Breaking down interprovincial trade barriers

The Supreme Court will hear arguments in the Comeau case this week. The outcome has implications for all Canadians

As the 150th anniversary year of Canada’s founding draws to a close, a mountain of paperwork is accumulating at the Supreme Court in the case Regina versus Comeau, which is scheduled to be argued on Dec. 6 and 7. Eight provinces and two territories have lined up to fight a New Brunswick court decision that held interprovincial trade barriers to be unconstitutional.

Based on the provinces’ solidarity against freeing up interprovincial trade, was Confederation simply a fluke, born of  the unique circumstances of 1867? Would the protectionist provincial governments of today ever agree to it?

The Comeau case is simple. New Brunswick resident Gerard Comeau travelled to Quebec, where the taxes on alcohol are lower. He stocked up on beer and spirits, then returned home. As soon as he re-entered New Brunswick, the RCMP (who had been tailing him in Quebec) stopped him, seized his alcohol and fined him. He had exceeded the limit on alcohol New Brunswick residents are allowed to bring in from other provinces.

Comeau refused to pay the fine, and with the help of largely pro bono lawyers, challenged the law’s constitutionality. A unified country, Comeau’s legal team argued, should not have such ridiculous import restrictions between provinces.

And, they argued, the British North America Act adopted in 1867 actually incorporated the principle of internal free-trade in Canada’s Constitution.

The nation is in a protectionist morass today largely because of an ill-considered 1921 Supreme Court decision that said that free-trade guarantee applies only to duties or tariffs, not to other types of trade barriers.

In August 2015, I sat in on the week of evidence and argument at the Comeau trial. Historians aren’t necessarily riveting speakers, but the star expert witness, Dr. Andrew Smith (a Canadian historian, now a university professor in the United Kingdom) held the Campbellton, N.B., courtroom spellbound.

In 1854, he testified, Britain and the United States signed the Reciprocity Treaty. It allowed commodities from the British North American colonies (primarily timber, fish, minerals and agricultural products) to gain free entry into U.S. markets. This unfettered access to a comparatively huge market created a golden age of economic prosperity for the British colonies. People were bullish and optimistic about the economy. They had the confidence to build new railroads and open new businesses.

But when the U.S. Civil War began in 1861, the union states became suspicious that Britain was aiding the confederacy. Despite the treaty, hostile U.S. customs officials began imposing impediments to the entry of Canadian goods, to punish these real or imagined enemies. For instance, they would “search and detain” perishable goods to the point where they were no longer salable, or they would require extensive paperwork and inspections before goods could enter. In 1866, the U.S. cancelled the Reciprocity Treaty.

The men who were soon to become Canada’s Fathers of Confederation had witnessed the benefits of free trade and open markets first-hand. They also knew how trade barriers – even non-tariff ones – caused prosperity to falter. They asked British officials to intercede through diplomatic channels in Washington but the U.S. barriers remained.

So the Fathers of Confederation began to search for an alternative market strategy. An important impetus for the provinces of New Brunswick, Nova Scotia, Upper and Lower Canada to unite as a single country was precisely to provide a unified market of more than three million people, free of internal trade impediments.

And more than 150 years later, a survey conducted by the Montreal Economic Institute shows that Canadians still overwhelmingly (89 per cent) believe they should have the right to transport goods unimpeded across provincial borders. They understand that reducing trade barriers between provinces would benefit all consumers.

It’s a shame their own provincial governments will be in court fighting them.

Karen Selick is a lawyer and writer in Ontario.

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