CBC Radio has a great report on what we can learn from the Supreme Court of Canada case R. v. Comeau, popularly known up here as the “Free the Beer” case.
In 2012, Gerard Comeau loaded his car with beer (and whiskey and liquor) in Quebec and headed home to New Brunswick, where the booze costs more. Five years later, he was at the Supreme Court. The reason is that he’d brought back more beer than was allowed under provincial liquor laws, unwittingly running afoul of interprovincial trade barriers.
Compared to tariffs, interprovincial trade barriers might seem like small fry. But as developed countries look to diversify trade relationships, non-tariff barriers such as those affecting Canadian provinces will loom large.
It sounds crazy that Canada has interprovincial trade barriers, but it’s not as dramatic as it sounds. There are not customs checkpoints between provinces and tariffs between provinces are prohibited by the Canadian constitution. Article 121 states: “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.”
Rather, the IMF classifies barriers to internal trade in Canada into four categories: natural (including geographic), prohibitive (as with alcohol sales), technical (weight and dimension standards), and regulatory and administrative barriers (permits/licensing, safety certification).
The report states (p.4) that “labor mobility, business regulation, transportation, markets for drugs, agricultural products, food and alcohol products, and until recently, government procurement, have been cited as areas mostly affected by trade barriers.” These are all provincial responsibilities.
The Supreme Court’s decision found that while Comeau had run afoul of the New Brunswick Liquor Control Act, which “makes it an offence to ‘have or keep liquor’ in an amount that exceeds a prescribed threshold purchased from any Canadian source other than the New Brunswick Liquor Corporation”, that Act does not count as a ban on interprovincial trade. Instead, a constitutional provincial power (regulating and controlling alcohol) has unavoidable secondary effects on trade that could only be precluded by unconstitutionally centralizing power.
New Brunswick only allows alcohol to be brought into the province through the New Brunswick Liquor Corporation. There is a small personal exemption to this rule, and Gerard Comeau had brought back more than his exemption allowed.
Because the legislation under which Comeau was charged had to do with regulating alcohol within the province and not preventing interprovincial trade, Comeau lost.
The Supreme Court agreed that trade barriers as trade barriers within Canada are unconstitutional. No province can impose tariffs or blanket bans on goods from within Canada to encourage buying local.
But the Court wasn’t willing to interfere with provincial jurisdiction. The court’s ruling says that the incidental cost to interprovincial trade of provincial control of importing and regulating alcohol is the cost of protecting the powers granted exclusively to provincial legislatures. It might be a bad idea for New Brunswick to manage alcohol sales through a monopoly, but doing so is a provincial decision and the province has to decide to give up the monopoly.
Provinces have the right to set their own safety or technical standards based on their perceived needs, and this prevents some goods and services from moving seamlessly between provinces. They are allowed to set regulations around alcohol, nicotine, and cannabis, which have the same effect. To eliminate technical and regulatory barriers despite the provinces’ wishes, a single standard would have to be imposed. To eliminate prohibitive standards, the provinces would have to lose their power to strictly control goods like alcohol, nicotine, and cannabis.
Interprovincial trade barriers aren’t special in this. The arguments about interprovincial non-tariff trade barriers mirror international arguments about harmonizing regulation to allow or encourage trade between sovereign states that want to set their own rules.
Regardless of the driving force behind technical, regulatory, and administrative regulations—whether or not they are good regulations worth the economic cost—they also restrict the free movement of goods and services between jurisdictions. This creates the right dynamics for bootlegger-baptist coalitions that can further entrench barriers. This is true even if we accept that the standards are good standards worth the cost.
Tariffs have a dramatic effect, but they’re easy to remove. The issues affecting interprovincial trade in Canada are thornier. This is on full display in premiers’ renewed commitment to eliminate interprovincial barriers by 1 June 2025: except in Quebec (linguistic concerns); excluding food; most First Ministers commit to direct-to-consumer Canadian alcohol sales. No one will move on to eliminate a supply management system (alas) that has delivered stable egg prices while the U.S. market has been so volatile—even though it affects interprovincial trade.
Canada’s difficulty freeing trade even within its own borders illustrates the tension between the desire for free trade and commitment to decentralization. It isn’t enough that the economic benefits would be substantial—though it may become enough if a full trade war erupts. All of these policies have reasons behind them that provincial voters support that have nothing to do with protectionism. There are similar issues facing all jurisdictions pursuing freer trade.
Freeing trade means negotiating between the competing liberal values of free trade and decentralized power. Those committed to freer trade have to keep that in mind and be clear-eyed about real trade-offs to free trade. We have to show why it’s worth it anyway.
