In a ruling that disappointed business groups, the Supreme Court of Canada said provinces can have regulations that impede inter-provincial trade, provided the primary function of the regulation is not to impede trade.
The decision, released last week, was a blow to Canadian winemakers, craft breweries and folks who oppose the supply management system for dairy, eggs and poultry.
The Supreme Court was looking at a case surrounding Gerard Comeau, a New Brunswick man who routinely bought large quantities of beer in Quebec and brought it back to his home province.
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The government of New Brunswick fined Comeau for “importing” beer but he fought the penalty, citing Section 121 of Canada’s Constitution Act, 1867. It says products from any province should be “admitted free” into other provinces.
Lower courts ruled in favour of Comeau but the crown appealed.
In a unanimous decision, the Supreme Court said the primary purpose of the New Brunswick law is to prevent holding excessive quantities of liquor from supplies not managed by the province.
“While s.134(b) in essence impedes cross-border trade, this is not its primary purpose. Section 134(b) does not infringe s.121 of the Constitution Act, 1867,” the justices said.
If the Supreme Court had agreed with Comeau, it could have had huge ramifications for supply management.
“We are pleased that the Supreme Court has restored some certainty about various regulations of trade in place in Canada, including the validity of supply management,” the Dairy Farmers of Canada said in a statement.
Other groups were less pleased.
The Canadian Vintners Association said the decision harms the wine industry because consumers cannot buy wine, directly, from out-of-province wineries.
The Supreme Court ruling means that provinces can have regulations that block trade, if the regulation serves another purpose.
“It still leaves a lot of wiggle room,” said Corinne Pohlmann, Canadian Federation for Independent Business senior vice-president. “(Provinces can say) our intent is not to stem the flow of trade. If that’s incidental to what we’re trying to do, oh well.”
With the ruling, organizations and businesses that support free trade will have to rely on the Canadian Free Trade Agreement, which the provinces and territories signed in April 2017. The deal took effect July 1, 2017.
“(The) decision means there’s even more onus on that agreement to really do what it says it’s going to do. Which is to start to dismantle some of those trade barriers,” Pohlmann said. “It’s unfortunate that the Supreme Court decision didn’t push that process along more quickly.”
Contact robert.arnason@producer.com
