Supreme Court's 'free-the-beer' decision privileges one part of the Constitution over another
A more robust test could have provided real balance
The Supreme Court of Canada's decision in the Comeau case on Thursday will disappoint many who were hoping for stronger protections for free trade within Canada's borders. That surely includes anyone whose weekend plans involved a long drive in search of cheap beer.
The case was an appeal brought by the Crown against Gerard Comeau, a New Brunswick man charged under a provincial law for going on a beer run to Quebec. The outcome hinged on the interpretation of Section 121 of the Constitution Act, 1867, which states that the goods of one province must be "admitted free into each of the other provinces."
The issue was whether the New Brunswick law — prohibiting possession of all but modest quantities of out-of-province liquor — was consistent with this constitutional guarantee. The trial judge had held that it was not. The Supreme Court disagreed, upholding the New Brunswick law.
The real significance of the decision lies not in the outcome, but in the approach to Section 121 laid down by the Court. Past cases had held that, despite the broadly worded language of Section 121, it actually only prohibited outright customs duties or tariffs at provincial boundaries.
Comeau and a number of interveners (one of which I represented) argued that this approach was at odds with the plain meaning and purpose of the provision, as well as constitutional principles. Section 121 aims to limit restrictions on trade in goods, and trade can be restricted in many ways other than tariffs, including through import quotas, discriminatory regulation and prohibitions on outside goods.
In its decision, the Court gave with one hand and took away with the other. It held that Section 121 applies both to tariffs and "tariff-like" measures that increase the price of goods imported from outside a province. So far, so good.
However, the Court went on to hold that the restriction of cross-border trade must be the primary purpose of a measure in order for it to be invalid under Section 121. A tariff-like measure (or even perhaps an outright tariff) may be upheld as long as it is rationally connected to a broader legislative scheme aimed at an objective other than restricting trade. Any objective within a government's jurisdiction would seem to qualify, including simply enhancing general welfare.
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This approach practically nullifies Section 121. "Rational connection" is among the lowest levels of scrutiny used in constitutional adjudication. As long as a measure is related to otherwise valid legislation as a matter of reason and logic, it will be upheld. In this case, New Brunswick's prohibition on out-of-province booze was upheld in part because it was rationally connected to a legislative scheme aimed at the valid objective of ensuring public supervision of alcohol within the province.
Section 91 of the Constitution Act, 1867, already provides that only the federal Parliament can pass legislation whose primary purpose relates to interprovincial trade. So it is unclear what work there is left for Section 121 under the Supreme Court's approach, at least with respect to provincial legislation. Thursday's opinion likely means that Section 121 will fade back into constitutional obscurity. That's an unfortunate outcome, and one that is not dictated by either the Constitution's text or its underlying principles.
This case required the Court to balance Section 121, which holds that goods should be "admitted free" into a province, with the provincial authority granted under Section 92, which includes the power to regulate property and civil rights. But the Court's approach provides no balance at all, privileging one part of the Constitution over another.
A more robust test could have provided real balance. For instance, the Court could have required that measures that discriminate against out-of-province goods must actually be necessary to achieve an important objective in order to be upheld. Under this approach, the government of New Brunswick would have had to establish that its prohibition on outside liquor was truly necessary to achieve objectives relating to public health and safety, a much higher bar than the one the Court applied.
The Court's decision also relies on the constitutional principle of federalism, which holds in part that provinces should have the power to address local concerns according to local values. But provincial autonomy must also be reconciled with national unity. And this means addressing a structural challenge inherent in any federal system of government: provincial governments have an incentive to establish policies that advantage their own residents at the expense of "outsiders," i.e. fellow Canadian citizens who happen to live in other provinces.
This is why federations like the United States and Australia, as well as aspiring federations like the European Union, have adopted robust constitutional protections against internal trade barriers. The Court on Thursday undermined one of the analogous protections found in the Canadian Constitution.
Section 121 has a meaningful role to play in the structure of Canadian federalism. It's a shame the Court didn't see that.