Lexpert Magazine

LEXPERT MAGAZINE | NOVEMBER/DECEMBER 2016 89 | IN-HOUSE ADVISOR: INTERPROVINCIAL TRADE | force and effect. e province appealed and the case, bypassing the Court of Queen's Bench because of its importance, is ex- pected to be heard in the New Brunswick Court of Appeal by early 2017. Judge LeBlanc's contrarian ruling likely jolted awake many of the in-house advisors and lawyers working for companies mired in the political bog of interprovincial trade. Observers, however, debate whether this case will make it to the Supreme Court af- ter the appeal is heard. Ian Blue is confident it will. "In such a constitutional case and such a politically charged atmosphere about trade barriers, I think there would be a good chance that [the Supreme Court] would choose to grant leave to appeal from either side." A Toronto energy lawyer with Gardiner Roberts LLP, it was Blue who, as part of a team, took on the Comeau case pro bono and wrote the defence's constitutional arguments. LaFortune, however, would "be very surprised if it survives appeal. I just think LeBlanc's decision was badly reasoned from the start." Nor does he see the gov- ernment jumping in with a reference case to the Supreme Court to clarify the reach and meaning of s. 121, though many, like Crowley, wish it would. Comeau's defence team extensively re- examined the history of Confederation with respect to free trade. Blue contends that Judge LeBlanc "took the argument further. You see, what he had to do as a pro- vincial court judge was say that he was dis- agreeing with four decisions of the Supreme Court of Canada." Comeau's team went so far as to bring in University of Liverpool historian Andrew Smith, an expert who testified on the "con- stitutional moment" — the events leading to Canadian Confederation. Smith testi- fied that dras of the Constitution evi- denced that the founders of Confederation wanted a Constitution that created an eco- nomic union with "unfettered exchange" across the country. In light of Smith's evidence, Blue says Judge LeBlanc "gave proper meaning to s. 121, which is that it applies to all provincial trade barriers." e implications could be profound for Canadian companies and their legal advi- sors. According to Blue, "It would mean that any marketing legislation, such as federal and provincial marketing boards, to limit quotas of milk, eggs, poultry and what have you, and prohibit them from being purchased from one province to the other, will all fall down. And any law that creates a provincial preference and excludes people from another province from sup- plying goods or services are gone. ey just can't stand under [Judge] LeBlanc's inter- pretation of s. 121." If Blue is right, in-house advisors in the alcohol, transportation, construction, food and a few other sectors will have interesting work ahead. DIVISION OF POWERS In principle, Confederation demands free trade. In practice, the provinces have done plenty to thwart competition If trade is the lifeblood of any economy, Canada has an internal hemorrhage. While we've done reasonably well in opening up free trade with other nations, protectionist attitudes between our own provinces may be trimming billions off our GDP annually. Here's a glimpse at some of the bricks in our internal trade walls. Wacky rules: Soon after Confederation, the provinces began concocting a wide range of barriers to thwart external competition with local industries. Last March, the Standing Senate Committee on Banking, Trade and Commerce compiled a chirpy list of Canada's Top 10 weirdest trade barriers. No 1: "Some truck configurations must be driven only at night in BC and only during the day in Alberta. Insomniacs rejoice." No. 9: "Provincial, territorial and federal standards for maple syrup grades differ. That's not so sweet." Bordered billions: Testifying before that same senate committee, University of Calgary economist Trevor Tombe, using what he called "cutting-edge" research methodology, estimated internal trade barriers were robbing Canada's GDP of between $50 billion and $130 billion annually. No Takers: Soon after he successfully used constitutional grounds to defend retiree Gerard Comeau against a provincial fine for bringing in too much beer from Québec to enjoy at his New Brunswick home, more than a dozen corporations asked for lawyer Ian Blue to make presentations on how the Constitution could be used to bring down illegitimate trade barriers. Though those companies — mainly from the wine and beer sectors — could likely afford the $2 million it would take to bring a case to the Supreme Court, especially if they teamed up, none stepped up to the plate, says Blue. "If we were in the United States I don't think I would have any trouble persuading an American company with a comparable [trade] problem to sue. But in Canada, you know as well I do, people are cautious, people don't want to make waves. They're litigation-averse." Beer wars: There are many creative ways to administer and implement non-tariff protectionist measures, in which provinces often engage. In 2015, under the Alberta NDP's first budget, Premier Rachel Notley raised the markup for craft beers from Ontario and the eastern provinces from 48 cents a litre to $1.25. Ontario-based Steam Whistle sued Alberta, contending s. 121 of the Constitution prevents provinces from charging markups not equally applied to all provinces. Steam Whistle won an injunction and Alberta, backing down, applied the new markup on all beers, regardless of providence. Alberta, however, said some revenue from that markup — $20 million annually — would be returned to Alberta brewers through the new Small Brewers Development program that would help them expand, create jobs and compete against protectionist regimes that exist in other provinces. In August, Artisan Ales Consulting Inc., a Calgary importer specializing in Québec beers, filed a complaint under the Agreement on Internal Trade that Alberta's preferential treatment for western brewers violates AIT provisions. IN HOUSE INSIGHT

• Cover
• big
• back