http://www.newrules.org. Contact him at dmorris@ilsr.org

[13 dec 08]

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