Montreal, April 19, 2018 – The Supreme Court missed a historic opportunity to free the Canadian economy from its numerous trade barriers. In its unanimous decision, handed down today, the highest court in the land decided to maintain the status quo, deplores the MEI.
“We are extremely disappointed in this decision,” says Michel Kelly-Gagnon, President and CEO of the MEI. “The nine justices had a golden opportunity to correct this provincial protectionism and reverse a former ruling dating back to the 1920s that is no longer well-suited to the modern Canadian reality.”
Two elements seem to have had a determining impact on the decision. First, the Court maintains that the threshold for reversing its former decision was not reached. Moreover, it considers that the New Brunswick law in question, even though it has a secondary effect of limiting interprovincial trade, is nonetheless valid because this is not its primary purpose.
“And yet, it seems clear that the New Brunswick government’s attorney had admitted that one of the main justifications for this protectionist law was to maintain the fiscal revenue of the province stemming from the sale of alcohol. With all due respect to the Court, it showed a certain naiveté in its decision,” argues Mr. Kelly-Gagnon.
Recall that Gerard Comeau, a New Brunswick resident, was stopped five years ago for having “imported” too much alcohol from Quebec. Fined by the police, he contested the charge and won his case before a trial judge who struck down a provincial law that dates back to the era of Prohibition, and that is contrary to the idea that led to Confederation.
“Canadian consumers are the big losers, and the provinces are going to continue to mutually impoverish themselves by maintaining in place trade barriers from a bygone era,” points out Howard Anglin, President of the Canadian Constitution Foundation. “Yet an overwhelming majority of Canadians think they should be able to buy and transport any legal product from one province to another.”
At a time when Canada is renegotiating NAFTA with the United States and Mexico in order to preserve the benefits that free trade provides to all Canadians, it is disappointing to see that the Supreme Court’s decision goes in the opposite direction.
“We are one country, we should be one common market, but the inconsistency remains. In certain sectors, it will continue to be easier to do business with other countries than with other provinces,” says Marco Navarro-Génie, President and CEO of the Atlantic Institute for Market Studies.
The Comeau case could have normalized the free movement of goods from coast to coast to coast and helped put an end to these harmful disputes that have dogged us for too long and cost Canadians tens of billions of dollars every year.
“The Supreme Court’s decision does not alter the fact that interprovincial barriers cost the Canadian economy over $50 billion a year. The provinces themselves recognize the size of the economic cost, and it is now up to them to act by bringing down the barriers and favouring true free trade to the benefit of all Canadians,” concludes Michel Kelly-Gagnon.
The MEI was represented before the Supreme Court of Canada as intervener in this case by lawyers Mark Gelowitz and Robert Carson of the Osler firm.
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The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization.
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