THE BLOG

This New Brunswick Trial Is Crucial to Interprovincial Free Trade

09/23/2015 04:56 EDT | Updated 09/23/2016 05:12 EDT
Silvrshootr via Getty Images

There's an important trial going on right now in New Brunswick that could have a broad, far-reaching effect on how business is done in Canada. What's at the center of this trial? Beer. How Canadian is that, eh?

To Ben Franklin, beer was "proof that God loves us and wants us to be happy," and Plato said, "He is a wise man who invented beer." But beer isn't complicated stuff. It's just a fermented tea of malted barley infused with resinous lupulin derived from hops. There's evidence that the ancient Mesopotamians and Egyptians figured out how to brew beer nearly 12,000 years ago. Some archeologists hypothesize brewing beer may have been the impetus for our ancestors to settle in small communities and grow cereal grains. Funny that beer may have civilized humanity and ushered in the agricultural revolution.

Fast-forward. In modern Canada, trade in beer is tightly controlled by our governments. In many ways, prohibition era sentiments still imbue how it's regulated. According to federal law, the only beer permitted to cross provincial borders must be purchased by or on behalf of an agent of the Crown. It's this federal law that created Canada's provincial liquor monopolies.

Without exception, provincial governments use this monopoly to raise revenues and prevent ordinary folks from making beer runs across provincial borders.

Regarding revenues, AB's Gaming and Liquor Commission transferred over $747 million to the provincial coffers for liquor sales in 2014. These revenues are extracted from unknowing consumers as fees and taxes hidden in the purchase price.

And regarding out-of-province beer runs, that's where the New Brunswick trial comes in.

Late in 2012, a New Brunswick resident, Gerard Comeau, crossed a bridge into Quebec to buy beer. Like many other New Brunswickers, Gerard routinely did this to take advantage of Quebec's lower prices. After purchasing 14 cases and some other liquor, Gerard made his way home. But unknown to him, he was caught up in a police sting.

The RCMP apprehended Gerard, confiscated his beer, and issued him a fine for $292.50 because he had exceeded New Brunswick's so-called "personal exemption" import limit of 12 pints.

But here's the problem. The section 121 of Constitution Act, 1867 guarantees free trade between provinces. Yet this has been "conveniently" ignored even though none other than the likes of Sir John A. MacDonald and George Brown expected confederation to "throw down the barriers of trade" and create a unified market in Canada.

If this part of our constitution weren't "conveniently" ignored, what would this mean today? No province would be able to restrict out-of-province beer runs. In fact, no province would be allowed to erect trade barriers of any sort. With very little hyperbole, this would be revolutionary.

How did it become "conveniently" ignored? It may have been due to political interference with the judicial system. In 1921, the Supreme Court of Canada heard arguments regarding Gold Seal, a liquor importer/exporter accused of violating the Canada Temperance Act. Gold Seal's defence relied on the constitution's free trade guarantee. But before the court released its decision, Justices Anglin and Mignault were summoned to a secret meeting to discuss the case with their old friend, the federal Minister of Justice, Charles Doherty. We only know that this happened because of a letter written by another Justice on the court at the time, Lyman Duff. By today's standards, such a meeting between a Cabinet Minister and Supreme Court Justices would be scandalous.

In the decision following the secret meeting, the court neutered the free trade guarantee interpreting it to mean that provinces can't impose custom duties -- all other trade barriers were permitted. And with that, the aspirations of the fathers of confederation and the original meaning of the constitution were ignored.

This is why Gerard's trial is so important. If he wins, Canada's constitution will be vindicated and our nation will be on the cusp of an economic revolution. No government, federal or provincial, would be allowed to maintain or erect barriers to interprovincial trade. This will benefit consumers and innovative producers alike. There will be greater choice, lower prices, and access to larger markets.

Somehow it's fitting that this economic revolution, like the agricultural revolution, could be brought about by beer.

ALSO ON HUFFPOST:

America's Best Cities for Beer