Montreal Gazette: New Brunswick beer ruling will help open up interprovincial trade

On April 29, New Brunswick provincial court judge Ronald LeBlanc ruled in favour of Gerard Comeau, who had been charged with transporting beer and liquor from Quebec into his home province.

New Brunswick’s Liquor Control Act limits how much alcohol a person can possess that does not originate from the provincial liquor board. The judge ruled that the limit constituted a trade barrier, violating Section 121 of Canada’s Constitution Act, 1867 which says that goods shall be “admitted free into each of the other provinces.” He recognized that the Fathers of Confederation were adamantly clear that free trade between provinces was one of the reasons for creating a new country.

While Comeau drove to Quebec to stock up on cheaper beer, Quebec also has erected its own walls that restrict Quebecers’ access to out-of-province booze.

For individuals, the law prohibits importing more than 12 bottles of wine, three bottles of spirits, and 72 bottles of beer from another province. Want to bring back an extra case of wine from that trip to Niagara? Better watch out for a RCMP sting operation. Hope that British Columbia winery can send you a few bottles? Not a chance.

Not many are fazed by the current law — the SAQ loses $90 million of taxes and markups per year from alcohol purchases outside the province — but as Comeau found out, enforcement can happen anywhere, without notice.

For businesses, the trade barriers are even more of a hassle. While the beer market in Quebec is mostly privatized, breweries that don’t own a physical warehouse in the province are prohibited from selling their beer within its borders. Owning such real estate makes it easy for the parent companies of Budweiser and Coors to sell cheap foreign suds at the dépanneur, but it proves to be an immense struggle for small Canadian microbreweries to find a market in Quebec. If you see any out-of-province beer labels here, it’s because they’re owned by one of the big three.

The one exception is Beau’s Brewery, located in Ontario less than 14 kilometres from the Quebec border. The small family-owned brewery spent years trying to get into Quebec, failed numerous times, and poured tens of thousands of dollars into consulting fees just to understand the regulations. Then they incorporated, got a warehouse and set up distribution. But it should not be this complicated.

The barriers in other provinces are just as sinister. Alberta, to name one, recently more than sextupled its tax on craft beer from out of province, causing an exodus that outraged Albertans and businesses alike.

Judge LeBlanc’s ruling could revolutionize our internal trade. It gives us hope that one day all products, not just alcohol, will flow freely across our nation’s borders — as the Fathers of Confederation intended. Current bureaucratic barriers on wheat, egg, milk and poultry could all be eliminated — and yes, on liquor too. Some experts believe the SAQ’s business model would need serious re-examination to comply with the Constitution, which could open the door to privatization.

Federal Economic Development Minister Navdeep Bains praised the decision and has called for a new Agreement on Internal Trade to bring barriers down.

The Comeau case offers the perfect opportunity for the federal government to enforce the Constitution. If it doesn’t, it will be up to the courts. While the Comeau decision is confined to New Brunswick for the moment, there is a good chance that it will be appealed at the Supreme Court. If it is, all of Canada’s trade barriers could come crumbling down. If it isn’t appealed, the winning case will serve as a strong new precedent for lawsuits in other provinces.

Judge LeBlanc wrote that his ruling “will have a resounding impact” on the future of interprovincial trade in Canada. If he’s right, that’s something worth drinking to.

Tom Kott is a consultant at HATLEY Strategy Advisors, a Montreal-based public affairs firm.

Original post HERE


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