Our beer-drinking Maritimer decided not to take this lying down (as it were) and challenged the authorities in court. Six years after the incident, the matter was finally resolved by the Supreme Court of Canada. Even though Section 121 of the Canadian constitution states that goods must be “admitted free” as they move from one province to another, the court somehow found that phrase ambiguous and decided that provinces were within their rights to impose limits on just such interprovincial movement of goods. So our plucky New Brunswick beer drinker must pay his fine and is still only allowed, legally, to bring 12 bottles of beer across the border from Quebec. Ironically, he can bring 24 bottles of beer across the border from the U.S.
With respect, the Supreme Court ruling is not helpful at a time when interprovincial rivalries are heating up in Canada, particularly with respect to the Trans Mountain pipeline. As British Columbia, Alberta, and Saskatchewan threaten each other with proposed restrictions on what may be allowed across their borders, it is important to understand the adverse impact of such restrictions on the Canadian economy. If the British Columbia Government is successful in derailing the legally approved pipeline project, prospective investors will understandably wonder if putting money into the Canadian economy is too risky a proposition – a point addressed in an earlier blog.
Not Just Beer Facing a Challenge at the Borders
The broader issue and concern is the extensive trade barriers that exist within Canada – covering far more than beer and adding major costs to doing business in this country.
For example, since provincial rules vary with respect to the size of containers for certain products, businesses either have to run multiple production lines or to forego selling their product in some parts of the country. A truck carrying products across Canada encounters some half dozen variations in requirements concerning weight limits, axel size, tire measurements and even the definition of what constitutes a truck. It is difficult to imagine how these bizarre inconsistencies could be justified on the grounds – cited in the recent Supreme Court decision – that federalism in Canada allows for regional diversity and local concerns.
A Senate Committee report in 2006 estimated that interprovincial trade barriers reduced Canada’s GDP by between $50 billion and $130 billion, and that negative impact has only increased over the years since. Canada has understandably been preoccupied lately with NAFTA, the free trade agreement it has with the U.S. and Mexico. But it is long past time to establish free trade within Canada by removing the many unacceptable and expensive restrictions that provinces have established over the years. Instead, the recent Supreme Court decision is enough to leave us crying in our beer!