What the ‘Free the Beer’ case can teach us about interprovincial trade

Gerard Comeau thought nothing of his 2012 trip from New Brunswick to Quebec and back again to pick up a carload of beer. He lived close to the border in Tracadie, N.B., and the prices were cheaper in Quebec. It seemed like a no-brainer.

He certainly didn’t expect a police sting, a five-year legal battle and a Supreme Court of Canada decision saying he didn’t have the right to purchase that beer without impediment. 

“I can go buy any material anywhere in Canada. You can go buy 20 shirts in Quebec, no problem. Why wouldn’t you be able to buy beer,” said Comeau, over a decade after that fateful beer run.

But Comeau’s quest to “free the beer” is once again in the spotlight as U.S. President Donald Trump threatens Canada with tariffs and interprovincial trade gets another look. 

The looming threat of those tariffs has Canadian premiers vowing to remove interprovincial trade barriers, which the federal government says could add an estimated $200 billion to Canada’s economy. 

Internal Trade Minister Anita Anand announced on Feb. 21 that the federal government would remove 20 of the 39 exceptions in the Canadian Free Trade Agreement, with most related to government procurement. 

“One of Canada’s strongest trading partners is Canada. We are all hands on deck to promote freer trade here at home,” Anand said in a statement.

Those who have been pushing for free internal trade say it’s about time. Others say it’s still not enough, and if Canada is going to make it through Trump’s trade war, more needs to be done. But not everyone is convinced.

Comeau gets caught

Comeau had no idea he was driving his beer into a trap in 2012. Court documents say the RCMP in New Brunswick were concerned about how often people were going to Quebec to buy beer, so they set up a two-day sting to crack down on it.

Comeau bought a lot of beer, along with two bottles of whiskey and one bottle of liqueur. The purchase was well over what was allowed. 

So, on his return trip, the RCMP pulled Comeau over, slapped him with a nearly $300 fine and confiscated his booze.

Comeau was determined to fight the fine, as it came with a provincial offence. That’s when Toronto lawyer Arnold Schwisberg approached Comeau about taking on his case pro bono, funded by the Canadian Constitution Foundation.

“I say this with admiration. Mr. Comeau is Joe Canadian. He is so relatable,” said Schwisberg.

Schwisberg had long thought the provincial trade laws were unconstitutional, specifically those around buying booze, and he wanted a chance to challenge them in court. He felt Comeau had the perfect case. 

“I truly believed then, as I believe now, that the interprovincial trade impediments in Canada are compromising our country’s economic strength. And this is only now being recognized, even though there was an opportunity before the Supreme Court in 2017,” said Schwisberg.

Arguing free provincial trade

The crux of his argument was Article 121 in the Canadian Constitution, which 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.”

Schwisberg emphasized a literal interpretation of the word “free” and argued that the fine on Comeau was unconstitutional.

Comeau was acquitted in provincial court by Judge Ronald LeBlanc in 2016. He even got his confiscated beer back. 

But that turned out to be just the battle, not the war. Bill Richards, who had represented the Crown, appealed to the Supreme Court of Canada, and it heard the case. 

“To interpret free as literally would have repercussions for provincial powers. Agriculture schemes and public health and environmental controls are not barriers designed to impede trade but [are] incidental,” said Richards, looking back on the case.

In April of 2018, the nine-justice panel unanimously agreed with Richards. They stated that provinces have the right to restrict the importation of goods from another province, as long as the primary aim of the restriction is not to impede trade. It found the Constitution’s language applied to something like a tariff, but it didn’t mean there could be zero restrictions.

Schwisberg was disappointed, but not totally surprised, by the decision.

“I realized that this had the potential to affect virtually every aspect of the Canadian internal economy. But I also recognized that there would be billions and billions of dollars of interests, that would make it very, very difficult to bring about this change,” said Schwisberg.

Why do these barriers exist?

Part of the reason for these barriers is the difference in standards between different parts of Canada. Provinces and territories often have different rules and regulations around the creation of products such as booze and dairy. 

This affects a number of different Canadian products. Most Canadian wineries, breweries and distilleries can’t sell or ship directly to consumers in other parts of the country. Most provinces have their own liquor retailers that have different rules related to selling, storing and labelling alcohol, though people are still able to buy alcohol from retailers in other provinces. It just comes with some limits, as Comeau found out.

But Brian Lee Crowley says it’s time for more of those barriers to come down. Crowley is the founder and managing director of the Macdonald-Laurier Institute.

“If Canadians decide that they’re willing to sort of bite the bullet and remove the trade barriers and upset some of the producer groups that are protected by those barriers, I think we will be able to raise our standard of living quite quickly,” said Crowley.

But there was pushback from industry in 2017, as many interest groups put their concerns to the Supreme Court, and there is pushback now. Removing those barriers would mean big changes for some industries in Canada, including dairy, egg and poultry, which rely on the supply management system to keep prices stable for farmers such as Mark Ricka. 

“It definitely gives me anxiety, right? It definitely makes you worry that the whole industry across the country would be up on the chopping block,” said Ricka, a third-generation dairy farmer in Chilliwack, B.C. 

He says he understands it on some level. Who wouldn’t want cheaper groceries? But he has concerns. He says some provinces would be able to produce milk cheaper, and therefore, sell it at a cheaper price than he may be able to in B.C. And that could put him out of business.

Will it change?

Crowley says those who support supply management have a lot at stake and are well-organized. And they have political support.

Liberal leadership contenders Mark Carney and Chrystia Freeland, as well as representatives from the Conservatives and NDP all provided statements to CBC saying they support Canadian farmers and supply management. 

Those political leaders have also voiced their support for improved internal trade within Canada. 

But what about those whose livelihoods would be at risk if those trade barriers were knocked down? Crowley says there’s a solution for that. 

Crowley says research into supply management has shown people are paying a premium on products such as dairy and eggs. 

The competition created by reducing trade barriers would bring down the prices of those goods for consumers, and with more money in people’s pockets, government would be able to step in to help the industries affected by those changes. 

“One of the great things about economic growth is that means governments can take a share of that growth and use it to compensate the losers. That’s a part of the role of government,” said Crowley.

Comeau still buys his beer in Quebec. While plenty of alcohol trade barriers remain, the provinces made a deal in 2018 to raise personal exemption limits on alcohol, letting Canadians carry six cases of beer, two cases of wine and six litres of spirits across borders.

So as long as Comeau doesn’t go overboard, he can buy his beer worry-free. And even though the barriers didn’t come down in 2018, Schwisberg is hopeful they may come down yet. 

“It is the perfect time to further the Canadian dialogue about how we’re going to strengthen our country economically by addressing the fact that it has been more difficult to trade with the Canadian province than it has been to trade with another sovereign nation, and that can’t continue,” Schwisberg.