The Supreme Court of Canada’s ruling earlier this year on interprovincial trade barriers represents a significant loss for consumers and for the Canadian economy at a time it can least afford it. But it was a great win for inertia.
In 2012, Gérard Comeau bought 344 bottles of beer, two bottles of whisky and one bottle of other spirits in Quebec, which he then brought back home to New Brunswick. This is something he had done several times.
But it was, in fact, deemed illegal, based on a 90-year-old law. Comeau was eventually arrested and fined $292.50. More than five years later, the Supreme Court ruled the fine was constitutional.
The Comeau case was never just about beer. It was essentially about enabling our domestic economy across the country to thrive. For the agrifood sector, the decision would have had tremendous significance had it gone the other way.
Who would have thought that $292.50 had the potential to forever stifle Canada’s domestic food trade?
For almost nine decades, interprovincial barriers have multiplied and made doing business stupidly difficult and expensive for many food companies. For consumers, if no one catches you, you move on. For businesses, when buying ingredients or specialty products from another province, it’s a major hassle.
What’s more, many of these products were taxed only to support provincial governments’ public coffers. Barriers were erected to suppress competition and to sell more taxed and overpriced food products and beverages.
Plenty of Canadian trade barriers
Canada has myriad trade barriers, in addition to the fact that the agrifood sector is addicted to marketing boards, whose countervailing powers appease entrepreneurial angst in the sector.
Those on the freer trade side of the equation were counting on the Supreme Court of Canada to put politicians on notice about the need to get our interprovincial act together and eliminate trade barriers. But it did not happen.
Because of the ruling, creative companies in smaller provinces won’t have a fighting chance to expand and compete in larger markets, such as Quebec and Ontario. Wineries, craft cheese producers, craft breweries, speciality meat producers and many other small-scale operations will face mounting obstacles domestically.
A different ruling could have also been the wake-up call our supply-managed sectors needed. But our provincially based quota system to support dairy, poultry and egg production facilities will escape unscathed, despite the trouble it’s causing in NAFTA renegotiations.
As well, this could have been an opportunity to recalibrate some of the agrifood wealth around the country.
For example, dairy processing has historically been concentrated in the province of Quebec. Quotas are evenly distributed, based on domestic demand for milk, including processing. Now it’s unlikely we’ll see other provinces play a much larger role in dairy processing.
‘Haves’ support the ‘have-nots’
The Comeau ruling could have also injected some deeply needed supply-management reforms to make the regime more flexible and current. New methods capitalizing on terroir knowledge could have been a huge boon to Canada’s gastronomic regions.
Right now, most food production is done in Ontario and Quebec. A different decision by the Supreme Court could have eliminated what many consider a weak and obsolete equalization system that sees the “have” provinces supporting the “have-nots.”
A different outcome could have also resulted in a reduction in the price of a variety of products we now enjoy. More competition would have put downward pressure on prices. Fiscal policies would have changed given how open provincial economies were going to become.
But now we’ll need to wait a while longer.
The will for more economic integration makes Canada’s internal trade barriers undesirable and unsustainable. The case for a better flow of goods remains very strong in Canada from an economic standpoint.
Internal trade barriers make no sense
Interprovincial trade barriers never made sense in the first place, and never will.
We are only 37 million inhabitants in one of the vastest countries in the world. Distribution costs are prohibitive for many of our small- and medium-sized companies, which often drive the open agrifood innovation agenda in Canada.
These companies have long needed just such a chance to thrive beyond one or a few provinces.
Some argued a different Comeau ruling could have triggered a race to the bottom in terms of health standards and food safety.
That’s nonsense. Risk management practices in the Canadian agrifood sector are exemplary. As we continue to seek opportunities abroad, Ottawa and the provinces need to clean house here first — and they do.
After 90 years, Ottawa was poised to finally receive a strong message that Canadians deserve better. But it was not to be. The Supreme Court has opted to stay on the sidelines.