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National Constitutions, Foreign Trade Policy and European Community Law
II. Constitutional Law and Transnational Exercise of Individual Rights: Freedom of Transnational Trade as an Individual Right?
A. Constitutional Recognition of Supremacy of Individual Rights?
The concept of a limiting constitution grew up in England in response to the abuses of monarchical absolutism, and English constitutional traditions continue to have a bearing on constitutional laws in many countries (in particular those of the Commonwealth). But it is the US Constitution of 1789 which seems to have had the strongest influence on many liberal constitutions adopted by European, Latin American and Asian countries during the 19th century (e.g. the Swiss Constitution of 1874) and the 20th century (e.g. the German Basic Law of 1949). Unlike the English concept of `parliamentary sovereignty', the US Constitution aimed at `a government of laws, not of men' (as described in the Bill of Rights preceding the Constitution of Massachusetts of 1780) by subjecting all government powers to permanent constitutional rules with a higher legal ranking than ordinary legislation and government regulation. The chief constitutional principles - such as limited government under the rule of law, separation and only limited delegation of powers, due process and judicial protection of individual rights - were meant to limit also the powers of Congress, and many framers of the US Constitution viewed the legislature as the potentially most dangerous branch of government. Long-term constitutional limitations were designed to protect the general interests of the citizens against the short term interests of organized groups, which have a strong influence on the daily policy process. Such limitations were expected to protect the equal rights of the citizens more effectively and to give the people more control (`sovereignty') over the political order than if decisions were taken successively by constitutionally unconstrained parliaments or by governments dependent upon majority support.
Perhaps the most distinctive contribution of American constitutional law was the emphasis on the supremacy of individual rights over government powers. The fundamental rights of the people were recognized as existing prior to government, whose main task - as emphasized already in the Declaration of Independence - was to promote individual rights and provide those `public goods' that people cannot or do not provide privately. In accordance with the constitutional principles of limited government, enumerated powers, and protection of individual freedoms against government interferences, the US Bill of Rights explicitly reserves certain powers to the states and to the people.6
A rights-based approach is also characteristic of European Community law and is one of the main reasons for the success of European integration. As the European Court of Justice recognized early in its history, `Community law ... not only imposes obligations on individuals but is also intended to confer upon them rights which become part of their legal heritage',7 and thus the EEC Treaty's prohibitions on national tariffs and non-tariff trade barriers can be judicially enforced by the Community citizens themselves, often against resistance by their own governments. In addition to the individual rights derived from primary and secondary Community law, more basic human rights are also recognized as part of the Community legal order and act as legal limitations on the powers of the Community. Individual Community rights, by limiting abuses of regulatory powers through decentralized (`democratic') control and enforcement of Community law, could operate as powerful tools of integration also in the field of the foreign trade law of the EEC. But they are confronted with particular `constitutional problems'. These are, in part, due to the fact that the EEC Treaty - in view of the EC Member States' GATT membership and the comprehensive and detailed obligations which this imposes on them - regulated the foreign trade law of the EEC in only a very scanty manner (e.g. in Articles 110-116, 40, 43). Even the more precise customs union rules of the EEC Treaty (Articles 9-37) are often construed without regard to the underlying GATT obligations of the EEC.8
B. Freedom of Foreign Trade as an Individual Liberty? The `Power Approach' in US Constitutional Law
In the United States, the Bill of Rights provisions do not `grant' the people their rights but only protect their `inalienable' liberties, which are viewed as existing independently of and antedating the Constitution. Liberty of contract and the liberty to produce and distribute goods and services are protected under the due process clauses of the Fifth and Fourteenth Amendments, according to which no person shall be deprived of `life, liberty or property without due process of law'. The American founding fathers had been motivated to a large extent by problems of economic regulation (see their demand for `no taxation without representation'), and one of the declared purposes of the Bill of Rights which was added to the Constitution in 1791 had been to place fundamental rights even more clearly beyond the reach of majoritarian politics. The US Supreme Court, up to the early 1930s, declared several federal and state laws dealing with economic and social matters unconstitutional under the `due process of law clauses' of the Fifth and Fourteenth Amendments because they deprived a plaintiff of liberty or property without procedural or substantive due process of law.9
The meaning of `unlisted natural rights' can only be authoritatively determined by Congress and the courts. Even though one of the major historical objectives of the US Constitution was to `secure the blessings of liberty' (preamble) also in the economic field, the US Congress does not appear to recognize an individual liberty to import and export. Thus, Congress replaced the words `right to export' contained in the first draft of the Export Administration Act of 1979 by the word `ability to export' so as to avoid the law being `misconstrued' as denoting a constitutionally protected right to export free from government restriction.10 US courts have applied, since the 1930s, a `judicial double standard' which accords a higher level of scrutiny and of judicial protection to civil and political rights than to economic liberties.11 Thus, the Supreme Court has recognized a right to travel abroad.12 But US courts have also held that `no one has a vested right to trade with foreign nations'.13 According to a recent decision by the Court of Appeals for the Federal Circuit, there has apparently not been one single US court decision over the past 200 years which has upheld a right of importers to overturn a Congressional exclusion of any product from importation. The reason given by the Court for this absence of a `right to trade' is that
When the people granted Congress the power to `regulate Commerce with foreign Nations' ... they thereupon relinquished at least whatever right they, as individuals, may have had to insist upon the importation of any product.14
But do powers to regulate commerce for the welfare of society really imply or require the relinquishment of all individual rights in this field? Is such an interpretation consistent with the concept of `unalienable liberties' retained by every person, and which government is not to abridge, as emphasized in the Declaration of Independence? Can interference with commerce for the benefit of society be reconciled with the traditional concept of the US Constitution as a `protector of liberty' which stands `for individual rights, protected even against legitimate authority, even against the elected representatives of the people and, in large measure, even when they act in good faith and in the public interest'?15 If the constitutional concept of limited government was designed to exclude parliamentary supremacy and to confine all government powers to limited purposes in order to protect the people against arbitrary interferences with their rights, should it not also be observed whenever trade policy taxes and restricts domestic consumers (e.g. by imposing tariffs and restrictions on imported goods) and distorts domestic competition for the benefit of import-competing producers (who benefit from higher prices and `protection rents')? Is trade protection not `precisely the sort of potentially smelly dispensation of economic favours that most needs additional, objective supervision'?16
The limitations on the legislature in the first Article of the Bill of Rights (`Congress shall make no law' abridging certain freedoms) is illustrative of this concern of the founding fathers of the US Constitution to protect the rights of `the people' also against congressional legislation and majority politics. The founding fathers explicitly limited the trade regulatory powers and were aware of their potential abuse. Thus, the US Constitution requires that `all duties, imposts and excises shall be uniform throughout the United States',17 that `no tax or duty shall be laid on articles exported from any state',18 and `no preferences shall be given by any regulation of commerce or revenue to the ports of one state over those of another'.19 In addition to these objective constitutional safeguards, which were designed to protect the states against trade-distorting regional preferences rather than to protect free trade, foreign trade transactions covered by existing contracts are constitutionally protected against retroactive government interferences by the constitutional prohibitions on ex post facto laws and on impairment of contract obligations (Article I, sections 9 and 10).20 Aggrieved American importers may also challenge the methods used to calculate and impose customs duties and the propriety of anti-dumping and countervailing duties before the courts. But, in the absence of a `property right' in the importation or exportation of goods, it is unlikely that US traders adversely affected by foreign trade restrictions have rights protected by the `due process of law' clause and by the `taking' limitation in the Fifth Amendment to the Constitution.21
The commerce clause, which permits Congress to make laws `to regulate commerce ... with foreign nations...',22 is construed today as a seemingly unlimited plenary power enabling Congress to make whatever laws may seem appropriate to it, including the power to prohibit imports and exports. The Supreme Court notably declined to apply certain `inter-state commerce' precedents to the congressional foreign trade policy powers because the latter differed from the `inter-state commerce' powers and included `the authority of Congress to absolutely prohibit foreign importations'.23 In case of challenges to executive foreign trade restrictions, the courts examine whether the executive action exceeded the constitutional or statutory authority granted to the Executive.24 But they do not review whether, even if there was some legal basis for executive action, the foreign trade restriction had been an `unnecessary' or `disproportionate' interference with an individual `right to trade with foreign nations'.
The protection of the transnational exercise of individual economic liberties through objective constitutional principles rather than through recognition of subjective individual freedoms seems to accord with the original conception of the US Constitution and with the US case-law concerning the protection of interstate commerce. The Supreme Court has recognized that the President's foreign affairs power `of course, like every other governmental power, must be exercised in subordination to the applicable provisions of the Constitution'.25 In a later case the Court confirmed:
Broad as the power in the National Government to regulate foreign affairs must be, it is not without limitation. The restrictions confining Congress in the exercise of any of the powers expressly delegated to it in the Constitution apply with equal vigour when that body seeks to regulate our relations with other nations.26
Some constitutional lawyers have therefore concluded from the case-law that `nothing in the Constitution suggests that the rights of individuals in respect of foreign affairs are different from what they are in relation to other exercises of governmental power'... `Nor is any particular exercise of foreign affairs power exempt from limitations in favour of individual rights'... `In principle, the Bill of Rights limits foreign policy and the conduct of foreign relations as it does other federal activities'.27 But the US government, US courts and prevailing constitutional doctrine seem to view the individual freedom to import and export as a privilege granted by Congress, rather than as an individual right that could be invoked as a cause of action e.g. against discriminatory or disproportionate governmental foreign trade restrictions.
C. Freedom of Trade as a Fundamental Right:
The `Rights Approach' of European Community Law
Influenced by the US Constitution and by its objective to ensure a common market by restricting the regulatory powers of the states, various 19th century constitutions in Europe explicitly guaranteed individual freedom of trade and industry (e.g. Article 3 of the 1867 Constitution of the North German Confederation, French Constitution of 1848). `Freedom of trade and industry ... throughout the territory of the Confederation, subject to such limitations as are contained in the Federal Constitution and the legislation enacted under its authority' (Article 31(1)), is one of the major guarantees of the Swiss Constitution of 1874. As the regulatory powers of the Cantons under the preceding Swiss Constitution of 1848 had entailed numerous discriminatory restraints on freedom of trade within Switzerland, Article 31(2) of the Constitution of 1874 stipulates that `cantonal regulations concerning the exercise of trade and industry and the taxes on such activities ... shall not depart from the principle of freedom of trade and industry except where the Federal Constitution provides otherwise'. The constitutional guarantee of freedom of trade was also recognized to protect the individual right to trade with foreign nations. And this freedom of foreign trade was specifically protected by the constitutional requirement in Article 29 that customs duties shall be `as moderate as possible' except for `extraordinary circumstances' where `the Confederation may ... resort temporarily to exceptional measures'.
Freedom of trade, including the right to import and export, is protected under European Community law on three different levels of law:
1. Freedom of Trade Guarantees in Primary Community Law
Legal and judicial protection are strongest whenever they are based directly on the EEC Treaty. These `constitutional' prohibitions of tariffs (e.g. Article 12), non-tariff trade barriers (e.g. Articles 30, 34) and of trade discrimination (e.g. Articles 40(3), 95) are recognized to constitute individual freedoms which can be directly invoked by individuals and enforced through the courts. The EEC Treaty protects freedom of trade also in relations with third countries by prescribing a customs union (Article 9), free circulation within the EEC of goods imported from third countries (Article 10), a common customs tariff (Articles 18-29), and compliance with the international GATT obligations of the EEC and its Member States (e.g. Articles 18, 110, 229, 234). As the GATT prohibitions of tariffs (e.g. Article II), non-tariff trade barriers (e.g. Articles II-XI) and of trade discrimination (e.g. Articles I, III, XIII, XVII) are drafted in a more precise manner than the corresponding EEC Treaty pro-
hibitions,28 the EEC Treaty's requirement of `primacy of international law'29 binding on the EEC over `secondary Community law' entails a comprehensive `foreign trade constitution' limiting the exercise of the discretionary trade policy powers of the Community. Thus, contrary to the case-law of the EC Court of Justice, the customs union principle of the EEC Treaty must be construed in conformity with the GATT obligations of the EEC to the effect that it prohibits non-tariff trade barriers by EC Member States inconsistent with GATT law.30 The non-discrimination requirements of the EEC Treaty (e.g. Articles 40(3), 95) must be interpreted to prohibit also discriminatory import restrictions violating GATT law.31
The customs union law of the EEC authorizes autonomous tariff changes (Article 28), agricultural market regulations (Article 40ff) and international trade agreements (Articles 113, 238) to the extent that they are consistent with the international legal obligations of the EEC (e.g. under GATT and the free trade agreements between the EEC and EFTA countries). However, the EEC Treaty recognizes e.g. in its rules on non-discrimination (e.g. Article 7, 40(3)), undistorted competition (e.g. Article 3(f)) and rule of law (e.g. Article 164), that the discretionary trade policy powers of the EEC must be exercised in a transparent, non-discriminatory and proportionate manner. As the EEC's GATT obligations for the use of transparent, non-discriminatory and proportionate policy instruments (i.e. internal taxes, other non-discriminatory internal regulations, production subsidies or tariffs rather than non-tariff trade border measures) are also in this respect more precise than the corresponding rules in the EEC Treaty, they should be taken into account in the interpretation of the foreign trade law of the EEC.32
2. Freedom of Trade Guarantees in Secondary Community Law
The general foreign trade regulations adopted by the EC Council - e.g. on the common customs tariff, customs valuation, common rules for imports and exports, anti-dumping and countervailing duty proceedings, and on protection against illicit commercial practices - were explicitly designed to implement the pertinent GATT obligations of the EEC for non-discriminatory access to foreign markets and supplies. Thus, both Council Regulation No. 282/82 on common rules for imports as well as Regulation No. 2603/69 on common rules for exports proceed from the directly applicable legal principles that `Importation into the Community ... shall be free, and therefore not subject to any quantitative restriction, without prejudice to measures which may be taken under Title V'..., and `The exportation of products from the European Economic Community to third countries shall be free, that is to say, they shall not be subject to any quantitative restriction, with the exception of those restrictions which are applied in conformity with the provisions of this Regulation'.33
The right to import and export is thus also recognized in the secondary foreign trade law of the EEC. The secondary foreign trade law also applies many of the `constitutional principles' of primary Community law, such as the `common market' principle and the principles relating to non-discrimination and legal certainty. In its more recent case-law, the EC Court of Justice has further recognized that even beyond customs law - e.g. in EC Council Regulation No. 2641/84 on the strengthening of the common commercial policy and in EC Council Regulation 2423/88 on protection against dumped or subsidized imports - the secondary foreign trade law is explicitly designed to implement the EEC's GATT obligations. The Court concluded from that:
... since Regulation No. 2641/84 conferred on the operators concerned the right to invoke GATT provisions in their complaint to the Commission in order to establish the illicit nature of the commercial practices as a result of which they claimed to have suffered injury, those operators were entitled to apply to the Court to review the legality of the Commission decision applying those provisions.34
In the recent Nakajima case, the Court also reviewed the `GATT consistency' of EC anti-dumping measures on the ground that the EC Anti-dumping Regulation explicitly referred to the pertinent GATT obligations of the EEC.35 The explicit references in the often diverse, sectoral foreign trade regulations of the EEC to GATT obligations enhance the scope for legal and judicial protection of individual rights. For the GATT requirements e.g. of transparent policy-making (Article X), non-discriminatory market access (Articles I, III, XIII, XVII) and proportionality of trade restrictions (e.g. Articles II, III, XI, XIII, XVII) apply to all the various interchangeable trade policy instruments. They offer precise, consistency-enhancing legal criteria for the interpretation of the general Community law principles such as `proportionality' of trade restrictions and protection of `legitimate expectations'.
In one of its first judgments relating to the anti-dumping law of the EEC, the EC Court rightly emphasized that one important function of the foreign trade law of the EEC was to create legal certainty and predictability for the trade transactions of EC importers, exporters, producers and consumers. Hence:
The Council, having adopted a general regulation with a view to implementing one of the objectives laid down in Article 113 of the Treaty, cannot derogate from the rules laid down in applying those rules to specific cases without interfering with the legislative system of the Community and destroying the equality before the law of those to whom the law applies.36
But the Court has so far shied away from applying these `rule of law' and equality principles to the international GATT obligations of the EEC even though the latter were recognized by the Court as an `integral part of the Community legal order' with legal precedence over secondary Community law. Given the direct effect (in the sense of direct domestic validity) and higher status of international legal obligations in the monist Community legal order, recognition of direct applicability would confer constitutional significance on the international rules concerned. This would appear justified from an individual rights perspective because the GATT guarantees of freedom, non-discrimination, transparent policy-making, proportionality and rule of law go far beyond the autonomous foreign trade law of the EEC. But this seems less justified from a mercantilist perspective of GATT rules as burdensome `concessions' which governments exchange on a reciprocal basis and which may be withdrawn at the discretion of governments37 even though they increase the welfare and liberty of domestic traders, producers and consumers by enabling them to buy and sell goods in the best (foreign) markets.
3. Freedom of Trade as a Fundamental Right
In addition to the judicial interpretation of the `freedoms of trade' of the EEC Treaty as directly applicable individual rights, the EC Court of Justice has also held that:
... the principle of free movement of goods and freedom of competition, together with freedom of trade as a fundamental right, are general principles of law of which the Court ensures observance.38
The official German translation (grundrechtliche Handlungsfreiheit) and French translation (le libre exercice du commerce en tant que droit fondamental) of this judgment confirm that Community law also guarantees a `fundamental right of freedom of trade' derived as a `general principle' from the national legal orders of some Member States. The Court has not specified the precise legal scope of this right. But - as `freedom of trade and industry' is recognized as an individual right in the constitutional laws of several EC Member States, such as Germany, France and Luxemburg, and as the Court's case-law concerning fundamental rights has emphasized that `in safeguarding these rights, the Court is bound to draw inspiration from constitutional traditions common to the Member States, and it cannot therefore uphold measures which are incompatible with fundamental rights recognized and protected by the constitutions of those states'39 - it must be assumed that freedom of trade as a fundamental right guaranteed by Community law is `inspired' by the corresponding national constitutional traditions as well as by the objective Community law guarantees of freedom of trade and by the need to make these Community rights effective.
The German Basic Law of 1949, for instance, includes explicit guarantees of fundamental economic liberties such as `the right freely to choose trade, occupation, or profession' (Article 12), `property and the right of inheritance' (Article 14), and `the right to form associations and societies' (Article 9). The Basic Law makes it clear that `the basic rights shall bind the legislature, the executive and the judiciary as directly enforceable law' (Article 1(3)). In addition to the enumeration of specific constitutional guarantees of individual rights, the Basic Law guarantees a general `right of liberty' according to which `Everyone shall have the right to the free development of his personality in so far as he does not violate the rights of others or offend against the constitutional order or the moral code' (Article 2(1)). This general freedom protects all individual liberties not specifically listed in the Basic Law, including economic liberties, and can be invoked as a cause of action in legal and judicial proceedings against all governmental restraints of individual liberty. In accordance with these constitutional guarantees of freedom of foreign trade, the German Law on Foreign Economic Relations of 1961 prescribes:
(1) In principle trade and commerce with foreign economic areas is free as to goods, services, capital, payments or other economic transactions as well as to transactions between residents in foreign assets and gold. Applicable are the restrictions contained in this Law or prescribed by ordinance based on this Law.40
The EC Court does not speak of `freedom of foreign trade' since all cases in which freedom of trade was recognized by the Court as a fundamental right - such as the Nold, Hauer and ADBHU cases - related to professional and trading activities within the EEC. At least in the ADBHU case, which referred to national environmental restrictions on intra-Community trade, the Court seems to have `internalized' as a `freedom of trade' what, from the perspective of national foreign trade laws, would appear as a freedom of transnational trade. In its case-law of fundamental rights, the Court rightly emphasizes that:
... the protection of such rights, whilst inspired by the constitutional traditions common to the Member States, must be ensured within the framework of the structure and objectives of the Community.41
The protection of freedom of internal and external trade in primary and secondary Community law suggests that `freedom of trade as a fundamental right' also protects the Community citizens' freedom to trade with partners inside and outside the EEC. The `communitarization' of the national constitutional guarantees of freedom of trade appears justified and necessary in view of the EEC Treaty objective of an `internal market ... without internal frontiers' (Article 8(a)). But, as in the primary and secondary foreign trade law of the EEC, this freedom of trade is not unlimited:
... the fundamental rights recognized by the Court cannot be regarded as absolute prerogatives but must be considered in relation to their function in society. As a consequence, some restrictions may be imposed on the exercise of these rights, in particular in the context of the common organization of the market. These restrictions must respond effectively to the objectives of the general interest pursued by the Community and must not, with regard to the aim pursued, constitute disproportionate and intolerable interference, impinging upon the very substance of these rights.42
In particular, `freedom of trade as a fundamental right' has nothing to do with laissez-faire liberalism. It does not only reflect the view that individual liberty is a constitutional value in itself, which extends into the economic area, and is of fundamental importance to most citizens for their personal development and their professional and economic activities. It also reflects the economic-political insight (underlying e.g. GATT law) that trade policy instruments are hardly ever a `first best policy' for correcting `market failures' or supplying `public goods'. As almost all policy objectives can be achieved in a more transparent and more efficient manner through internal policy instruments, such as those admitted under GATT and Community law, the legal limitation of the use of non-transparent, discriminatory or disproportionately harmful trade policy instruments strengthens the ability of governments to resist protectionist pressures and to use policy instruments enhancing the individual rights and welfare of their citizens.43
If the communitarian `freedom of trade as a fundamental right' also protects the freedom to engage in transnational trade vis-à-vis third countries, just as the national legal guarantees of `freedom of trade' (e.g. under German law) are recognized to protect the transnational exercise of individual economic liberties, then EC citizens can invoke their fundamental rights under the `new legal order' of Community law also against non-transparent, discriminatory or arbitrary exercises of the foreign relations powers of the EEC. Thus, individual freedom of trade as a fundamental right might facilitate access to courts and judicial recognition of a `direct and individual concern', which traders adversely affected by EC trade restrictions must prove in order to bring direct complaints to the EC Court. The objective EEC Treaty prohibitions of trade restrictions and the individual freedom of trade are ultimately two different sides of one and the same individual liberty. In determining constitutionally valid reasons to limit the individual freedoms of trade, the various layers of Community law must be construed as a functional unity, taking into account also the international GATT obligations of the EEC for the use of transparent, non-discriminatory and proportionate trade policy instruments.
D. Why Recognition of Individual Freedom of Foreign Trade Matters
What difference does it make whether economic liberty is protected by `procedural due process of law' or also by constitutional guarantees of `substantive due process of law'? Does it add anything to the protection of individual liberty if objective prohibitions of trade restrictions are construed as directly applicable individual freedoms of trade? Given the constitutional premise of both US constitutional law as well as European Community law that individual rights are not `granted' by governments and that the only legitimate function of governments is to protect the individual rights of the citizens, are there valid arguments to restrict the individual freedom of trade to the choice of domestic trading partners and to deny individual rights to import and export?
The EEC Treaty prohibitions on tariffs and non-tariff trade barriers have become much more effective than the corresponding GATT prohibitions, even though the latter are in some respects (e.g. freedom of transit, prohibition of non-tariff trade barriers and of trade discrimination) framed in more precise and comprehensive terms (e.g. in GATT Articles III, V, XI(1), XIII). This seems to be largely due to the judicial recognition of the EC citizens as legal subjects and not mere objects of European Community law. The experience of European integration appears to confirm the economic theory of property rights according to which the proper functioning not only of economic markets but also of `political markets' depends on the appropriate assignment of individual freedoms and property rights. For a number of reasons, objective legal guarantees of economic liberty can become more effective if they are recognized to constitute individual rights:
a) An international division of labour among millions of private citizens in different countries depends on a high degree of specialization, investments and transnational economic transactions. These will not take place without legal security (e.g. of market access) and reliable expectations. International economic transactions consist of exchanges of property rights (e.g. in the purchased goods and related payments) which will be more secure if objective legal guarantees of market access are recognized as individual rights and protected by domestic courts. Such rights to import and export can increase the legal security and the value of international trade transactions.
b) The economic theory of property rights44 demonstrates not only that precisely defined property rights in private or public goods (such as open markets or a clean environment) are an incentive for their efficient production, use and distribution. They also offer a spontaneous, decentralized remedy against `market failures' by enabling individual citizens to protect themselves against adverse `external effects' (e.g. of restraints of competition and environmental pollution). Just as the interpretation by the EC Court of Justice of the prohibition on cartels in Article 85 of the EEC Treaty as a directly applicable `freedom of competition' has strengthened the effectiveness of Article 85 vis-à-vis private restraints of competition, enforceable private rights could also strengthen `freedom of trade' vis-à-vis `rent-seeking' group interests in welfare-reducing trade restrictions.
c) Individual rights (e.g. of access to foreign markets) are also an incentive for citizens to protect themselves against `government failures' (such as trade protectionism), arbitrary majority politics and against the `asymmetries' in current policy-making processes which favour organized `rent-seeking' producer interests (e.g. in import protection) to the detriment of general, dispersed consumer interests (e.g. in liberal trade).
The foreign trade law of both the USA and the EEC is characterized by the delegation of broad regulatory powers to the Executive without precise criteria for the exercise of these discretionary powers. As objective constitutional safeguards - such as the constitutional requirements of separation and limited delegation of powers and judicial review - are often not effectively observed in the field of foreign trade law and policy, the recognition of individual freedoms of trade and of procedural rights can act as a `second line of constitutional protection' enabling individual importers, exporters, producers and consumers to defend their rights against `grey-area' trade restrictions.
d) Individual rights can facilitate and increase the scope of judicial review. The general constitutional guarantee of liberty (including economic liberty) in Article 2 of the German Basic Law, for instance, is recognized by courts to confer a `standing to sue' against all governmental restraints of individual liberty including foreign trade restrictions. In the EEC, the `direct applicability' of the customs union law contributed to the judicial willingness to review foreign trade restrictions as domestic legal issues rather than as foreign policy issues. By limiting the admissible policy instruments and decision-making procedures for trade restrictions, directly applicable freedoms of foreign trade can also enlarge the scope for judicial review. The EC Court of Justice has consistently held that foreign trade restrictions must be `proportional' and may not restrict the freedom of foreign trade more than is necessary to achieve the regulatory objective.45 In the ADBHU case, for instance, the Court stated that `the principle of freedom of trade ... is subject to certain limits justified by the objectives of general interest pursued by the Community provided that the rights in question are not substantively impaired'. Reviewing in this light certain rules laid down in an EEC directive on the collection of waste oils, the EC Court held that their restrictive effect on the freedom of trade did not `go beyond the inevitable restrictions which are justified by the pursuit of the objective of environmental protection, which is in the general interest'.46 But in a considerable number of other cases related to foreign trade restrictions, the Court declared foreign trade restrictions void e.g. because no public interest had been established as a justification of discriminatory import restrictions on goods en route.47
e) Recognition of freedom of foreign trade as an individual right further contributes to the insight that individual liberty constitutes a constitutional value in itself also in the area of foreign trade, and not only a means to an end (such as economic welfare). In a constitutionally limited democracy where human rights are recognized as `the basis and foundation of government' (Virginia Bill of Rights of 1776, Article 1 of the German Basic Law), the `state interests' must be defined in terms of the individual rights and interests of the citizens. As all government measures must serve the equal rights of the citizens, the justification of foreign trade restrictions in terms of the `public interest' should be much more specific than is actually the case in most countries. This is true in particular for the EEC where the legitimacy of foreign trade restrictions enacted by the EC Council or by the EC Commission does not derive from parliamentary legislation. This `democratic deficit' should be compensated by maximizing the equal rights of Community citizens and by enabling them to challenge the legality of foreign trade restrictions before the courts. The active judicial review by the US Supreme Court, the EC Court of Justice and the Swiss Federal Court of `interstate commerce' confirms that the often excessive judicial deference towards alleged `public interests' in foreign trade restrictions is by no means a legal necessity. Courts could and should review whether the often non-transparent, discriminatory and disproportionately harmful government restrictions of transnational trade transactions are actually capable of protecting and promoting the equal rights of domestic citizens.
6 Notably in the Ninth Amendment (`The enumeration in the Constitution of certain rights shall not be construed to deny or disparage others retained by the people') and in the Tenth Amendment (`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').
7 Case 26/62, Van Gend en Loos v. Nederlandse Administratie der Belastingen, [1963] ECR 1, 12.
8 For examples see Petersmann, `Commentary on Article 234', in H. von der Groeben, J. Thiesing, C. Ehlermann (eds), Kommentar zum EWG-Vertrag (4th ed., 1991) Vol. IV, 5750-5753.
9 See B.H. Siegan, Economic Liberties and the Constitution (1980) 24ff, 110-182; J.A. Dorn, H.G. Manne (eds), Economic Liberties and the Constitution (1987) 1ff, 39ff.
10 Senate Reports No. 169, 96th Congress, 3rd Session, 1, 3 (1979).
11 See also H.J. Abraham, Freedom and the Court (5th ed., 1988) 11ff.
12 Kent vs. Dulles, 357 US 116, 129 (1958).
13 In a 1904 decision (Buttfield vs. Stranahan, 192 US 470, 493), the US Supreme Court decided `that no one has a vested right to trade with foreign nations, which is so broad in character as to limit and restrict the power of Congress to determine what articles ... may be imported into this country and the terms upon which a right to import may be exercised'. While this decision seemed to imply the existence of a `right to trade with foreign nations', subsequent court decisions have quoted from the 1904 decision only `that no one has a vested right to trade with foreign nations'. By omitting the above-mentioned qualifications of the 1904 decision, the courts have (mis)construed the 1904 decision as a precedent for the denial of any `vested right to trade with foreign nations'.
14 Arjay Associates Inc. v. Bush, 891 F2d 891, at 898 (Fed. Cir. 1989).
15 Henkin, `Introduction' to L. Henkin, A.J. Rosenthal (eds), Constitutionalism and Rights (1990) 1.
16 Hudec, `The Legal Status of GATT in the Domestic Law of the United States', in M. Hilf, F. Jacobs, E.U. Petersmann (eds), The European Community and GATT (1986) 187, 246.
17 US Constitution, Art. I, §8, cl. 1.
18 US Constitution, Art. I, §9, cl. 5.
19 US Constitution, Art. I, §9, cl. 6.
20 See, e.g., the `contract sanctity clause' in section 6 of the Export Administration Amendment Act of 1985, in ILM (1985) 1369ff.
21 See Morrison, Hudec, `Judicial Protection of Individual Rights under the Foreign Trade Laws of the United States', in M. Hilf, E.U. Petersmann (eds), National Constitutions and International Economic Law (1992).
22 US Constitution, Art. I, §8, cl. 3.
23 Brolan v. United States, 236 US 216, 222 (1915).
24 In Youngstown Sheet & Tube v. Sawyer (343 US 579, 1952), for instance, the Supreme Court held that President Truman's seizure of the steel mills in order to ensure production of steel during the Korean war was unconstitutional, since it was neither authorized by law nor by any direct constitutional power of the President.
25 US v. Curtiss-Wright Export Corp., 299 US 304, 320 (1936).
26 Perez vs. Brownell, 356 US 44, 58 (1958).
27 L. Henkin, Foreign Affairs and the Constitution (1972) 252ff, 269ff.
28 This is not only true for the foreign trade law of the EEC Treaty which lacks precise and unconditional prohibitions on tariffs and non-tariff trade barriers as in GATT Articles II to XI. But also the EEC Treaty provisions on the elimination of tariffs and quantitative restrictions in intra-Community trade often use much vaguer terms (e.g. in Article 12: `charges having equivalent effect', Article 30: `measures having equivalent effect') than the corresponding GATT provisions which specify more precisely (e.g. in Articles II, III, XI(1)) the various kinds of prohibited non-tariff trade barriers.
29 On this principle underlying Articles 228 to 234 of the EEC Treaty, see Petersmann, `Commentary on Article 234', supra note 7, at 5726-5729.
30 In Case 37-38/73, Diamantarbeiders v. Indiamex, [1973] ECR 1609, the EC Court held, for instance, that `charges of equivalent effect as tariffs', imposed by an EC Member State on imports from third countries, can be compatible with the foreign trade law of the EEC notwithstanding their inconsistency with GATT Article II. In Cases 51, 86, 96/75, EMI v. CBS, [1976] ECR 811, the Court held that the EC common rules for imports relate only to quantitative restrictions `to the exclusion of measures having equivalent effect' even though the latter are prohibited by GATT Articles XI, III. In Case 174/84, Bulk Oil v. Sun International, [1986] ECR 559, discriminatory quantitative export restrictions by an EEC Member State were declared compatible with the foreign trade law of the EEC without regard to the prohibition of such restrictions in GATT Articles XI and XIII.
31 In e.g. Case 245/81, Edeka AG v. Germany, [1982] ECR 2745, the Court construed the non-discrimination requirement of EC law in a manner inconsistent with the GATT obligations of the EEC to maintain non-discriminatory market access vis-à-vis GATT supplier countries. The case illustrated that discrimination among supplier countries also entails discrimination among competing domestic importers. In Case 193/85, Co-Frutta, [1985] ECR 2085, the Court did, however, apply the national treatment requirement for internal taxation (Article 95 EEC) to products imported from third countries in conformity with the EEC's national treatment obligations under GATT Article III(2).
32 For further examples see: Petersmann, `GATT Law as International Legal Framework of the European Free Trade System', in O. Jacot-Guillarmod (ed.), L'avenir du libre-échange en Europe: vers un espace économique européen (1990) 111-129.
33 See Article 1 of both regulations.
34 Case 70/87, Fediol v. Commission, Judgment of 22 June 1989 (not yet reported), para. 22.
35 Case C-69/89, Nakajima Co. v. EC Council, Judgment of 7 May 1991 (not yet reported).
36 Case 113/77, NTN Toyo Company v. EC Council, [1979] ECR 1979, 1185, para. 21.
37 The GATT case-law of the EC Court of Justice seems to be influenced by the trade policy argument (emphasized notably by the EC Commission) that e.g. in the United States GATT rules are not `directly applicable' vis-à-vis federal legislation which prevails according to the `later in time rule'.
38 Case 240/83, Procureur de la République v. ADBHU, [1985] ECR 531, 548.
39 Case 4/73, Nold v. Commission, [1974] ECR 491, 507.
40 Paragraph 1; See also paragraphs 2, section 2, and 3, section 1.
41 Case 11/70, Internationale Handelsgesellschaft, [1970] ECR 1125, 1134.
42 Case 5/88, Wachauf v. Federal Republic of Germany, Judgment of 13 July 1989, para. 18 (not yet reported).
43 On the `economic theory of optimal intervention' see, e.g., W.M. Corden, Trade Policy and Economic Welfare (1974); J.E. Meade, Trade and Welfare (1955).
44 For a survey see: E.G. Furobotn, S. Pejovich (eds), The Economics of Property Rights (1974); A. Schüller (ed.), Property Rights und ökonomische Theorie (1983).
45 Pescatore, `Les Principes généraux du droit en tant que source du droit communautaire', in FIDE, The General Principles Common to the Laws of the Member States as a Source of Community Law (1986) 17, 19, remarks that the principle of proportionality is among the most frequently invoked principles of Community Law.
46 ADBHU [1985] ECR 531, para. 12, 13.
47 See, e.g., Case C-152/88, Sofrimport, Judgment of 26 June 1990 (not yet reported).
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