In a much-anticipated decision, the Supreme Court of Canada (“SCC”) today held that while there are significant barriers to free trade between provinces within Canada, those barriers are constitutional as long as they are not directed “in essence and purpose” at preventing the flow of out-of-province goods into a province.
In other words, even if a provincial law or regulation makes it harder or more expensive to import goods from another province, but has another valid purpose – such as health and safety, or if it is part of a provincial marketing scheme – and only incidentally burdens free trade, then it is constitutional. This would apply to provincial liquor monopolies, and accompanying rules to limit the importation of liquor from other provinces.
However, it is important to note that, under the Court’s newly-articulated test, not all provincial laws that burden interprovincial trade are valid. If both the effect (the “essence”) and the primary intent (the “purpose”) are to make interprovincial trade harder, or impossible, then a trade barrier will be unconstitutional.
Using an example that is relevant to the current dispute between Alberta and B.C. over the Trans Mountain pipeline, the Court said that “[i]f the purpose of the law aligns with purposes traditionally served by tariffs, such as exploiting the passage of goods across a border solely as a way to collect funds, protecting local industry or punishing another province, this may … support the contention that the primary purpose of the law is to restrict trade,” and is therefore unconstitutional.
Supported by the CCF, Gérard Comeau’s counsel, Ian Blue, QC, Arnold Schwisberg, and Daria Peregoudova, had argued before the Supreme Court that the Fathers of Confederation knew well the benefits of free trade and drafted the Constitution Act, 1867, with the purpose of creating a single unified economic market across all of Canada, guaranteeing free trade from coast to coast to coast.
Although the evidence for this is strong, the Court held that such a broad constitutional prohibition against interprovincial trade barriers would interfere with the ability of provinces to legislate on matters of provincial concern, and that “provinces within a federal state should be allowed leeway to manage the passage of goods while legislating to address particular conditions and priorities within their borders.”
While we disagree with the Court’s decision, by bringing the issue to the public’s attention, Gérard Comeau’s case should continue to drive more open interprovincial trade policy in the years ahead.
For more information on the challenges of interprovincial trade, please go to www.OneCountryOneMarket.ca
What is the case about?
What was Mr. Comeau’s offence? He bought beer and spirits in Quebec and returned home to New Brunswick, but was caught in an RCMP operation targeting interprovincial shoppers. They stopped his car, detained him, seized his beer, and issued him a ticket for $292.50 for violating the province’s Liquor Control Act, which prohibits possessing more than 12 pints of beer or one bottle of liquor that wasn’t purchased through the New Brunswick liquor monopoly.
What is the Constitutional Issue?
Section 121 of the Constitution Act, 1867, provides that “all articles of the growth, produce or manufacture of any one of the provinces shall … be admitted free into each of the other provinces.”
This provision was intended to ensure that the newly confederated Dominion of Canada would be a single economic unit for internal trade. The Fathers of Confederation were keenly aware of the benefits of free trade and repeatedly referred to the benefits of open trade between the four provinces of their new country.
George Brown, for example, predicted that “[the] union of all provinces would break down all trade barriers between us, and throw open at once … a combined market of four million people.” And Alexander Galt, a fellow member of the Great Coalition government that secured Confederation, believed that one of “the chief benefits expected to flow from Confederation [would be] the free interchange of the products of the labour of each province.” Their vision was enshrined in Section 121.
Since 1867, the federal and provincial governments have failed to implement this founding promise and violated the Constitution by erecting protectionist barriers that impede the free flow of goods across Canada. New Brunswick’s limitation on possessing alcohol purchased in another province is just one example.
Why is interprovincial trade important?
A recent study by economists Trevor Tombe and Lukas Albrecht of the University of Calgary estimated the annual benefits of free markets for the movement of goods and labour among the provinces at between $50 billion and $130 billion, or $7,500 per Canadian household per year. A study by the Senate of Canada reached the same conclusion.
Vast Majority of Canadians Support Interprovincial Free Trade
According to a recent Ipsos poll commissioned by the Canadian Constitution Foundation, Canadians overwhelmingly believe in free trade across our country. The polling results included:
94% of Canadians support a constitutional right to transport legally-purchased goods between provinces.
95% of Canadians support a constitutional right for businesses to sell their products directly to people in any province.
96% of Canadians support a constitutional right for people with professional qualifications in one province to work in all provinces.
The Canadian Constitution Foundation (“Freedom’s Defence Team”) is a registered charity, independent and non-partisan, whose mission is to defend the constitutional freedoms of Canadians through education, communication and litigation.