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Canada Already Has An Interprovincial Trade Agreement: Our Constitution

By | on Jul 27 2016

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Even before Canada’s Premiers departed Whitehorse on Friday, media coverage was applauding a “ground-breaking” and “historic” agreement on internal trade within Canada.

Not so fast.

The official statement announcing a new “Canadian Free Trade Agreement” (CFTA) is only 191 words long and omits any of those pesky details where the devil is reputed to lurk. Already the whiff of sulphur can be detected in talk of “exception” to protect “local interests.” Truly historic moments rarely come with caveats.

One key omission was immediately evident. When it comes to alcohol, the agreement will establish “a working group on alcoholic beverages, which will explore opportunities to improve trade in beer, wine and spirits across Canada.” I’ve helped draft enough summit communiques to feel confident translating this for you: “don’t hold your breath.”

Alongside the CFTA statement, the premiers of Ontario, Quebec, and British Columbia announced a separate proposal to create an e-commerce site to allow the people of their respective provinces to purchase wine through the provincial monopoly boards of the other provinces.

While almost any development would be an improvement on the current, prohibition-era restrictions on the movement of alcohol within Canada, this deal is a move in the wrong direction. Rather than loosening the provincial alcohol monopolies that deny consumers choice and producers a national market, this deal would build on those restrictions, further entrenching them.

To their credit, Premiers Clark and Couillard acknowledged the modesty of their ambition, with Clark admitting that “We have not freed the grapes completely” and Couillard responding that, at least “we’ve unshackled them.” Such small mercy might mollify a prisoner, but it should not satisfy Canadian consumers.

Ironically, while 191 words were not enough reform Canada’s “byzantine” (Premier Clark’s word, which if anything understates the problem) internal trade rules, there is already an even shorter statement that the Premiers could have turned to for a solution.

Section 121 of the Canadian Constitution, adopted during confederation 149 years ago, already mandates free trade between provinces. Needing just 29 words, Section 121 says in its entirety: “All Articles of the Growth, Produce, or Manufacture of any one of the Provinces shall, from and after the Union, be admitted free into each of the other Provinces.

How beautifully succinct; how pellucidly clear. No need for clumsy jargon about “growing the economy,” gauzy “visions for promoting trade,” or cross-fingered promises of “working groups” to “explore opportunities.” And the best part: it’s already part of the supreme law of the land.

The promise of Section 121 was recently upheld in New Brunswick, where a trial judge threw out a fine against Gerard Comeau, who had legally bought beer and spirits in Quebec and driven them home across the New Brunswick border. The court recognized that the Fathers of Confederation intended their new country be a single economic unit for purposes of trade, and that Section 121 means the provinces cannot prevent the free movement of goods among themselves.

Unfortunately, Canada’s premiers do not seem to have read Judge LeBlanc’s decision, which is an 88-page lesson in economic history, constitutional exegesis, and political misfeasance. Nor do they appear to have absorbed the lesson of multiple academic and political studies that estimate the loss to the Canadian economy of internal-trade barriers at between $50 billion and $130 billion every year.

As a result, the new agreement on wine sales will perpetuate the unconstitutional restrictions against purchasing or shipping wine (to say nothing of beer and spirits, which appear to be excluded from the scheme) directly from producers or suppliers. It will also continue to shut out small wineries who can’t afford the substantial cost and red-tape of distributing through provincial monopolies, so consumers will continue to be denied access to some of the best wines made in other provinces.

State-run e-commerce hubs are not necessary for consumers to buy food, books, or clothes from other provinces. Why then do the premiers persist with these anachronistic and unconstitutional restrictions on the sale of alcohol? Until the provinces stop violating Section 121 of the Constitution, the vision of our country’s founders, the rights of Canadian drinkers, and tens of billions of dollars of annual economic growth will continue to be scotched by their parochial interests.

Howard Anglin is the Executive Director of the Canadian Constitution Foundation, which was proud to support M. Comeau’s case and which will continue to defend his constitutional rights, and the constitutional rights of all Canadians, now that the Government of New Brunswick has appealed the decision.

(Image by Michael Gil under CC 2.0).

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