Public health vs. free trade: Sweden and European Union clash over alcohol policy

Last June, the European Court of Justice ruled that a Swedish ban on individuals importing alcohol inhibited the free movement of goods within the European Union, a key pillar of the EU’s single market goal. The Court found that the measure “is inappropriate for attaining the objective of limiting alcohol consumption generally and is not proportionate for attaining the objective of protecting young persons from the harmful effects of alcohol.”

 In Sweden, a state-run monopoly known as Systembolaget handles all retail sales of alcoholic beverages. A Swedish citizen, Klas Rosengren, had imported Spanish wine outside this system and Sweden had confiscated the wine and instituted criminal proceedings against him, an action halted by the court ruling. While Rosengren and the alcohol industry hailed the ruling, Bjoern Rydberg, the communications director at Systembolaget, minimized its importance, “This decision is not very important as previous rulings have already stated that the products have to be taxed” [1]. Since most individuals import alcohol privately in order to avoid paying Sweden’s high alcohol tax, the incentive for private importation is not high if taxes are due anyway.

Whatever the short term impact of this ruling, the dispute centers on two contradictory principles– a nation’s right to protect public health against harm from, in this case, alcohol, and the right of companies to free movements of goods within the growing boundaries of the European Union. How these conflicts are settled in Europe and elsewhere will influence whether globalization and free trade undermine public health protection or lead to new ways to balance trade promotion and health promotion.

In the late 19th century, in response to high levels of alcohol consumption and health-related alcohol problems, Sweden began a series of initiatives to reduce alcohol use. These included a rationing system introduced in the 1920s, high taxes on alcohol, the establishment of the state monopoly on retailing in order to minimize the profit motive, a state monopoly on importation of alcohol, and reduced availability of alcohol by, for example, closing the retail stores on Saturdays. Social movements also took on alcohol; a popular slogan of the labor and temperance movements was, “You cannot stagger to freedom.” Over time, these policy measures were relatively successful. By the 1980s, Sweden had one of the lowest rates of per capita consumption of alcohol and alcohol-related health problems in western Europe [2].

In 1995, Sweden joined the European Union and many of its previous alcohol policies were changed. For example, only the retail monopoly was retained and alcohol taxes were lowered. By 1997, beer prices decreased by about 20% and between 1996 and 2004 legal imports trebled and illegal imports quadrupled, as estimated from survey data. In addition, the number of authorized alcohol outlets was increased and Saturday business hours were restored. These changes were associated with a steep increase in per capita annual alcohol consumption, from 8 liters in 1996 to 10.4 liters in 2004.2 Data also suggest an increase in the frequency of heavy drinking, a pattern associated with alcohol-related injuries and violence. Compared to other countries, Swedes have developed a distinctive pattern of drinking with relatively few drinking occasions but a high frequency of heavy drinking among both adults and young people. Some studies have shown that compared to other western European countries, Sweden has a higher rate of alcohol-related mortality associated with increased consumption [3].

In 2005, concerned that the EU was going to further preempt its alcohol control policies, Sweden’s Systembolaget launched a preemptive European-wide print and internet ad campaign. In messages addressed to the European Union President, Jorge Manual Barroso, the Swedish ad read, “Dear Mr Barroso, here’s why you should seriously consider cutting down on drinking”. It then cited World Health Organization data showing that Europe had the highest alcohol consumption of the six global regions and that 600,000 Europeans died of alcohol-related causes in 2002, accounting for 6.3% of all premature deaths and 10.8% of the disease burden [4].

In the coming years, Sweden and the EU will continue the battle to resolve conflicts between public health protection and liberalization of trade rules. At stake is the right of nations to determine their own policies to protect health and the right of industries and global markets to eliminate obstacles to their ability to sell what they want where they want. As shown in Table 1, alcohol consumption patterns in Europe vary widely, in part in response to local cultures but also due to differences in alcohol control policies on tax, pricing and retail distribution. In the business friendly Czech Republic, annual consumption rates are almost 2.5 times higher than in Sweden and the incidence of chronic liver disease and cirrhosis is more than three times higher. How the European Union sets alcohol policy will influence whether Sweden becomes more like the Czech Republic or vice versa.

Alcohol in Three European Countries

 

 

Sweden

France

Czech Republic

 

  

 

Average annual consumption 
(in liters of pure alcohol)

 

5.62

 

9.5

 

13.67

Incidence of chronic liver disease/cirrhosis
(per 100,000 people)

5.26

13.33

16.66

Price of .5 liters of beer
Price of .7 liters of spirits (in Euros)

1.29
21.54

.66
11

.23
3.19

Tax on beer 
Tax on spirits 
(as % of retail price)

26%
67%

9%
33%

7%
26.1%

Restrictions on alcohol sales

State monopoly

Sales license required

License required for production but not sales of alcohol

 

     

 

By Nicholas Freudenberg, Hunter College, City University of New York.

 

Sources: WHO Europe, Eurocare (European Alochol Policy Alliance and the Institute of Alcohol Studies)

1. Court rules against Swedish alcohol import controls. Agence France Press, June 5, 2007. Accessed at http://www.eubuisness.com/EUlaw/1181037607.17/ 
2. Norstrom T, Ramstedt M. Sweden – is alcohol becoming a regular commodity? Addiction 2006; 101(11): 1543-1545. 
3. Norstrom T., ed. Alcohol in postwar Europe: consumption, drinking patterns, consequences and policy responses in 15 European countries. Almqvist and Wiksell, Stockhom, 2002, pp. 157-76. 
4. Bevanger L. Swedish ads urge EU alcohol curbs, BBC News, Oslo, November 22, 2005. Accessed at http://news.bbc.co.uk/2/hi/europe/4458622.stm

Photo credits:

1. Systembolaget 
2. Tom Rovers