Academic journal article Canada-United States Law Journal

Of Trade and Beer: Nafta, the Comeau Case and Regulatory Cooperation

Academic journal article Canada-United States Law Journal

Of Trade and Beer: Nafta, the Comeau Case and Regulatory Cooperation

Article excerpt

TABLE OF CONTENTS  I. Introduction  II. Trade model--NAFTA  III. Common market model--European Union  IV. Regulatory model--Canadian Free Trade Agreement  V. International Regulatory Cooperation     A. Regulatory Cooperation Council        1. Comprehensive Economic and Trade Agreement          (Canada-European Union)       2. Comprehensive and Progressive Agreement for Trans-Pacific          Partnership (CPTPP)  VI. Borders 


The Comeau case before the Supreme Court of Canada (1) raises many questions about the nature of the internal market in Canada. At the time of writing, pleadings have been filed and arguments have been presented. Legal analysis has focused on constitutional law doctrine governing the powers of the provincial and federal governments. This paper takes a different approach. Based in international trade law, it discusses several ways in which trade treaties and similar agreements respond to cross-border regulatory differences. Assuming governments with appropriate regulatory authority have arrived at rules that differ from each other, can commerce take place across borders? If so, in what circumstances and with what qualifications?

In the fall of 2012, Gerard Comeau, a resident of New Brunswick, bought 15 cases of beer, 2 bottles of whiskey and 1 bottle of liqueur in the province of Quebec. The prices he paid were lower than the prices from the New Brunswick provincial monopoly, the New Brunswick Liquor Corporation. When he drove back to New Brunswick, his vehicle was intercepted and the goods were seized. He was charged with possession of liquor not purchased from the Liquor Corporation, in a quantity beyond the permitted limit. The amount of the fine was $292.50 (Canadian dollars). Mr. Comeau contested the charge, arguing that it was contrary to section 121 of the Constitution Act, 1867. The trial judge decided in his favour. The New Brunswick Court of Appeal declined to hear an appeal. Leave to appeal was granted by the Supreme Court of Canada.

The New Brunswick Liquor Corporation has a monopoly on importing liquor into the province, pursuant to section 3(1) of the federal Importation of Intoxicating Liquors Act, (2) which was originally adopted in 1928. That legislation provides that liquor may be imported into a province only by the provincial monopolies, with some exceptions, none of which applied in this case. The Gold Seal decision of the Supreme Court of Canada in 1921 affirmed that the federal government has the power to prohibit the importing of liquor into a province pursuant to section 91 of the Constitution Act, exercising its jurisdiction over trade and commerce as well as over the peace, order and good government of Canada. (3)

Section 121 of the Constitution Act, 1867 provides as follows:

   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. (4) 

In his decision in Comeau, LeBlanc J. of the New Brunswick Provincial Court heard evidence on the understanding of the phrase "admitted free" in 1867. Some dicta in the Gold Seal decision (5) interpreted that phrase as referring only to customs duties or charges, which would be prohibited in trade between provinces in the new Dominion. LeBlanc J. determined that, at the time, "admitted free" had a wider meaning than merely "admitted free of duty." (6) Part of the impetus for Confederation had been a reaction to the abrogation of the Elgin-Marcy Reciprocity Treaty (1854-1866), (7) under which free trade had taken place between the British North American colonies and the United States. The British colonies had experienced unfettered trade in natural products pursuant to the treaty, which the United States first undermined by search and seizure procedures and other border impediments, before finally abrogating the treaty in 1866. LeBlanc J. concluded that the colonies wanted unfettered trade within the new Union without non-tariff barriers:

   I have been convinced that their intent was to replace the loss of    the free trade American market with a free trade Canadian market. … 
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