Booze wars: Premiers squabble over free trade of alcohol in bid to protect bottom line

There's a constitutional showdown brewing over beer, wine and spirits and it's causing headaches for some premiers who are eager to protect provincial liquor monopolies.

Prohibition-era provincial liquor laws restrict movement of alcohol across borders

While premiers in Whitehorse are inching toward a comprehensive deal on interprovincial trade, freer trade of alcohol remains a potential stumbling block. (CBC)

There's a constitutional showdown brewing over beer, wine and spirits and it's causing headaches for some premiers who are eager to protect provincial liquor monopolies.

While the leaders in Whitehorse for an annual summit are inching toward a comprehensive deal on interprovincial trade — an agreement that would knock down trade barriers that hamper the flow of goods and services across provincial boundaries — alcohol remains a stumbling block.

Virtually all provinces and territories, save for Alberta and Manitoba, have strict limits on how much alcohol you can bring with you across a provincial border. Ontario, Quebec and British Columbia limit it to just three litres of spirits, nine litres of wine and roughly 25 litres of beer. In other provinces, the limit is lower. Exceed the limits and you could face criminal charges and hefty fines.

But cross-border booze shoppers might have a reason to rejoice. A New Brunswick court judge recently struck down that province's prohibitions on moving alcohol across borders and exonerated retiree Gerard Comeau, who had gone well above the limit.

New Brunswick's laws are designed to protect its own provincially run liquor stores against cheaper products from neighbouring Quebec, something Judge Ronald LeBlanc ruled is simply unconstitutional. LeBlanc cited section 121 of the Constitution Act, which states: "All articles of the growth, produce or manufacture of any of the provinces shall, and from and after the Union, be admitted free into each of the other provinces."

New Brunswick Finance Minister Roger Melanson said earlier this month that a pending interprovincial trade deal won't include alcohol because the province is appealing the Gerard Comeau court ruling. (Stephen MacGillivray/Canadian Press)

The decision could have huge consequences for the entire country and pave the way for liberalized liquor sales across the land, but New Brunswick is appealing the ruling and insists any interprovincial trade deal reached this week must exclude alcohol for now.

"It's not being discussed at this time because it's in front of the courts," Roger Melanson, the New Brunswick minister responsible for trade issues, told reporters earlier this month. "I think it's important that we respect that process."

"I think they're trying to defend a piece of legislation that is indefensible," federal Conservative MP Dan Albas said of provincial Liberals in Fredericton who are pushing back. "They're throwing in the kitchen sink here trying to find any angle."

Conservative critic for Interprovincial Trade Dan Albas speaks about reducing inter-provincial barriers on the sale of alcohol Monday May 30, 2016 in Ottawa. (Adrian Wyld/Canadian Press)

The government voted down Albas's motion in June to seek a reference from the Supreme Court on the matter, but Innovation Minister Navdeep Bains has voiced support for the principles expressed in the Comeau decision and said that any "comprehensive" interprovincial trade agreement should deal with cross-border alcohol shopping.

But the federal government isn't at the table in Whitehorse this week, and premiers could ultimately punt a decision on dropping booze barriers.

Liquor monopolies boon for bottom line

There's no surprise why some cash-strapped provinces are pushing back against freer trade: NB Liquor added $165 million to the provincial government's bottom line in the last fiscal year.

The LCBO, one of the largest single purchasers of liquor in the world, pads Ontario's coffers to the tune of $1.7 billion a year. Downward price momentum from cross-border purchasing could prompt a dip in those revenues.

"Many of these provincial liquor monopolies are not competitive. Yes, we understand that finance ministers have it tough, but they shouldn't be able to circumvent constitutional rights of Canadians to trade with Canadians," Albas said after the Comeau ruling.

NB Liquor has added $165 million to cash-strapped New Brunswick's bottom line in the last fiscal year. (CBC)

But some provinces, namely B.C. and Quebec, are pushing for changes in Yukon to get their products on store shelves nationwide.

"We should have a free-trade zone in Canada, between us," British Columbia Premier Christy Clark told reporters on her way into talks in Whitehorse Thursday. "It makes no sense that you can get B.C. wine more easily in China than you can in Ontario."

"There is a legitimate desire from our citizens in Ontario or B.C. [who say] 'why can't I order wine from Quebec?' And vice-versa. We have to answer the citizens' needs," Quebec Premier Philippe Couillard said Thursday, sounding decidedly more upbeat on the possibility of a deal despite historical intransigence.

Bad blood between Wall, Notley

And while alcohol is well-known as a social lubricant it has become a sticking point for two provincial leaders in particular.

The premiers' trade talks have been overshadowed by an ongoing squabble between Alberta Premier Rachel Notley and Saskatchewan Premier Brad Wall over the price of beer.

Notley has levied a $1.25 markup on every litre of beer sold, but has offset the pain for Albertan producers by introducing grants for small brewers.

Wall has argued that Notley's grants are a protectionist measure that will hurt producers in his own province.

The premiers' trade talks in Yukon have been overshadowed by an ongoing squabble between Alberta Premier Rachel Notley and Saskatchewan Premier Brad Wall over the price of beer. (Canadian Press)

That move has left Wall hopping mad and vowing to retaliate, a position that doesn't bode well for hammering out a national framework for minimizing trade barriers.

"It is something that we hope to resolve with Alberta here ... we want to make sure beer drinkers have a lot of choice and the lowest costs possible," he said in an interview Thursday with Rosemary Barton on CBC News Network's Power & Politics.

Notley said she doesn't expect a push to reduce trade barriers will hamper her government's policy choices.

"I don't think at this point that the internal trade agreement would, in any way, inhibit the conversations that we're currently having with respect to alcohol," the Alberta premier said Thursday.


John Paul Tasker

Senior writer

J.P. Tasker is a journalist in CBC's parliamentary bureau who reports for digital, radio and television. He is also a regular panellist on CBC News Network's Power & Politics. He covers the Conservative Party, Canada-U.S. relations, Crown-Indigenous affairs, climate change, health policy and the Senate. You can send story ideas and tips to J.P. at john.tasker@cbc.ca.

With files from the CBC's Jacques Poitras


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