Gerard Comeau decided to contest a CAN$300 fine for bringing legally purchased beer and spirits from one Canadian province to another. Five years later, the Canadian Supreme Court is reassessing the case, and the decision could set the stage for all internal trade barriers to come to an end.
Comeau already won his case before the court of New Brunswick, alleging that transporting goods all over the country is a constitutional right. Section 121 of the Canadian Constitution provides that "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" to foster integration and trade throughout the country.
The provincial government disagreed and appealed it to the Supreme Court. Officials want to legitimize interprovincial restrictions, although a poll conducted by the Montreal Economic Institute (MEI) reveals that 89 percent of Canadians disagree with them.
According to the survey, even in the case of alcohol, 78 percent of Canadians believe that they should be free to cross provincial borders without restriction. Only 16 percent and 12 percent support trade protection or taxes, respectively, at the borders.
For Comeau’s case, MEI is working together with the Canadian Constitution Foundation (CCF) and the Atlantic Institute for Market Studies to defend the right of Canadians to carry legally purchased goods wherever they want.
CCF Executive Director Howard Angling hopes “the Court will uphold the trial court’s decision to strike down this obsolete law, which is a relic of the Prohibition era, and is contrary to the spirit of Confederation.”
Such a decision from the Canadian Supreme Court “would have extraordinary benefits for the economy of the provinces,” he adds.
Internal Trade, Productivity, and Interconnected Industries: A Quantitative Analysis, a study conducted by Lukas Albrecht and Trevor Tombe supports this last statement. They found that internal trade barriers reduced economic activity by 3 to 7 percent of annual Gross Domestic Product — a minimum of CAN$2,700 per Canadian.
In their research, Albrecht and Tombe highlight that interprovincial trade is a key contributor to the Canadian economy, and they demonstrate how liberalization reforms per sector improve wider growth.
According to Comeau, the 2017 Canadian Free Trade Agreement also illustrates how provincial restrictions hinder trade in the country. At least 70 percent of the document consists of exceptions to protect industries and respect provincial restrictions, turning trade into a time-consuming endeavor.
The Supreme Court will issue a decision by mid-2018, but most Canadians agree that the country should recover inter-territorial trade freedom, which prevailed in Canada in her early years. A decision in favor of trade freedom would put US states to shame, since many still impose antiquated and economically destructive barrier to alcohol distribution.