Gerard Comeau beer. Photo by the author
CBC Radio has delivered an intriguing report on the implications of the Supreme Court of Canada case R. v. Comeau, affectionately dubbed the “Free the Beer” case in Canada.
In 2012, Gerard Comeau set off with a trunk full of beer (and a bit of whiskey and liquor) from Quebec to his home in New Brunswick, where the prices are notably higher. Fast forward five years, and he found himself facing the Supreme Court. His crime? Bringing back more beer than the provincial liquor regulations permitted, inadvertently stepping into the murky waters of interprovincial trade barriers.
While interprovincial trade barriers may seem trivial compared to tariffs, they are becoming increasingly significant as nations seek to diversify their trade relationships. In Canada, these non-tariff barriers are set to take center stage.
It may sound absurd that Canada has interprovincial trade barriers, but the reality is less dramatic. There are no customs checkpoints between provinces, and the constitution forbids tariffs among them. Yet, Article 121 clearly states that “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.”
The IMF classifies internal trade barriers in Canada into four categories: natural (like geography), prohibitive (think alcohol sales), technical (including weight and size standards), and regulatory/administrative barriers (like permits and safety certifications).
According to the report (p.4), “labor mobility, business regulation, transportation, markets for drugs, agricultural products, food, and alcohol products, and until recently, government procurement, have been cited as areas mostly affected by trade barriers.” These responsibilities fall squarely on provincial shoulders.
The Supreme Court’s ruling found that while Comeau had indeed violated the New Brunswick Liquor Control Act—which prohibits individuals from possessing liquor in amounts exceeding a specified threshold from outside the province—the Act does not constitute an outright ban on interprovincial trade. Instead, the ruling highlighted a constitutional power that allows provinces to regulate alcohol, which inadvertently affects trade.
New Brunswick permits alcohol imports solely through the New Brunswick Liquor Corporation, with a small personal exemption, which Comeau exceeded.
As a result of the court’s interpretation, Comeau lost his case. The Supreme Court confirmed that while trade barriers as such are unconstitutional, provinces cannot impose tariffs or bans that favor local products.
However, the Court was reluctant to intervene in provincial jurisdiction. The ruling indicates that the incidental costs to interprovincial trade resulting from provincial alcohol control are just part of maintaining the powers allocated exclusively to provincial legislatures. It might be questionable for New Brunswick to monopolize alcohol sales, but that is a decision for the province to make.
Provinces have the liberty to establish their own safety or technical standards based on perceived needs, which hinders the seamless flow of goods and services across borders. They may regulate alcohol, nicotine, and cannabis, which all have similar impacts. To eliminate technical and regulatory barriers, there would need to be a universal standard, and to abolish prohibitive standards, provinces would have to relinquish their stringent control over goods like alcohol.
This situation mirrors international debates about harmonizing regulations to enhance trade between sovereign states that wish to maintain their own rules.
Regardless of the rationale behind technical and regulatory standards—be they sound or not—they still impose restrictions on the free movement of goods and services across jurisdictions, fostering conditions for bootlegger-baptist coalitions that could further solidify these barriers. This holds true even if we acknowledge that these standards are beneficial.
While tariffs create stark effects, they are relatively simple to dismantle. The complexities surrounding interprovincial trade in Canada are much more intricate. This challenge is evident in the renewed commitment from premiers to dismantle interprovincial barriers by June 1, 2025: except in Quebec (due to linguistic concerns); excluding food; and while most First Ministers endorse direct-to-consumer Canadian alcohol sales, no one is eager to tackle the supply management system that has stabilized egg prices amid U.S. market volatility—even though it hampers interprovincial trade.
Canada’s struggle to liberate trade within its borders exemplifies the tension between the aspiration for free trade and the commitment to decentralization. The economic benefits of removing these barriers are substantial, yet they might only become compelling if a full-blown trade war emerges. Each of these policies has roots in voter support for reasons that transcend mere protectionism, echoing challenges faced by jurisdictions worldwide in their quest for freer trade.
Ultimately, liberating trade necessitates navigating the competing liberal values of free trade and decentralized governance. Advocates for freer trade must remain cognizant of the real trade-offs involved and articulate why these changes are worthwhile.
